Types of partnerships in Switzerland
There are two types of partnerships in the Swiss Code of Obligations:
- the limited partnership
- the general partnership
Under a Joint company, partnerships in Switzerland are required to have minimum of two individuals conducting business operations together in the same joint company. Partnerships may not have legal entities as partners as compared to other types of Swiss companies. Swiss partnerships must be registered with the companies register if carrying out business activities.
Requirements for setting up a general partnership
In Switzerland, when carrying out small businesses, general partnerships (Kollektivgesellschaft) are usually employed. These are most suitable for small businesses and do not require any minimum share capital. The general partnership is formed by signing the articles of partnership. The general partnership’s name consists of the family name of at least one of the partners and the suffix indicating the relation between the two founding members. All the partners are held responsible for the liabilities individually foe themselves and jointly when it comes to partnership’s debts and obligations. Partners may also decide to expand the business and add more partners in such formation.
It is necessary to register for taxation purposes in case of annual turnover more than 500,000 CHF for general partnerships in Switzerland.
The taxation of general partnerships in Switzerland
The tax depends on the partnerships in Switzerland whether it is limited or general partnerships. The tax liability in Switzerland is attributed to the partners in general partnership but not to the partnerships as a legal entity. In the general partnership, taxes will be paid by the partners based on the capital invested. Partners are also liable to pay their personal income tax based on their income from various sources.
Advantages of Swiss general partnerships
The general partnerships have the greatest of advantage that there is no requirement of initial capital and no requirement of registration with the Swiss companies register if no business activity is carried out. It is most suitable for small enterprises as mentioned above. Forming a general partnership is simple and straight forward process. As long as foreign citizens obtain a Swiss work permit, they may also establish a general partnership.
If you want to set up a general partnership and need legal assistance please contact our attorneys in Switzerland.