Branch of a Swiss company

A branch of a Swiss company is a commercial establishment affiliated to the main company, which may be located in Switzerland or abroad.
Swiss companies can set up branches anywhere in the country.
The branch of a legal entity headquartered in Switzerland is regulated by the Swiss Code of Obligations and the Ordinance on the Commercial Register (art. 109-112 ORC).
In this analysis, we will examine the main features of a branch of a Swiss company, including its legal and tax obligations, its dissolution, and its advantages and disadvantages.

Features

A branch office enables a company to carry out activities in a location other than its head office, being considered by the main company as an extension of its activities in another geographical area.
The branch is legally subordinate to the main company, while being linked to it financially and commercially.
It must carry on a similar activity to that of the main company for a prolonged period, but in separate premises.

A branch is an entity that has no legal personality separate from that of the main company.
It is integrated into the company and subject to the same legal and tax rules and obligations.
This means that the main company is responsible for the actions of the branch, and that any liability or debt incurred by the branch is also attributable to the main company.
However, the branch enjoys a certain degree of autonomy in managing and directing its activities.
The branch’s representative must be domiciled in Switzerland and have signing authority.

Legal and tax obligations

A branch in Switzerland must meet a number of legal obligations.
One of the main obligations is to register the branch in the commercial register of the geographical area in which it operates (art. 931 al. 2 CO).
Registration is effected by filing a requisition, without the need for authentication or certification by a notary.

Registration of the branch is declaratory, and involves providing information such as the registered office, company name and legal form of the main company, the identification number of the main office, the address, purpose and representatives of the branch.
Other documents, such as certified articles of association, may also be required.

The branch is subject to the same tax rules as the main company, which implies compliance with Swiss tax laws and payment of the local, cantonal and federal taxes that apply to its activity.
As a permanent establishment, the branch is subject to taxation in the geographical area in which it operates.
It must also keep separate accounts from those of the main company, enabling it to declare its income and expenses independently.
Thanks to Switzerland’s international tax treaties with numerous countries, profits generated by the branch can be transferred to the main company without being subject to double taxation.

Benefits

The creation of a branch offers a number of advantages to a company, not least the possibility of expanding into a new geographical area without having to set up a new company.
What’s more, the presence of a branch in another country can raise the company’s profile with local customers, and enable it to respond to local tenders that would otherwise be inaccessible.
Last but not least, the branch enjoys a certain degree of autonomy in terms of management and direction, which can facilitate local management.

Disadvantages

Setting up a branch can entail risks for the main company, particularly in the event of litigation or misconduct on the part of the branch.
The consequences can affect the company’s reputation and finances.
In addition, cultural and geographical differences between the parent company and the branch may lead to communication and coordination difficulties.

Dissolution

The branch may be dissolved for a variety of reasons, such as the cessation of the activity for which it was created, its merger with another entity or its sale.
The dissolution procedure is similar to that for setting up a branch, and involves closing the accounts, paying any debts and taxes, and removing the branch from the commercial register.

The branch’s representatives must therefore file a deletion application with the Commercial Register and provide the documents justifying the dissolution of the branch.
The deletion takes effect as soon as it is published in the Swiss Official Gazette of Commerce.
If the main company is delisted, the branch is automatically delisted.

The branch: an attractive option for Swiss companies looking to expand their activities

In short, the branch office is an attractive option for Swiss companies seeking to expand into a new territory or to meet the needs of the Swiss market.
It offers a degree of organizational freedom, while benefiting from the expertise and resources of the parent company.
The procedure for setting up a branch is relatively quick and easy, but requires an understanding of the legal, tax and accounting issues involved.
As a result, it’s important for companies to enlist the help of professionals to avoid costly mistakes.