There’s no legal definition of the term ‘joint venture’ in Switzerland; nor is there any legislation directly applicable to JVs. Depending on a legal structure, registering a JV in Switzerland can take two different forms :
- contractual JVs;
- corporate or joint stock JVs.
The difference between them is that in the 2nd case parties to a JV can operate through a corporate structure. In their turn, contractual JVs are frequently established as simple partnerships & based on relatively simple agreements.
Registering a company in Switzerland provides its founders with more flexibility in terms of establishing & operating it. It also makes it much more simple for them to terminate its activities. However, they don’t always act as a group, nor do they have limited liability.
Creating joint-stock JVs in Switzerland, on the other hand, provides their founders with an opportunity to operate as a legal group & be independent legal entities. What this means is that they must adhere to the local legislation applicable to establishing, operating & terminating JVs in Switzerland.
Registering a JV with share capital in Switzerland makes sense if a separate organization is required to achieve a common goal for marketing purposes, or the key issue is dealing with third parties.
Switzerland: Establishing International JVs
Pursuant to Swiss legislation, local & foreign partners are treated the same way; hence, creating cross-border JVs in Switzerland is perfectly legal. However, if JVs are engaged in a regulated business, foreign participants may be required to comply with certain rules. In particular, nationals of countries that aren’t members of the EFTA & EU must adhere to a migration regime under which only a limited number of activities is permitted. That can make registering JVs in Switzerland problematic for them & require applying for a work permit.
JVs: Features & Structure
Swiss JVs are normally established as equity limited companies (AG). If the purchasing of AGs’ shares that aren’t listed on a stock exchange results in the threshold of twenty five percent of the share capital being exceeded, the names & addresses of ultimately beneficiaries must be reported to the relevant regulators within thirty days. Swiss JVs’ structure is mainly determined by the needs of their participants.
Opening a JV in Switzerland requires paying no taxes, with parties to a JV bearing losses & profits directly.
In the case of joint stock JVs, incorporating a company in Switzerland requires paying a stamp duty of one percent of its nominal share capital (if the latter exceeds one million Swiss francs). The said stamp duty can be smaller if a JV is formed with contributions in the form of parts of the business of participants to JVs.
Taxation of corporate profits is done at the cantonal, community & federal levels. The federal income tax rate is eight point five percent. Tax rates are different for different cantons; many cantons have announced that they will lower income tax rates thanks to corporate tax reform III.
Normally, capital tax is below five percent & levied on a company’s capital at variable rates (depending on a canton in which it’s located).
To sum up, establishing a JV in Switzerland requires its participants to carefully analyze the tax situation and seek tax advice. They should also keep in mind that the Swiss tax regime is very competitive, which is why choosing an optimal tax structure in Switzerland will help them achieve a desirable result. Should you need any help with registering a contractual or joint stock JV in Switzerland, do not hesitate to contact IQ Decision UK. Our experts will be happy to assist you with any registration-related matters & ensure the result you’re looking forward to achieving.