I am a longtime Swiss resident (British, C-permit) and pay my bills through part-time freelance work as a software developer. In terms of tax and other legal stuff, I use a Swiss payroll company to handle everything. (After some years, I came to the conclusion that the management fee was worth it to avoid the hassle of running my own one-man GmbH.)

Anyway, I am now looking at selling some software applications that I have privately developed (i.e. no connection to my freelancing). I am considering setting up a non-Swiss company, such as a US LLC (or similar, in another jurisdiction). I am not trying to use an offshore shelter to avoid Swiss tax, I just want a much cheaper entry into selling my own software commercially (a Swiss GmbH costs too much for this risky venture).

I would be fully open about my ownership of the company (i.e. no hiding behind beneficiary services). I would not be an employee of the company, because I would not plan to take a salary. But, any profit that I take from the company as its owner would be declared on my Swiss personal tax return as an additional income stream.

One concern is that I might run into problems, because the company would not be liable to any Swiss company tax. There might also be other issues, which I have not considered. Eventually, if it does look like a viable option, then I would involve my Swiss lawyer to make sure everything is legal, but for now I am just putting out some feelers about the concept (cheaper than asking him).

Does any one have any thoughts or experiences that they would like to share about the above?

All responses appreciated,

Max

Hi,

There is an endless amount of information available on-line, but it's not always easy to understand what is true.
You'll find thousands of "incorporation" websites with contradictory information.
I've been trying to "see trough the mist" myself as I'm planning to create a company...
Anyway, as far as I understood, (not guaranteed information) an US LLC might be a good option, because such company is not teated like a "company" for tax purposes in the US, it is rather a "flow-trough" entitie, being the beneficial owners taxed on their share of the profits and not the company itself.
When you say " One concern is that I might run into problems, because the company would not be liable to any Swiss company tax"
you're making it more complicated than it actually is. An US (or any other foreign) company cannot, by defenition, be liable for swiss tax. Swiss tax applies to swiss entities (companies or individuals). The fact that your US LLC is not liable for Swiss tax is an enormous advantage. But, you, as a swiss resident are required to declare your share of the profits from such company and pay the tax (Income tax) here.

One other thing you might want to consider is the US tax liabilitie.
It all seems very simple. Your US LLC is not liable of US tax, because it is taxed as a flow-trough entity, then; being you liable for tax purposes, not in the US because you live in Switzerland then; only tax liable in Switzerland. Fine so far.
In theory it would be easy not to pay any tax, like many non US people do trough US LLC's: just simply not declaring their profits in their home land.
It seems not to be the case here, but it doesn't really matter anyway.
So, fine so far, concerning taxes...
There is an if though: to keep it this way your US LLC shall not sell or buy in the US or do any relevant business in there, otherwise you will become US tax liable in what concerns the profits generated in the United States or even all the profits generated trough your US LLC. Then you may know what follows: potential double taxation, having to claim tax refunds or exemptions when tax treaties apply, etc, etc more papper work and less money left; meaning - unless you're expecting some reasonable amount of money from this venture that would make this scenario worthed anyway - (unless that I say) what you're saving in tax and swiss bureaucrats you'll spend in american laywers and tax expert accountants.

Conclusion: an US LLC might be a good option if you don't plan to sell in the US.
If you do, then probably other off-shore jurisdictions are more suitable.
Using offshore companies doesn't mean you are incurring in tax fraud: as long as you declare your revenues to the Swiss taxman, everything's fine .
That, being said, you can incorporate a company wherever you like (as long as the locals allow you, the Swiss won't care). You may prefer other countries for commercial or other practical reasons like how business friendly they are, how easy is to do business there or with a company registered; and of course what corporate tax rate they offer.

You have good jurisdictions available if you want to do business with europpean countries, like Cyprus, Ireland, or Madeira.
Costa Rica seems to be great too, if you're not especially into europe, and it's not black-listed
Then you have the "hardcore off-shores" like antigua, bermuda, etc.
You can chose Singapore or Hong-Kong because they are very business friendly. There's a lot of possibilities; avoiding tax is not based on where you locate your company but on your choice of doing it or not!

Many thanks for your detailed response, I was giving up hope that anybody would answer.

All of the points you raised are valid, and clear to me. My concern over the Swiss corporate tax was more that my local tax office thinks I am being tricky and pulling a fast one. I have such "spirit of the law" problems in the past when I lived in other countries and they are stressful, to say the least.

I have previously used some of the jurisdictions you mentioned, but I wanted a more "on-shore" look for the company. But, seeing how the US would be a big market for my software, I certainly recognize the problem you raised.

The bottom line, is that the overall infrastructure costs need to be significantly less than a Swiss-based GmbH, at least in the early years.

Anyway, lots of things to think about still.