Opening a branch office in Switzerland is one of the two main routes available to foreign companies wishing to establish a Swiss presence, the other being the creation of a subsidiary (SA or Sàrl). The branch office is an establishment of the foreign company in Switzerland, without its own legal personality, but subject to registration and disclosure obligations in the commercial register. PBM Avocats accompanies foreign companies in their establishment in French-speaking Switzerland, managing all legal formalities and advising on the structure best suited to their situation.
Legal Definition of the Branch Office
The branch office is defined by Federal Supreme Court case law as a commercial establishment that presents a certain permanence, has its own organisation and a certain management autonomy, and deals with third parties in the name of the parent company. Unlike a simple representative office or commercial agent, the branch office has sufficient operational autonomy. The criteria retained by the Federal Supreme Court include: the presence of stable premises, the existence of local management, the capacity to contract directly with Swiss clients.
The Obligation of Registration in the Commercial Register
Art. 935 CO requires every Swiss branch office of a foreign company to register in the commercial register of the canton where it is established. This obligation is independent of the turnover achieved. The branch office is registered under the same business name as the parent company, with the addition of the branch office location. Registration is constitutive: the branch office may not legally carry out its activities in Switzerland before this registration.
| Required Document | Description | Note |
|---|---|---|
| Foreign commercial register extract | Certificate of existence of the parent company in its country of origin | Recent (less than 6 months), apostilled |
| Articles of association / founding documents | Founding documents of the foreign company | Official translation if not in French/German/Italian |
| Opening decision | Decision by the parent company's governing bodies authorising the opening of the branch office | Minutes or resolution |
| Representative details | Identity, Swiss domicile, power of attorney | Domicile in Switzerland mandatory |
| Branch office address | Physical seat in Switzerland (commercial lease or property) | Lease or proof of ownership |
The Branch Office Representative in Switzerland
Appointment of a representative domiciled in Switzerland is mandatory (art. 935 para. 2 CO). This representative is registered in the commercial register and has authority to represent the branch office. They may be an employee of the foreign company, a local director recruited for the occasion, or a domiciliation service provider mandated for this purpose. The representative must have a personal home address in Switzerland — a simple postal or commercial address is not sufficient. PBM Avocats can accompany the selection and appointment of this representative.
Accounting and Tax Obligations of the Branch Office
The branch office is subject to Swiss accounting obligations provided for by arts. 957 et seq. CO. It must keep accounts and draw up annual financial statements distinct from those of the parent company, reflecting only its activities in Switzerland. These accounts form the basis for taxation in Switzerland. On the tax level, the branch office is subject to profit tax in Switzerland on profits realised on Swiss territory (permanent establishment principle). It is also subject to VAT if its turnover exceeds CHF 100,000 per year. International tax planning is essential to optimise the overall tax burden.
Branch Office vs Subsidiary: Practical Comparison
| Criterion | Branch Office | Subsidiary (SA / Sàrl) |
|---|---|---|
| Legal personality | No (part of parent company) | Yes (autonomous entity) |
| Liability | Parent company liable for all debts | Limited to subsidiary's capital |
| Minimum capital | None | CHF 20,000 (Sàrl) / CHF 100,000 (SA) |
| Notary required | No | Yes (founding deed) |
| Image and credibility | Lower | Better (independent Swiss entity) |
| Cost and formation time | Less costly and faster | Longer and more costly |
Particularities in Geneva and the Canton of Vaud
In the canton of Geneva, branch offices are registered in the Geneva Commercial Register (RCGE). In the canton of Vaud, they are registered in the Vaud Commercial Register (RCVD). Registration deadlines vary between cantons, generally 2 to 4 weeks after submission of a complete file. Registration fees are modest. Certain sectors of activity may require special authorisations (banks, insurance, regulated professions) from cantonal or federal authorities (FINMA, CFMJ) independently of commercial register registration.
Frequently Asked Questions about Opening a Branch Office in Switzerland
What is the difference between a branch office and a subsidiary in Switzerland?
A branch office is an establishment without its own legal personality: it is integrated into the legal structure of the foreign company (parent company), which remains directly liable for all its obligations. A subsidiary is an autonomous Swiss company (SA or Sàrl), endowed with legal personality and whose liability is limited to its own capital. On the tax level, the branch office is taxed in Switzerland on the profits it realises on Swiss territory, while the subsidiary is taxed on its entire worldwide profit (with possible tax treaty exemptions).
Is a representative domiciled in Switzerland mandatory for a branch office?
Yes. Art. 935 para. 2 CO requires that a branch office of a foreign company have a representative domiciled in Switzerland, registered in the commercial register with authority to represent. This representative is the point of contact for third parties, Swiss authorities and courts. They need not be Swiss nationals, but must be domiciled in Switzerland in the civil law sense. The representative's personal liability is limited: they are not personally liable for the branch office's debts, except for personal fault.
How is a Swiss branch office of a foreign company taxed?
The branch office is taxed in Switzerland on profits realised in Switzerland (permanent establishment principle). Taxable profit is determined according to Swiss accounting rules and cantonal and federal tax rules. Switzerland taxes permanent establishment profits at the same rate as resident companies: approximately 13.99% in Geneva and 13.79% in Vaud. Double taxation conventions concluded by Switzerland allocate the right to tax between Switzerland and the parent company's country to avoid double taxation. A separate balance sheet for the branch office is required to determine taxable profit.
What documents are required to register a branch office in the Swiss commercial register?
Registration of a branch office in the commercial register requires notably: a recent extract from the company register of the country of origin attesting to the legal existence of the parent company, the articles of association or founding documents of the parent company (translated if necessary), a declaration by the representative in Switzerland with their home address, a description of the branch office's activities, and where applicable powers of attorney granted to the representative. Foreign documents must generally be apostilled or legalised.
Can a branch office later become a subsidiary?
Yes. The transformation of a branch office into a subsidiary (SA or Sàrl) is possible but does not legally constitute a transformation within the meaning of the MA: it involves creating a new Swiss entity and transferring the branch office's assets and contracts to it. This operation requires thorough tax due diligence (notably regarding transfer duties and VAT), drafting of asset transfer contracts, and informing contractual partners whose consent may be required for contract assignment.