Fundamentals of Accounting for the Incorporation of a Company in Switzerland
Switzerland is an attractive location for international companies, but also demanding from a regulatory perspective. Foreign companies that establish a permanent presence or conduct business in Switzerland must strictly comply with local regulations. One of the most important pillars is the Swiss accounting obligation. Anyone planning to incorporate a company in Switzerland—whether through a subsidiary, a branch, or a permanent establishment—must understand the specific requirements of accounting for foreign companies in Switzerland.
Legal Basis: The Swiss Code of Obligations (CO)
The primary legal basis for the Swiss accounting obligation is the Swiss Code of Obligations (CO), in particular Articles 957 and following. These provisions apply in principle to all legal entities and to sole proprietorships that exceed certain thresholds.
Who is Required to Keep Accounting Records?
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All legal entities (SA, Sagl).
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Sole proprietorships and partnerships (e.g., limited partnerships) that have achieved turnover of at least CHF 500,000 in the last financial year.
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Companies below this threshold must keep only a simplified record of income and expenses and present their financial position.
Requirements for Accounting of Foreign Companies in Switzerland
For foreign companies operating in Switzerland, the exact form of accounting depends on the chosen structure:
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Subsidiary (SA/Sagl): These are autonomous Swiss companies. They are subject to the full Swiss accounting obligation under the CO and must prepare annual financial statements (balance sheet, income statement, notes) according to Swiss rules and file them with the commercial register (depending on size).
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Branch (Zweigniederlassung): Although legally not autonomous, the branch must maintain its own accounting in Switzerland reflecting its local business activity. However, it does not need to file separate financial statements with the commercial register, since the annual accounts of the parent company are decisive.
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Permanent Establishment (Betriebsstätte): A permanent establishment often arises without the formal creation of a branch (e.g., through long-term activities). In this case, separate recording of profits attributable to Switzerland is mandatory for tax purposes.
Principles of Proper Accounting
Regardless of structure, the following principles must be observed to ensure IFRS compliance and adherence to local laws:
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Clarity and Understandability: Accounting must be clear and comprehensible to third parties.
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Completeness: All business transactions must be fully recorded.
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Principle of Documentation (Belegprinzip): No entry without supporting documentation.
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Retention Obligation: Business records must be kept for 10 years.
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Currency: Accounting must be kept in Swiss francs (CHF) or in the foreign currency most relevant to the business activity. If a foreign currency is used, the financial statements must also be presented in CHF.
Conclusion: Compliance as an Investment in Incorporating a Company in Switzerland
Compliance with the Swiss accounting obligation is fundamental for foreign companies to avoid fines, tax complications, and reputational damage. Timely consultation with a fiduciary or local tax advisor is essential. This ensures that accounting for foreign companies in Switzerland is correctly set up from the start and that the incorporation of a company in Switzerland rests on a solid foundation.