HAVE A QUESTION?

  • What is the difference between a corporation and a limited liability company?

    For SMEs there is in principle no great difference between these two legal forms, subject to a few exceptions. The minimum share capital of a corporation is CHF 100,000, half of which must be paid up at the time of foundation, whereas for a limited liability company it is CHF 20,000. The shareholders of a corporation remain anonymous, whereas the partners of a limited liability company are published in the commercial register. The shareholders of a LLC can be forced to make additional payments by the articles of association, which is not allowed for an AG. Translated with www.DeepL.com/Translator (free version)
  • Do I have to hold a general meeting if I am a single shareholder?

    The answer is yes, although it does not have to be a meeting, but minutes must be drawn up and signed within 6 months of the end of the relevant business year. Indeed, it is necessary to at least approve the financial statements of the company and to decide on the carry forward of profits or losses. This is the prerogative of the shareholder, not the director.
  • My company has a negative balance sheet. What should I do?

    When the assets no longer cover the company's debts, there is an "over-indebtedness". It is the responsibility of the board of directors to constantly check the financial situation of the company and to take the necessary measures if there is a threat of over-indebtedness. If there is no reliable plan to get out of it, bankruptcy must be declared and the director is jointly and severally liable for the outstanding debts up to the amount of the loss accumulated since the time when the bankruptcy petition should be made. In addition, the accounts must be submitted to the auditor approved since 2022.
  • My company is insolvent. What should I do?

    Since 2022, the board of directors must act promptly in the event of a threat of insolvency, in particular to take reorganisation measures, apply for a debt-restructuring moratorium or propose solutions to the shareholders if they fall within their competence. A threat of insolvency exists when within 6 months the company has neither the liquidity to pay its outstanding debts nor the credit necessary to obtain such liquidity.
  • Is it possible to use the euro in my accounts?

    Transactions in foreign currencies have always been allowed, but since 2015 Swiss companies can use the foreign functional currency in their accounts instead of the Swiss franc. The choice of this currency is up to the company and must be objectively justified. However, the financial statements must be presented with an equivalent in Swiss francs, also indicating the conversion rate.
  • I want to distribute dividends.

    The distribution of dividends is the responsibility of the general meeting of shareholders. In addition to having sufficient profits, allocations must be made to the general legal reserve. As of 2022, this reserve shall in principle be filled each year with at least 5% of annual profits until it reaches half of the share capital.
  • Do I have to appoint an auditor?

    For private companies and if at least 10% of the shareholders do not require it, an auditor is only necessary for companies that have in 2 successive financial years 250 employees, CHF 20 million in the balance sheet or CHF 40 million in turnover. Since 2022, an audit is also required in case of overindebtedness or loss of capital.
  • Do I have to keep the original invoices?

    Invoices can be kept in digital format provided they are easily accessible in Switzerland upon request by the authorities. They serve as proof of a transaction. They are also part of the accounting system and must be kept for 10 years from the end of the business year concerned.
  • What is the purpose of a shareholders' agreement?

    A shareholders' agreement allows you to add rules in addition to what is allowed by law and the articles of association. However, this type of relationship is concluded between the shareholders and has no effect on the company as such, the rights arising from this type of contract can only be exercised against the other shareholders.
  • What is the difference between a director and an administrator?

    The administrator is a corporate body, along with the shareholders' meeting and the auditor, if any. He is appointed by the shareholders at an annual or extraordinary meeting. He is always disclosed in the commercial register. On the other hand, a director may be engaged by an employment contract signed by one of the persons entitled to represent the company. Although he performs management and representation functions, he is not a legal person and has no special attributes - such as signing the annual accounts - or liability for overindebtedness.
  • Who decides on the director's signing authority?

    For a director or administrator, signing authority is decided solely by the board of directors. In this respect, a resolution of the board of directors must be submitted to the register of commerce and the power to sign - individually or collectively - is then made public. However, this publicity is declaratory in nature and is only intended to inform third parties of its validity.
  • Do I have to have a corporate address?

    In essence, the company has a registered office which is made public in the commercial register and the municipality is determined in the articles of association. However, a company is not required to own or rent the office building, as a domiciliation is allowed provided that the person entitled to the premises accepts it. The domiciliation is however indicated as such in all correspondence.
  • I have received an automatic tax assessment. What should I do?

