Starting your own business is rarely a piece of cake, but certain countries welcome your entrepreneurial spirit with open arms and make legal procedures as painless as possible. Germany and Switzerland are often proclaimed some of the most business-friendly countries in Europe, but do they live up to their reputations? Their economies’ size and the number of thriving businesses would suggest so. With $46 993,99 Gross domestic product (GDP) per capita and 3 963,34 billion U.S dollars of GDP in 2019, Germany is the world’s 4th biggest economy, and its business potential remains immense. Switzerland is significantly smaller, so $83 718,81 Gross domestic product (GDP) per capita and 715,36 billion U.S dollars of GDP shows its impressive economic power. Which of the two neighbours is, however, more welcoming if you want to start a company? How is the German company set up process different from the Swiss?
Located in the heart of Europe, Germany is definitely a country, where the entrepreneurial spirit is encouraged. With a thriving economy, competitive products, and a strong work ethic, Germans are at the top of the European food chain. Their business prosperity is not, however, placed in the hands of a few big market players, but thousands of so-called ‘Mittelstand’ — small and medium-sized enterprises, often run by families, generation after generation. Mittelstand companies normally have an annual turnover below 50 million euros and employ between 10 to even 500 people. According to estimates, there are more than 3,5 million such enterprises in Germany, and they produce up to 45% of the gross national product. In fact, they are responsible for 50 to 70% of all jobs in Germany, so it is needless to say that they power the entire country. How to set up a company on German soil?
Firstly, you have to determine what type of company you would want to establish. The most popular is the Limited liability company (GmbH), which frees shareholders from responsibility for a company’s debt. It is possible to set up a GmbH on your own, without third parties, provided that the company’s share capital is at least 25,000 dollars. Your company starts to be legally recognised after the registration in the Commercial Register. Another popular option to consider is AG or Joint-stock company, which requires 50,000 euros of share capital and at least five founding members. What is interesting about AG is that its shares can be listed on stock exchanges without any problems. How about other types of companies? General partnership, OHG, gives all partners unlimited liability and legally obliges them to participate in the business operation. Limited partnership, KG, allows two types of partners in a company: partners, whose liability extends to his or her personal assets, and partners, whose liability extends only to nominal holdings in the company. What are the next steps in the process of setting up the company in Germany? Having chosen the type of your company, its ownership structure, and purpose, it is essential to choose a unique name that would not infringe any existing company name. Afterwards, you need to execute the company deed, and it is necessary to do it in front of a notary in Germany. Once it is done, the founders prepare the Articles of Association, provide IDs, and sign papers. To proceed, you have to the minimum share capital in the German bank, which is finally followed by the registration in the commercial register and tax offices. That’s when your company is officially in existence! Applying for permits and licences is the final step of the procedure if you need any. The business setup process in Germany is crafted to be fairly human-friendly, but in case of any doubt, there are plenty of companies ready to walk you through the entire procedure.
Switzerland, the home to banks, excellent chocolate, and one of Europe’s strongest economies, is one of the most attractive places to set up your business. Located between France, Germany, Italy, and Austria, it has easy access to Europe’s biggest markets, and it has been enjoying economic prosperity for a long time. Swiss Franc is one of the world’s most stable currencies and numerous businessmen keep their money safe in Swiss banks. In other words, Switzerland seems to offer a quite favourable economic climate. Is it, however, easy to set up a company there?
First of all, luckily for many, The Swiss Constitution gives everybody a right to run a business in Switzerland, regardless of their nationality, if they meet certain criteria. A potential business owner has to either have a valid C permit or be a spouse of a C permit holder/ Swiss citizen. Without such a legal base, starting a company might be impossible. There is, however, another condition to fulfil: your business has to demonstrate "lasting positive effect or influence on the Swiss labour market". Without a well-thought, convincing business plan breaking into the Swiss market is a mission impossible. However, once you meet all the criteria, and obtain your permit, setting up a business in Switzerland is quite an easy procedure. There are several types of enterprises to choose from, but most common are sole trader, general partnership, limited partnership, subsidiary, and a branch office. The sole trader is the simplest form of an enterprise that one can start in Switzerland, as it can be started by one entrepreneur, and does not require any partnership. It is an option available to all Swiss residents. In contrast, general partnership demands at least two people and one of them needs to have a Swiss residency. The limited partnership works in a similar way, but one of the founding partners has limited liability. Subsidiary helps foreign companies grow on a local market, and so does branch office, but it relies more upon its parent company regarding its business structure. After you choose the best type of enterprise for your needs, you need to prepare all the required documents with the help of a lawyer or a fiduciary. Signed documents have to be authenticated by a notary public or municipal administration, and afterwards capital has to be deposited. Afterwards, when the foundation documents are returned and you handed in the confirmation of capital deposit, your company is officially registered in the commercial registry! The great news is that although for Limited Liability Company and Public Limited Company minimal capital is respectively 20,000 and 100,000 Swiss Francs, people starting Sole Enterprises have no required minimal capital and pay only a base registration fee. The fee is fixed by the federal government at 120 Swiss Francs, but each canton adds its own fees. In general, however, it is no more than 200-300 Swiss Francs altogether. What’s also interesting, it is not necessary to be physically present in Switzerland to start a company there. It definitely helps foreign investors and anyone who is yet to move to Switzerland, to start their Swiss adventure.
All in all, both Germany and Switzerland are booming with potential and are ready to accommodate great business ideas if numbers and efforts back them up. Both countries make a business set-up process as easy as possible, but Switzerland seems to be particularly focused on creating business opportunities for willing, bright entrepreneurs. Not requiring a physical presence in the country during the company set-up, and lowering costs of a company set up itself, it removes practical obstacles, which prevent many from entering the business world. If European countries were to compete for the title of the business paradise, both Switzerland and Germany would be in the lead, perhaps Switzerland one step ahead of Germany. Either way, if your direction is business-oriented, head to Germany and Switzerland!
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