Strategic location benefit Zug: Ltd or LLC — Which company type suits you?
In recent years, there has been a steady increase in the number of start-ups in the canton of Zug in Switzerland. Overall, the canton at the heart of Switzerland had an economic growth double the countries average in 2023. The many newly founded companies are contributing to this extraordinarily strong economic growth. This is largely due to the low tax burden compared to the rest of Europe.
When setting up a company in Switzerland, there are a few important points to consider, which we will discuss in the following.
If you're reading this article, you're likely in one of these two groups:
1) You have a business idea and want to incorporate it into a tax-efficient company structure and limit liability to company level
2) You already have a company and would like to move your company headquarters to Switzerland, as you have heard that the company's capital and profit taxes as well as income taxes are significantly lower here than at your current company domicile and place of residence.
In fact, we have a lot of clients who are in the same boat as you. In the first half of 2024 alone, we helped numerous young entrepreneurs set up their own companies in the tax-friendly canton of Zug. These include many entrepreneurs from Germany, France, the UK and other European countries.
The first question that all new founders ask is:
Should I set up an Ltd (AG in German/Swiss) or an LLC (limited liability company or GmbH in German/Swiss)?
Both legal forms are popular and have their respective advantages and disadvantages. For many entrepreneurs who are setting up their own company for the first time, an LLC is the preferred choice, which is largely due to the lower requirement for the initial share capital. Establishing an LLC requires CHF 20,000 in share capital. In comparison, you need CHF 100,000 to set up an Ltd. It is important to note that in both cases the money is not spent, but simply has to be deposited into a share capital account at any Swiss bank in order to demonstrate adequate financing. As soon as the company is officially incorporated and listed in the Swiss company register, the entire share capital is paid out to an operational business account, managed by you. From that moment on, the share capital is available to you again.
Many first-time founders do not have the share capital required for an Ltd foundation at hand, which is why the LLC is an attractive alternative.
Is liability only limited in the LLC?
No. In both legal forms (Ltd and LLC), there is no personal liability of the shareholders or shareholders. The personal liability of shareholders with their private assets is only possible if they have acted unlawfully. If this is not the case, shareholders of both legal structures are only liable in up to the value of the company's shares.
Why should anyone set up an Ltd then?
In Switzerland, the Ltd has a higher reputation than an LLC. Additionally, the Ltd has the advantage that it offers shareholders a certain degree of anonymity. Shareholders are publicly visible in a LLC, but they are not disclosed in the case of an Ltd. Many entrepreneurs who have a Swiss company but live abroad prefer the extra level of anonymity the Ltd company type offers. In both legal forms, the director/signatory is entered in the commercial register and therefore publicly visible.
Can any European citizen start a company in Zug?
Europeans can generally set up a company in Zug without any problems. Swiss law simply requires that at least one person with Swiss residence can represent the company, i.e. has signing authority. Many entrepreneurs move to Zug due to low corporate and income taxes and the lack of capital gains tax and can thus found their company with themselves as the director. Others are choosing to give a director mandate to a trusted person, already based in Switzerland.
Do I need a business address in Zug?
Yes, in order to enjoy the tax benefits of the Canton of Zug, you need a company domicile in Zug. The Office Group Zug rents out office spaces to entrepreneurs who want to have their company headquartered in Zug. Starting at CHF 149, you get a company address for your Ltd or LLC and services, such as letter handling, accounting, tax advice and more. The founders of Office Group Zug are themselves entrepreneurs who moved from Germany to Switzerland almost 10 years ago to run their business here with less bureaucracy and more efficiency.
Okay... how do we start?
If we've piqued your interest, feel free to give us a call to discuss the next steps. Our team can take care of the entire company incorporation process for you so that you can concentrate on your core business. We have good relationships with notaries, banks and any other service providers that you need when setting up a company. You would fill out a simple questionnaire with necessary information so that our team can then prepare the founding documents (e.g. articles of association, share register, rental agreement, etc.), which are then checked by you and finally by the notary. After a short, streamlined process, which ends with the certification of the new legal entity at the notary, your company will be entered in the commercial register within a few days, to a maximum of two weeks. More information on the exact incorporation process can also be found in this article.