Corporate Administration & Finance

Proper accounting is not just a legal requirement; it's the backbone of sound business management. Switzerland's accounting principles are straightforward and business-oriented, governed primarily by the Swiss Code of Obligations (CO).

The Swiss Code of Obligations provides the legal basis for accounting. Its principles are pragmatic, focusing on providing a "true and fair view" of a company's financial health. While the CO is sufficient for most SMEs, larger companies may use more detailed standards like Swiss GAAP FER or the international IFRS.

Swiss law mandates that all accounting records, vouchers, business correspondence, and contracts must be securely archived for ten years. This makes a systematic and professional filing system—whether physical or digital—a critical compliance task from day one.

• Double-Entry Accounting: This is the standard method for all corporations (GmbH and AG). It provides a complete financial picture by recording every transaction as a debit and a credit.

• Simplified Accounting: Only sole proprietorships and associations with less than CHF 500,000 in annual revenue may use a simpler method that only tracks cash receipts, cash disbursements, and assets.

This is the structured list of all financial accounts in your general ledger. While there is no single mandatory chart of accounts, most Swiss SMEs adopt a standard framework (like the KMU/PME framework) to ensure consistency and simplify the preparation of financial statements and tax returns.

Every year, your company must prepare a financial report that includes:

• The Balance Sheet: A snapshot of your company's assets, liabilities, and equity.

• The Profit and Loss (P&L) Statement: A summary of revenues, costs, and expenses over the financial year.

• Notes to the Accounts: Providing additional detail on the figures presented.

Larger companies may have more extensive reporting requirements.

• Statutory Statements: These are the official, annual financial statements required by law and used for tax filings and shareholder approval.

• Management Accounts: These are internal, often monthly or quarterly, reports (e.g., cash flow statements, budget vs. actuals) created for leadership. They provide timely insights to help you make strategic business decisions.

Switzerland has standardized its invoicing system with the Swiss QR-Bill. This invoice contains a QR code that embeds all payment information. Using this format for both issuing and paying invoices is standard practice, streamlining the entire payment process.

Using a certified Swiss accounting software is highly recommended. Popular solutions like Bexio, Abacus, and Klara are designed to comply with Swiss law, handle Swiss payroll, and generate QR-Bills automatically, saving you significant time and reducing the risk of errors.

Beyond the competitive rates, understanding the mechanics of the Swiss tax system is key to staying compliant.

This tax is levied on a company's net profits at the federal, cantonal, and communal levels. The tax return is filed annually, and payments are typically made based on provisional invoices, with a final settlement after the return is assessed.

This is a small annual wealth tax levied at the cantonal and communal levels on the company's net equity (assets minus liabilities). The rates are very low, typically a fraction of a percent.

When a Swiss company pays a dividend to its shareholders, it must deduct a 35% withholding tax and remit it to the Federal Tax Administration (FTA). Shareholders residing in Switzerland can claim a full refund of this tax on their personal tax return. Foreign shareholders may be eligible to claim a partial or full refund under the Double Taxation Agreement between Switzerland and their country of residence.

Each year, your company must file a tax return in the canton of its registered office. The deadline varies by canton but is typically 6 to 9 months after the close of the financial year.

A professional tax advisor or accounting firm can act as your company's tax representative, preparing and filing tax returns, corresponding with the tax authorities on your behalf, and providing strategic advice.

All companies with annual revenues of CHF 500,000 or more are subject to a mandatory annual radio and television levy, which is collected by the FTA.

VAT (known as MWST in German) is a consumption tax applied to most goods and services in Switzerland.

Registration with the Federal Tax Administration is mandatory for any company based in Switzerland that generates more than CHF 100,000 in annual taxable revenue. It's essential to monitor your revenue and register proactively once you anticipate crossing this threshold.

Switzerland has some of the lowest VAT rates in Europe:

• Standard Rate: 8.1% (applicable to most goods and services)

• Reduced Rate: 2.6% (for certain goods like food, books, and medicine)

• Special Rate: 3.8% (for accommodation services)

Companies typically file a VAT return on a quarterly basis. The return declares the VAT collected from customers (output VAT) and the VAT paid to suppliers (input VAT). The difference is then paid to or refunded by the FTA.

Cross-border transactions have specific VAT rules. Services provided to foreign customers are often zero-rated (export), while services imported from abroad may be subject to a "reverse charge" mechanism, where the Swiss recipient must declare the VAT.

A foreign company with no physical presence in Switzerland that provides services in the country must register for Swiss VAT from its first franc of revenue if its global revenue exceeds CHF 100,000. To do so, it must appoint a fiscal representative based in Switzerland.

An audit is an independent examination of a company's financial statements. Not all Swiss companies need a full audit.

• Ordinary Audit (Full Audit): Mandatory for publicly traded companies and large companies that meet two of the following three criteria in two consecutive years:

1. Balance sheet total of CHF 20 million

2. Revenue of CHF 40 million

3. 250 full-time employees

• Limited Audit: Required for most other companies (GmbH and AG). This is a less extensive review than a full audit.

A company with fewer than 10 full-time employees can, with the consent of all shareholders, choose to opt-out of the limited audit requirement. This is a common choice for startups and small businesses to reduce administrative costs.

Good corporate governance ensures that your company is managed transparently and in accordance with the law and its own statutes.

Any significant change in the company's key information must be officially registered with the Commercial Registry. This includes changes to the:

• Company address

• Directors or authorised signatories

• Company purpose

• Articles of Association

These changes often require a notarial deed.

• Share Register (for an AG): The company must maintain an up-to-date internal register of all its shareholders.

• Register of Beneficial Owners: All companies must maintain a register identifying the ultimate beneficial owner(s)—the individual(s) who ultimately control the company.

The AGM of shareholders is the supreme governing body of the company. It must be held at least once a year, within six months of the close of the financial year. Its key responsibilities include:

• Approving the annual financial statements and the annual report.

• Deciding on the appropriation of profit (e.g., paying dividends).

• Electing the Board of Directors (for an AG) and the auditors.

• Shareholders: The owners of the company. They exercise their rights at the AGM.

• Board of Directors (for an AG) / Managing Directors (for a GmbH): The executive body responsible for the overall strategy and management of the company. They are legally accountable for its operations.

• Management: The individuals responsible for the day-to-day running of the business, appointed by the board/managing directors.