    You have 30 days from the date of notification to lodge a written and reasoned complaint and to demonstrate that the assessment is manifestly incorrect, if necessary to lodge the tax return or to answer the requests for information that you have omitted. If the assessment is insufficient, you must still act in order to avoid a fine for tax evasion.
  • I still haven't received the tax return form for my new company.

    Even if you have not received it, it is your responsibility to request it and file the return. Although this is rare, the administration may not be aware that your new company has been founded and it is therefore your responsibility to notify the relevant tax authority.
  • I did not file my tax return on time. What are the risks?

    Failure to file a tax return on time despite a reminder constitutes a procedural violation, punishable by a fine of up to CHF 10,000 in serious cases or repeated offences. Each delay is treated separately and the fine applies to both direct federal tax and cantonal and communal taxes. It is advisable to request additional time.
  • My supplier did not give me the invoice. What are the risks for VAT?

    The absence of a supplier's invoice could be problematic in the event of a tax audit, in which case the administration may refuse to refund the VAT invoiced by the supplier, unless you can prove the amount and rate of VAT paid to your supplier by any other means. It is advisable to ask for the invoice or other evidence showing this.
  • Do I have to wait for the tax slips or do I already have to pay my taxes?

    In principle, direct federal tax does not bear interest on arrears until the final or provisional assessment. In Geneva, the profit/income tax is due on the last day of the tax period and bears interest on arrears from the 31st day thereafter. If the balance is in favour of the tax authorities on this date, taking into account previous years and instalments, it is better to request a provisional ISR in order to avoid late interest.
  • I use my company's bank card

    It is not forbidden to use your company's funds, but it is a loan. Prompt repayment within 30 days is desirable, otherwise the loan must bear market interest. Furthermore, the loan must be documented, the borrower's creditworthiness must not be in doubt and the commitment to repay must be certain, otherwise the entire loan may be qualified as a hidden distribution of profits.
  • I use my company car

    The use of the company car for your own purposes requires sufficient market remuneration and proportional coverage of maintenance and insurance costs, otherwise it would be considered as a hidden dividend. In addition, the private share must be calculated and the VAT to be reimbursed must be correctly adjusted, otherwise a reversal will be possible in the event of a tax audit.
  • I am taxed at source. Do I have to file the tax return?

    If you are an employee residing in Switzerland, you must in principle file your tax return in order to declare income not subject to tax at source or when your gross income exceeds a certain threshold, which is CHF 120,000 in Geneva, or if you have taxable assets, for example CHF 83,398 in Geneva for a single person.
  • I have completed my tax return. Does the withholding tax still apply?

    Completing your tax return, even if you are obliged to do so, does not release your employer from paying the withholding tax. However, it is deducted from your final tax bill, or refunded if it exceeds it. In addition, if the administration is unable to collect the withholding tax from your employer, it may demand it from you directly.
  • I forgot to declare the dividends. Is it still possible to refund the withholding tax?

    In principle, a Swiss resident who does not declare income subject to withholding tax or the assets from which this income is derived to the competent tax authorities loses the right to a refund of the withholding tax deducted from this income. However, it is still possible to claim a refund if the omission of the declaration was due to negligence and if this income or this wealth is declared later or has been taken into account by the tax authorities before the taxation has become effective.
  • I waive / subordinate a claim against my company.

    A subordination has no tax effect as long as the claim remains and the company is not yet substantially enriched. However, a waiver of the claim is subject to the 1% stamp duty, subject to exemptions for reorganisation under special conditions. Such a waiver may also be subject to profit tax in certain circumstances, in which case the profit may be offset against losses carried forward without a 7-year limit.
  • The authority has not accepted all write-offs / provisions.

    It is possible that the authority relies on estimates or flat-rate calculations and thus rejects depreciation or provisions that are deemed excessive, subject to proof of their justification. In this case, a possible release of a provision in the following year will be tax neutral to the extent of this reversal, thus levelling the financial statements and the tax balance sheet.
  • I lend the money to my company.

    A loan to the company is possible, but must not bear excessive interest, otherwise it will be considered as a hidden dividend. The loan may also be considered as hidden equity in case of an undercapitalised company, and will therefore be added to the capital tax base.
  • Home office of the management.

    If there is a single director who is constantly working in a canton other than that of the company's registered office, there is a risk that the tax authorities will consider the place of effective administration or the permanent establishment in this other canton, and thus the company will be subject to taxes there. Intercantonal conflict may also occur for this reason.
  • What social security charges do I have to pay on my employees?

