A branch of a Swiss company is a commercial establishment that is linked to the parent company. It can be located in Switzerland or abroad. Switzerland-based companies have the option to create branches throughout the country. The branch of a Swiss company is subject to the provisions of the Swiss Code of Obligations and the Commercial Register Ordinance (Art. 109-112 ORC). In this text, we will examine the key characteristics of a branch of a Swiss company, its legal and tax obligations, dissolution procedures, as well as advantages and disadvantages.

Characteristics

The branch offers a company the opportunity to expand its business outside of its headquarters by being considered an extension of its activities in a different geographical area. Legally, it is subordinate to the main company and is financially and commercially connected to it. The branch must carry out activities similar to those of the main company for an extended period, but it must do so from separate premises.

The branch does not have a legal personality separate from that of the main company; it is considered an integral part of the latter and is subject to the same rules, legal obligations, and taxes. In other words, the main company is responsible for the actions of the branch and must also answer for any liability or debt incurred by it. However, the branch enjoys a certain autonomy in the management and direction of its activities. The representative of the branch must be domiciled in Switzerland and must have a signature right.

Legal and tax obligations

The branch is required to comply with several legal obligations in Switzerland, including registration in the commercial register of the place where it is established (Art. 931 para. 2 CO). This registration must be carried out by means of a requisition, without requiring an authentic form or notarial certification.

The registration of the branch is declarative and involves the communication of various information such as the seat, trade name, and legal form of the parent company, the identification number of the main office, the objectives, address, and purposes of the branch, as well as the names of its representatives. Other documents such as certified statutes may also be required.

The branch is subject to the same tax rules as the main company and must comply with Swiss tax laws, paying the local, cantonal, and federal taxes applicable to its activity. As a permanent establishment, the branch is subject to taxation in the geographical area where it is located. It must also keep separate accounting records from the main company, allowing it to report its income and expenses independently. Profits generated can be transferred to the main company without being subject to double taxation, thanks to international tax agreements concluded by Switzerland with many countries.

Advantages

The creation of a branch has several advantages for a company. Firstly, it allows the company to expand its operations into a new region without having to create a new company, which can be more cost-effective and faster. Additionally, the presence of a branch can improve the visibility and reputation of the company among local customers. The branch can also facilitate responses to local tenders that would otherwise be inaccessible. Finally, the branch benefits from a certain autonomy of management and direction, which can facilitate its local management.

Disadvantages

Creating a branch can pose risks to the main company in the event of disputes or failures of the branch, which can harm its reputation and finances. Furthermore, geographical and cultural differences can lead to communication difficulties between the main company and the branch, complicating the management of the branch’s activities.

Dissolution

The dissolution of the branch can be motivated by various reasons such as the termination of the activity for which it was created, a merger with another entity, or the sale of the branch. The dissolution procedure is similar to that of creating the branch and involves closing the accounting records, paying any outstanding debts and taxes as well as deleting the branch from the commercial register.

To do this, the representatives of the branch must file a request for deletion with the commercial register and provide supporting documents justifying its dissolution. The deletion is effective from the moment it is published in the Swiss Official Gazette of Commerce. If the main company is deleted, the branch is automatically deleted as well.

Expanding activities on the Swiss market or abroad

In summary, the branch represents an interesting option for Swiss companies looking to expand their activities on the Swiss market or abroad. It allows for great adaptability in terms of organization while benefitting from the resources and expertise of the main company. Establishing a branch in Switzerland is a relatively easy and quick procedure but still requires taking into account several legal, tax, and accounting considerations.