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Old 12.10.2007, 11:28
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Swiss Sarl Vs UK Ltd. company

Hello,

As you might know from my previous posts (thanks for the replies), I've been going through the process of starting a business - so far this has meant focusing on business plans, customers etc etc.

Now I have this underway and am in a position to conclude (hopefully ...) negotiations on my first big contract, I am focusing on many of the soletrader/Sarl questions that have been already widely discussed on this forum.

I am from the UK and have a 5 year B permit. It ocurred to me that it might be easier and certainly cheaper and lower risk (in terms of my knowledge of the 'system') if I were to start a UK Limited company, and be a director of that organisation in Switzerland. My business partner is in the UK, and so I can see how this might work from a UK perspective, but have no idea about the Swiss aspect. Would I also need to create a Swiss subsiduary (which then defeats the object), or is it possible for someone from the UK to be a director of a UK Limited company and reside in Switzerland? If so what would be their status in terms of soletrader/self employed etc.?

Finally, putting aside the more legal aspects, does anyone have any thoughts in more practical terms ...? Many of my customers would be in Switzerland (although the business is international and my first contract is likely to be in Germany) and I can imagine that a Swiss company would be better received in most cases - any thoughts on this or other practical implications such as the possible nightmare of combined UK and Swiss tax?

Thanks for your help.

Patrious
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  #2  
Old 12.10.2007, 11:52
swissbob
 
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Re: Swiss Sarl Vs UK Ltd. company

How did you obtain your B permit? Are you currently employed in Switzerland?

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any thoughts on this or other practical implications such as the possible nightmare of combined UK and Swiss tax?
Have you considered the VAT implications and what about German taxes?
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Old 12.10.2007, 12:04
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Re: Swiss Sarl Vs UK Ltd. company

Thanks for the response. I used to be employed, but recently left and after a short break plan to start my own business. Would a UK company arrangements create problems in this respect?

Yes, VAT is a good point - I presume a UK business would be liable for VAT in the UK rather than CH?

As for German taxes, I had not considered that as money will flow from Germany to my company (based in the UK or CH) and I will not be working in Germany, but potentially here in CH. Sounds like I need to talk to an accountant.


Patrious
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Old 12.10.2007, 12:11
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Re: Swiss Sarl Vs UK Ltd. company

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Sounds like I need to talk to an accountant.
You said it .
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Old 12.10.2007, 12:24
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Re: Swiss Sarl Vs UK Ltd. company

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Thanks for the response. I used to be employed, but recently left and after a short break plan to start my own business. Would a UK company arrangements create problems in this respect?

Yes, VAT is a good point - I presume a UK business would be liable for VAT in the UK rather than CH?

As for German taxes, I had not considered that as money will flow from Germany to my company (based in the UK or CH) and I will not be working in Germany, but potentially here in CH. Sounds like I need to talk to an accountant.


Patrious
You raise some interesting points here. Lets get the accountant out of the way first. For this situation you will need to have an international account. They will charge you SFr. 200-300 per HOUR so make sure you have everything fully prepared to minimize the time they spend with you - oh and VAT to that amount.

Before I attempt to answer can you confirm the following:

UK Ltd company of which you will be a director
Contract with German company.
Living in Switzerland - no intention to change that
Paid out of the UK based on current proposed model
Will actually be working for the German company in Switzerland

Is it allowed, yes.
Is it the best solution, almost certainly not.
Your current thoughts, should I form a Swiss company?

Have I summed it up? Sorry for throwing in the two answers in the details, just though you should know that bit...
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Old 12.10.2007, 12:36
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Re: Swiss Sarl Vs UK Ltd. company

Richard, thanks for your note (and SwissBob, hint taken - the local accountant has my business ).

Yes you're right, the facts are as follows:

- UK Ltd company of which I would be a director
- Contract with German company (and others, most likely in the UK/Switzerland).
- Living in Switzerland - no intention to change
- Paid out of the UK based on current proposed model
- Will actually be working for the German company (and others) in Switzerland

My current thoughts are should I form a Swiss company, should I form a UK company, or should I take a slight risk regarding limited liability and just be an independant to begin with, and form a company as revenues grow.

Patrious
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Old 12.10.2007, 12:52
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Re: Swiss Sarl Vs UK Ltd. company

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Richard, thanks for your note (and SwissBob, hint taken - the local accountant has my business ).

Yes you're right, the facts are as follows:

- UK Ltd company of which I would be a director
- Contract with German company (and others, most likely in the UK/Switzerland).
- Living in Switzerland - no intention to change
- Paid out of the UK based on current proposed model
- Will actually be working for the German company (and others) in Switzerland

My current thoughts are should I form a Swiss company, should I form a UK company, or should I take a slight risk regarding limited liability and just be an independant to begin with, and form a company as revenues grow.

Patrious
Okay then there are two ways you can do this efficiently and smoothly.

1. Work here as a sole trader and bill the UK company for the services you provide. This is best done using a time sheet.
2. Create a company(AG, SA, GmbH, Sarl) here and bill the UK company as companies do.

It makes no sense whatsoever to create a subsiduary of the UK company here. The tax liability would be in the UK for this company and the actual costs would be the same as if you created the company here in your name.

