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The Top Reasons why Europe's up-and-coming Entrepreneurs are flocking to Switzerland!

The Top Reasons why Europe's up-and-coming Entrepreneurs are flocking to Switzerland!

May 27, 2024
Founding in Switzerland compared to other European countries

If you are living anywhere in Western Europe, chances are that you are facing high tax rates both on the company as well as the private level. Germany – for instance – has a corporate tax rate of 25% and a progressive personal income tax level of up to 45%, French companies pay even more profit tax (26.5%) while employees pay the same 45% as workers in Germany.

(Graphic 1: Progressive tax rate in France 2023)

High taxes are one burden for founders in Europe, but the regulatory overhead to comply with both local and EU-wide regulation makes the process of starting and running a business even more complicated. Running your own company is associated with an increase in risk and often the mere accounting and compliance requirements take up a large proportion of a founder’s time that could otherwise be spent on acquiring new clients or improving the product.

For those reasons we have seen a constant increase in entrepreneurs moving their business from Western European countries into Switzerland, where not only are taxes low but also the regulatory environment to start your own business is much more friendly.

Swiss Taxes and their Benefits for Entrepreneurs

Let’s start with the obvious: Switzerland has the lowest taxes in all of Europe. Within Switzerland, the canton of Zug offers some of the most attractive tax rates. As a business owner, you are concerned with the following taxes:

Personal income tax: average of 11.8%

Corporate (profit) tax: 11.8%

Dividend tax: ca. 12%

Capital gains tax: 0%

Compared to its European counterparties, founders in Zug save between 20 – 40% of taxes depending on the size and revenue of the company. This is not a negligible saving, which – when compounded over time – can lead to significant differences in growth for a company merely depending on where it was incorporated.

If you run a Zug company but live abroad and want to pay yourself a monthly salary, you need to pay close attention to the tax treaties between your home country and Switzerland.

Since there are no capital gains taxes in Switzerland, you would pay 0% if you sell your company at a later stage. Additionally, Swiss residents can invest freely into global stock markets without paying taxes on capital gains.

How can I open a company in Zug?

If you want to open a company in Switzerland, the first thing you need is a director who is Swiss or has a Swiss working permit. There are companies that specialize in helping founders from Europe to move their business to Switzerland. For example, the Office Group Zug is a Zug-based company that provides a business address and helps founders to set up their company in Switzerland.

Generally, there are two types of companies you can form in Switzerland: A GmbH and an AG.

The main difference between these two legal forms are the startup capital and disclosure of shareholders. To incorporate a GmbH, you need to pay in CHF 20,000 into a Swiss bank account which you can then withdraw to your company bank account once the GmbH is opened. This is much lower compared to the CHF 100,000 needed to open an AG. The capital that you pay in for the foundation of the company is not gone, it merely serves as a signal to the government that you have sufficient capital to start a business and you will always receive it back.

For a Swiss AG the shareholders of the company are not disclosed. Only the director can be found publicly. For a Swiss GmbH the shareholders and their respective shares of the company are publicly viewable.

Why are there so many crypto companies?

Though Zug is open to any kind of business, it has attracted a disproportionately large number of crypto founders over the years. This is due to the fact that the Swiss government creates a particularly friendly environment for new industries, allowing founders to operate in a regulatorily simple environment. As a result, the city of Zug is one of the largest crypto hubs in the world with a mere population of 30,000 inhabitants.

Due to the government’s lenient approach to crypto innovation, many service providers such as banks, lawyers, notaries, etc. have emerged from the canton of Zug. Zug has the highest rate of crypto-friendly banks with Sygnum Bank AG, SEBA AG, Maerki Baumann & Co and even the regional Zuger Kantonalbank is open to crypto clients. Compare this to most institutions in the rest of Western Europe who vehemently reject clients that work in the crypto space. You can read more about the Crypto Valley Zug in this article.

Should I move to Zug?

You are the only person that can answer that question. If you are unhappy to have the government as a silent partner in your business that takes none of the risks but happily takes a large percentage of the profits, you should consider moving to Switzerland.

Switzerland is not only the European tax haven but the standard of living is exceptionally high. The roads are clean, transport is on time and there is hardly any crime in the entire country. In addition, the country is not part of the EU and diversifying into the Swiss Franc (CHF) has proven profitable time and time again.

The world is entering an era of increasing uncertainty with global conflicts escalating at an alarming rate. If you are looking for a stable economy with transparent systems in place to protect entrepreneurs, you should consider Switzerland as a base.

Start establishing your company in Zug today!

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