German Investments in Switzerland
Choosing the Right Vehicle for a German Investment in Switzerland
Structuring Swiss investments by German individuals or companies — comparing AG, GmbH, and branch options. Key Swiss tax, legal, and treaty aspects under the Germany–Switzerland double tax treaty.
Panoramica
German investors expanding into Switzerland face a distinct legal and tax landscape: low cantonal corporate tax rates, a dual-level (federal + cantonal) tax system, and special participation relief for cross-border holdings. The choice between a Swiss AG, GmbH, o branch determines tax exposure, withholding, compliance, and profit repatriation treatment under the Germany–Switzerland tax treaty.
Switzerland remains an attractive destination for holding, trading, and financing companies — but correct structuring is crucial for treaty access and German tax relief eligibility.
AG (azienda)
Il Aktiengesellschaft (AG) is the standard Swiss corporate form for inbound investors. It offers limited liability, strong reputation, and broad recognition. The AG is subject to federal and cantonal corporate income tax, typically totaling 11 – 18 % a seconda della posizione.
- Pro: Full treaty access, separate legal entity, straightforward dividend distribution mechanism, high credibility.
- Contro: Higher incorporation cost and capital (CHF 100 000); formal governance requirements (board, audit thresholds).
- Use cases: Operating subsidiaries, holding or finance companies, market entry platforms.
GmbH (Limited company)
Il Gesellschaft mit beschränkter Haftung (GmbH) provides limited liability with lower capital (CHF 20 000 minimum) and simpler governance. Tax treatment is the same as for an AG; differences are largely corporate law and perception.
- Pro: Lower cost, flexible ownership, same tax treatment as AG.
- Contro: Names of shareholders are publicly disclosed; less prestige for large-scale transactions.
- Use cases: SMEs, service subsidiaries, and long-term operational setups.
Branch (permanent establishment)
German companies may operate in Switzerland through a branch (Zweigniederlassung) without incorporating a separate entity. The branch is registered with the Swiss commercial register and taxed on profits attributable to Swiss operations.
- Pro: Simpler setup, no share capital, direct control by German head office.
- Contro: No limited liability; profit attribution under OECD PE rules can be complex; may complicate German tax relief claims.
- Use cases: Pilot operations, project work, short-term presence.
Germany–Switzerland tax treaty
The treaty allocates taxing rights and provides mechanisms to eliminate double taxation between the two countries:
- Business profits: Taxable in Switzerland only if attributable to a Swiss permanent establishment.
- Dividends: Withholding reduced to 5 % for qualifying corporate shareholders (≥ 10 % shareholding) and 15 % for others.
- Interest / royalties: Typically exempt from Swiss withholding under the treaty.
- Relief in Germany: Exemption or credit method under German domestic implementation of the treaty.
Withholding & reporting
Switzerland levies 35 % withholding tax on dividends (Verrechnungssteuer). Under the treaty, German investors can reclaim or reduce this to the applicable rate (5 % / 15 %) by filing the official refund form (Form 82 – E / DE) with the Swiss Federal Tax Administration.
- Ensure correct residency certification from German tax authorities.
- Swiss company must issue proper dividend resolutions and reporting.
- German investors remain subject to German tax on worldwide income (with foreign tax credit or exemption).
Comparison table: AG vs. GmbH vs. Branch
| Aspect | AG | GmbH | Branch |
|---|---|---|---|
| Legal form | Separate legal entity | Separate legal entity | Part of German parent |
| Liability | Limited to share capital | Limited to share capital | Unlimited for parent company |
| Swiss taxation | Corporate tax (federal + cantonal) | Corporate tax (federal + cantonal) | PE profits taxed in Switzerland |
| Withholding on dividends | 35 % (5 %/15 % treaty) | 35 % (5 %/15 % treaty) | None (on internal transfers) |
| Typical use | Holding / operating subsidiary | SME subsidiary / services | Temporary or pilot activity |
Who we advise
- German companies establishing Swiss subsidiaries (AG / GmbH).
- Private German investors and family offices holding Swiss assets or real estate.
- German corporations using Swiss entities for holding, trading, or finance functions.
FAQ
Can a German company form a Swiss AG or GmbH?
Yes. Foreign shareholders and directors are allowed; at least one Swiss resident director (with signing authority) is typically required for registration.
How can the 35 % Swiss withholding tax be reduced?
Under the Germany–Switzerland treaty, qualified shareholders can apply for a reduced rate (5 % / 15 %) or refund through Form 82 – E / DE, certified by the German tax authority.
Is a branch preferable to a Swiss entity?
For short-term or project-based activities, a branch can be efficient. For permanent operations or reputational reasons, an AG / GmbH is generally preferred.