Joint Ventures in Switzerland

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.

Taxation

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).