Setting up a business in French-speaking Switzerland: the 2026

CHF 20,000 against CHF 100,000: that is the gap in minimum capital between a GmbH [Société à responsabilité limitée] and an AG [Aktiengesellschaft] at the time of incorporation. The registration period at the Geneva Commercial Register currently stands at between five and ten working days for a complete file. These two figures summarise the real question every founder faces: which legal form to choose, at what actual cost, and what effective tax burden will the structure bear in the first twelve months of activity? This guide responds with verifiable figures, referenced to the Swiss legal texts currently in force.

The minimum capital of a GmbH is set at CHF 20,000 by Article 772 of the Code of Obligations (CO), fully paid up at incorporation. An AG requires CHF 100,000 of share capital, of which CHF 50,000 must be paid up at the time of incorporation pursuant to Article 632 CO. The gap in tied-up liquidity is therefore at least CHF 30,000 from day one — a decisive factor for any structure in the seed phase.

In terms of profit tax, both forms are treated identically in Geneva: the combined effective rate (federal direct tax, cantonal and communal) stands at approximately 14% for a standard Geneva SME, in accordance with data published by the Geneva Cantonal Tax Administration. In Vaud, this rate reaches 14.9% for a company domiciled in Lausanne. The choice of legal form does not affect this rate, but it does affect the flexibility with which the partner or partners may be remunerated.

The AG offers a structural advantage for projects involving external investment or the admission of third-party shareholders: shares are freely transferable, save for any statutory restriction, whereas the transfer of GmbH quotas requires the consent of the general meeting of partners representing at least half of the capital (Art. 786 CO). A common pitfall is to incorporate an AG for a sole-trader activity generating less than CHF 200,000 in annual turnover: the additional formal obligations (board of directors, audit body subject to thresholds) are not then offset by any measurable tax advantage.

The incorporation costs of a GmbH in Geneva range between CHF 1,500 and CHF 3,000, split between notarial fees (a public deed is mandatory), the fees of the cantonal Commercial Register and the publication costs in the Swiss Official Gazette of Commerce (SOGC). These costs are fully deductible as operating expenses in the first year of activity, pursuant to Article 27 of the Federal Act on Direct Federal Tax (FDTA).

For an AG, the range rises to CHF 3,000 to CHF 5,500 owing to the higher capital and the increased documentary complexity (articles of association, capital payment, bank confirmation). In Vaud, Commercial Register fees are slightly lower than those charged in Geneva: incorporating a GmbH there costs between CHF 1,200 and CHF 2,500 excluding notarial fees. In Valais, the range is comparable to that of Vaud.

One frequently overlooked item is the opening of the capital escrow account, which may incur fees of CHF 200 to CHF 500 depending on the financial institution. Some banks also charge account maintenance fees from the first month, regardless of any activity. These amounts remain deductible, but they must be provisioned in the incorporation budget in order to avoid an initial cash-flow shortfall.

A Geneva-based self-employed person generating CHF 120,000 in net profit bears approximately CHF 42,000 in direct taxes and AVS [old-age and survivors' insurance] contributions as a sole trader, given a self-employed AVS rate of 10.1% on the assessable income and taxation of income at the ordinary rate. The same amount channelled as a salary from a GmbH reduces the total burden to approximately CHF 34,000, representing an annual saving of CHF 8,000 — provided that the salary is set at a market-rate level and that employer social security contributions are correctly accounted for.

The fiscally justified tipping point lies between CHF 80,000 and CHF 100,000 in annual net profit for a Geneva resident. Below CHF 80,000, the fixed costs of a legal entity (mandatory bookkeeping, VAT subject to thresholds, administrative charges) generally absorb the tax advantage. The sole trader structure therefore remains the most straightforward: no minimum capital, registration with the Commercial Register optional up to CHF 100,000 in turnover (Art. 931 CO), and simplified bookkeeping possible.

From CHF 150,000 in net profit onwards, the GmbH allows the distribution of partially exempt dividends (60% of the dividend taxable at federal level for a holding of at least 10%, Art. 20 para. 1bis FDTA), which significantly reduces the overall tax burden compared with the ordinary rate applicable to a sole trader.

The salary paid by a GmbH or an AG to its managing partner is deductible from the company's taxable profit (Art. 58 FDTA a contrario), but it is subject to income tax and AVS contributions at the level of the recipient. The optimum balance depends on the marginal income tax rate of the partner, compared with the company's profit tax rate.