    Swiss employers pay social security contributions on their employees' wages. The contributions for AHV, disability insurance and loss of earnings allowances amount to 10.6%, as well as unemployment insurance which amounts to 2.2% (1% for the portion exceeding 148,200). Half is due from the employer and the other half is deducted from the salary. In the canton of Geneva, you must also pay maternity insurance of 0.086% (half and half) and family allowances of 2.45% (entirely paid by the employer). Finally, you have to pay the 2nd pillar pension contributions and the occupational accident insurance premiums.
  • I am the director of my company. Does it have to pay social security contributions?

    Although the duties of a director are governed by a mandate contract and not by an employment contract, all director's remuneration in any form whatsoever - fees, directors' fees or salary - constitutes a salary that is relevant for social security contributions.
  • I want to dismiss an employee.

    Except in serious cases that irretrievably break the relationship of trust, a dismissal requires a statutory notice period of at least 1 month in the first year of service, at least 2 months in the second and at least 3 months from the third. During the probationary period of up to 3 months, the period is shortened to 7 days. It is also not allowed to dismiss an employee in an abusive way, for example during sick leave, maternity leave or military service.
  • I want to fire a director. Do I have to give notice of termination?

    The appointment of a director is a matter for the general meeting of shareholders. As a contract of office, it can be terminated at any time and without further notice. However, where the director also holds a position as a director or employee, this relationship is governed separately by an employment contract, and unless immediate dismissal is justified, the minimum notice periods for terminating this second contractual relationship must be observed.
  • I am looking to hire an employee. Can I publish an advertisement?

    In industries with an unemployment rate of at least 5%, vacancies must be advertised at the regional employment office and not advertised elsewhere for 5 days. There are exceptions for relatives of directors, people already working in the company and many others. Failure to comply with this obligation is punishable by a fine of up to CHF 40'000.
  • My employee asks me for the bonus as last year.

    A discretionary bonus is not necessarily provided for in the employment contract, but is in principle at the discretion of the employer. However, in the absence of an explicit agreement, the bonus is considered to be agreed if the employer has paid it for more than three consecutive years without reserving its discretionary nature in a statement to the employee. In this case, the employee can demand payment of the bonus.
  • Is an electronic signature valid in Switzerland?

    Most contracts in Switzerland are not subject to any special form. In these cases, an electronic signature is sufficient as proof of the parties' signature of the contract. However, for contracts that are subject to a written form by law - insurance, assignment of claims - a qualified electronic signature provided by an accredited provider and complying with strict legal requirements is required.
  • My employee is not registered in the commercial register. Can he/she sign contracts?

    A written power of attorney, general or special, attesting to your employee's power of representation is usually sufficient. However, if you have made known, either in express terms or by your actions, the powers conferred on your employee, you can only oppose the total or partial revocation of these powers to third parties acting in good faith if you have also made this revocation known.
  • My debtor does not pay me.

    If, despite reminders, your debtor still does not pay, it is strongly recommended that you request a written acknowledgement of the debt. With this acknowledgement, you may be able to ask for the debt to be pursued even if the debtor objects. If you do not have such a document, you will have to prove your claim in court.
  • I have received a summons to pay.

    You have 10 days to oppose it without giving reasons. If your creditor does not have a written acknowledgement of debt signed by you and does not have an enforceable judgement, it is his responsibility to prove the claim in court. However, the debt is recorded in the public register for up to one year, even if your creditor is wrong, so you can ask him to cancel the debt served without reason.
  • I have doubts about the creditworthiness of my debtor. Can I stop my services?

    Unless otherwise stipulated in your contract, a serious doubt about the solvency of your debtor allows you not to perform your contractual obligations until payment is guaranteed. This is particularly the case in the event of bankruptcy or unsuccessful seizure. In addition, and unless otherwise contractually agreed, you are not obliged to provide your services before payment.
  • I have been charged a reminder fee for the invoice.

    In contrast to the 5% interest on arrears which is provided for by law, reminder charges must be specifically mentioned in the contract, as imprecise wording such as "reminder charges may be charged" is insufficient. If the reminder fee is properly agreed, the creditor may not set it arbitrarily. Otherwise it is up to the creditor to prove the damage or lost profit caused by your delay.