Luxembourg and Switzerland may be small geographically, but they both rank in the top five wealthiest countries in Europe. Investors can benefit from political and economic stability, a high quality of living, and favourable tax regimes in both countries.
Company formation in Luxembourg and Switzerland is also quite similar. Each country provides a Limited Liability Company (SARL) which is popular with investors. The minimum SARL share capital requirements are €12,400 in Luxembourg and €12,320 in Switzerland.
Investors setting up a company in Luxembourg must comply with the requirements of at least three directors, a registered office and no more than 40 shareholders. Swiss company formation requires just two directors as a minimum, with one of them to be a Swiss resident.
The second most popular company form in Switzerland is a Specialist Corporation (SA) which is mainly used for medium to large sized businesses and requires a minimum share capital of €61,000. With this kind of structure the share capital is paid up, shareholders can remain anonymous and most of the board directors must be Swiss residents.
A Joint Stock Company (SA) in Luxembourg offers a minimum share capital of €30,000 and requires at least three directors, a registered office in Luxembourg and audited accounts if the company grows past a certain size. That leaves General Partnership, Limited Partnership and Branch of foreign company as alternative forms of company in Luxembourg.
Both countries have favourable tax regimes for investors. Although Switzerland offers relatively low Personal and Corporate Tax rates, the tax regime is quite complex. Compliance with regulations is essential to avoid charges and local advice is recommended to make the most of the benefits available.
Luxembourg provides a unique low-tax environment for foreign investors. Despite having a Corporate Income Tax of 31% on top of a Wealth Tax, and the country being one of the founder members of the EU, Luxembourg has a surprising status as a European tax haven. To maximise these tax benefits incorporation of a low-tax business entity is necessary. The 1929 Holding Company and the Soparfi are strictly-defined classes of holding company which cause Corporate Income Tax to fall to below 1%. Neither of them is an actual legal entity in their own right, but uses either an SA or an SARL as their legal base.
In Switzerland companies are subject to canton (state) as well as federal laws. Cantons have their own regulatory and taxation powers which differ from one canton to another.
Luxembourg complies with EU directives on labour, health and safety. Domestic and foreign investors have the right to establish business enterprises in Luxembourg.
In addition to the incredibly advantageous tax regime in Luxembourg, investors can benefit from the various grants available to encourage investment. These are mainly available manufacturing industries other than steel, which the country is heavily reliant on.
Swiss incentives are supported by the government and are aimed at encouraging tourism and communication and training facilities, which can benefit from 25% loans. At cantonal level, it’s possible to qualify for other financial help like rent subsidies, tax holidays for up to ten years, reduced energy bills and work permit waivers.
At around 4%, Switzerland has one of the lowest unemployment rates in Europe. Even so, you will have no problems finding the right people for your business. A well-educated and skilled workforce, Switzerland has the added advantage of being masters of three major official languages – French, German and Italian. English is also widely used.
In Luxembourg there is also a low unemployment rate but a ready supply of well-educated workers commute into the country from neighbouring countries every day.