In Geneva, the marginal income tax rate exceeds the profit tax rate (14%) from an assessable income of approximately CHF 90,000. In practical terms, a partner whose total income exceeds this threshold would do well to keep their salary below this level and leave the surplus as profit within the company, taxed at 14% rather than at a marginal rate of 30 to 40%.

The legal constraint that must not be overlooked: the cantonal tax administration may recharacterise a salary that is manifestly disproportionate (whether too high or too low) as a benefit in kind or a concealed profit distribution. The salary must correspond to what an unrelated third party would receive for the same position — the cantonal human resources service or the Federal Statistical Office (FSO) salary data serve as a reference. An annual gross salary of CHF 80,000 to CHF 120,000 for a full-time active manager is generally accepted without challenge in Geneva for a services SME.

Incorporation costs (notary, Commercial Register, SOGC, account opening) are fully deductible in the year in which they are incurred, without any requirement for straight-line amortisation, pursuant to Article 27 FDTA and the practice of the Geneva Cantonal Tax Administration. For a GmbH, this represents an immediate deduction of CHF 1,500 to CHF 3,000 against the profit of the first tax period.

Tangible fixed assets (IT equipment, machinery) are depreciable at the rates permitted by the Federal Tax Administration (FTA): 40% per annum on a declining-balance basis for IT equipment, 25% for office furniture. Equipment acquired at CHF 20,000 thus generates a depreciation deduction of CHF 8,000 in the first year, reducing taxable profit by the same amount.

Provisions for commercial risks are fiscally admitted at up to 10% of outstanding receivables from Swiss clients and 15% from foreign receivables, in accordance with the consistent practice of the FTA. A provision of CHF 5,000 against a debtors' ledger of CHF 50,000 is therefore deductible without individual line-by-line justification. A frequent mistake in the first year is to fail to recognise these provisions through lack of awareness, leaving an artificially inflated taxable profit at a time when actual cash flow is under pressure.

The restructuring of a sole trader business into a GmbH — a common step when the fiscal tipping point is reached — in principle triggers the taxation of accrued hidden reserves (revalued assets, goodwill). Article 19 FDTA provides for a deferral of taxation where the restructuring meets the conditions of fiscal neutrality: transfer of the entire business, maintenance of Swiss tax liability and compliance with a five-year lock-up period for certain assets.

An inappropriate choice of registered office also proves costly. Transferring the domicile of a company from Geneva to Zug — where the effective profit tax rate stands at approximately 11.9% — entails a registered-office transfer procedure before the two cantonal commercial registers concerned, costs of CHF 2,000 to CHF 4,000, and potentially a breakdown of the inter-cantonal tax-sharing arrangements if the company carries on activities in several cantons.

The absence of a shareholders' agreement from the time of incorporation of an AG with multiple founders is the most costly source of error in the medium term. In the event of a dispute between shareholders, the absence of a pre-emption clause or a pre-defined valuation mechanism forces the parties into a judicial expert appraisal whose cost regularly exceeds CHF 20,000. This document, drafted at the time of incorporation, costs between CHF 1,500 and CHF 3,000 in legal fees — a cost-to-risk ratio that speaks for itself.

The quantified decision-making factors may be summarised as follows:

• Minimum GmbH capital: CHF 20,000 (Art. 772 CO), fully paid up

• Minimum AG capital: CHF 100,000, of which CHF 50,000 at incorporation (Art. 632 CO)

• GmbH incorporation costs in Geneva: CHF 1,500 to CHF 3,000, deductible in year N

• AG incorporation costs in Geneva: CHF 3,000 to CHF 5,500

• Profit tax rate Geneva: approximately 14%

• Profit tax rate Vaud (Lausanne): approximately 14.9%

• Tipping point from sole trader to GmbH: CHF 80,000 to CHF 100,000 in annual net profit

• Threshold for 60% dividend deduction (Art. 20 para. 1bis FDTA): minimum holding of 10%

• Fiscally admitted provision on Swiss receivables: 10% of outstanding receivables

• IT equipment depreciation: 40% declining balance per annum

Each of these thresholds determines a different structural decision. fiduciaire-genevoise.ch supports founders in analysing their situation prior to incorporation, so that the legal form chosen is consistent with the foreseeable tax burden over three years. What is your projected annual profit for the next twelve months? The answer to that single question determines the majority of the choices described in this guide.