Why should you choose either 1 or 2. When you are simply working as an employee (or director) of a UK company you are liable to UK and Swiss social contributions on declared earnings. This is daft. You can take advantage of certain tax treaties to ensure that you are only liable for some of them but you will stay pay more tax than if you had a simple Swiss company be it sole trader or GmbH/Sarl.

When you create a business here you are able to make deductions for all sorts of things that you encounter for example car, telephone, internet, food, travel, it goes on. If you have a formal company there are even more things you can do to optimise your tax burden and to spread it. I have covered and am covering this in another thread.
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Old 12.10.2007, 16:43
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Re: Swiss Sarl Vs UK Ltd. company

Richard, thanks for your reply and help - it is very much appreciated.

The option to form a UK Limited company, which would be the contracting party to my customers and hence provide limited liability, and then to bill my time as a sole trader based in Switzerland is interesting.

So I can make my decision as to whether to go this route, or the seperate Swiss business, I would like to gain some advice which is specific to details of my particular situation. I'm wondering if you know of - or would be able to a recommend - a law firm who provides this type of service in the Lausanne area.

Patrious
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Old 12.10.2007, 16:44
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Re: Swiss Sarl Vs UK Ltd. company

Richard, thanks for your reply and help - it is very much appreciated.

The option to form a UK Limited company, which would be the contracting party to my customers and hence provide limited liability, and then to bill my time as a sole trader based in Switzerland is interesting.

So I can make my decision as to whether to go this route, or the seperate Swiss business, I would like to gain some advice which is specific to details of my particular situation. I'm wondering if you know of - or would be able to a recommend - a law firm who provides this type of service in the Lausanne area.

Patrious
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Old 10.12.2007, 18:24
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Re: Swiss Sarl Vs UK Ltd. company

I have been reading this with interest.

If you are an employee of a UK company and the company offers its services to a swiss company (i.e. to send you to Switzerland to do some consultancy work) does the UK employee of the company need a work permit? If so why?

I ask this because in the late 80's early 90's, for South Africans that could not get a UK permit to work and would then be restricted to 5 an hour cash in hand working in a pub. I used to form UK Ltd companies for them with them as Director and Shareholder. They would then go to UK employment agencies that would get them a contract for work and pay their limited company. The South African would then draw out the cash using a company cash-point card. They could then deduct expenses including the rent of their flat which would be leased in the name of the limited company as an office. They would then only have to pay Corporation Tax on the net income (20%-30%)and receive the balance as a net dividend. As they would not be resident in the UK (as on holiday), not subject to higher tax.

Last edited by Cashboy; 10.12.2007 at 18:37.
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Old 10.12.2007, 19:56
swissbob
 
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Re: Swiss Sarl Vs UK Ltd. company

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I have been reading this with interest.

If you are an employee of a UK company and the company offers its services to a swiss company (i.e. to send you to Switzerland to do some consultancy work) does the UK employee of the company need a work permit? If so why?
For short visits, assuming EU citizenship, simply registering your arrival is enough but for longer assignments proper registration and permits are required. Why? It's the law.

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I ask this because in the late 80's early 90's, for South Africans that could not get a UK permit to work and would then be restricted to 5 an hour cash in hand working in a pub. I used to form UK Ltd companies for them with them as Director and Shareholder. They would then go to UK employment agencies that would get them a contract for work and pay their limited company. The South African would then draw out the cash using a company cash-point card. They could then deduct expenses including the rent of their flat which would be leased in the name of the limited company as an office. They would then only have to pay Corporation Tax on the net income (20%-30%)and receive the balance as a net dividend. As they would not be resident in the UK (as on holiday), not subject to higher tax.
If I read this right, you set up a company with a foreign director and owner. No problem there. The your clients worked on contracts in the UK without registering with the relavent authorities and, as I read it, without paying tax or social security? If that was so then it was (is) simply illegal.
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Old 10.12.2007, 20:07
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Re: Swiss Sarl Vs UK Ltd. company

Technically under the new agency law if could be deemed illegal now.

Most agencies request a National Insurance number of the contractor even if they use a Ltd company but up to two years ago it was never a problem.

That was the reason so many East Europeans were working in the UK before their countries joined the EEC.

In fact, there are stacks of Russians in London, illegally working, because they are able to obtain a Polish Passport relatively easily. They then arrive in England, obtain a National Insurance number by showing their Polish passport and then they have no problems ever again with regard to work and the UK state benefits.
Hence the situation in the UK.
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Old 10.12.2007, 20:09
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Re: Swiss Sarl Vs UK Ltd. company

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Technically under the new agency law if could be deemed illegal now.

Most agencies request a National Insurance number of the contractor even if they use a Ltd company but up to two years ago it was never a problem.

That was the reason so many East Europeans were working in the UK before their countries joined the EEC.

In fact, there are stacks of Russians in London, illegally working, because they are able to obtain a Polish Passport relatively easily. They then arrive in England, obtain a National Insurance number by showing their Polish passport and then they have no problems ever again with regard to work and the UK state benefits.
Hence the situation in the UK.
Didn't say you couldn't have done it. Just said it was illegal.
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Old 10.12.2007, 20:32
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Re: Swiss Sarl Vs UK Ltd. company

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For short visits, assuming EU citizenship, simply registering your arrival is enough but for longer assignments proper registration and permits are required. Why? It's the law.
Where does one register their arrival?

How long is a "longer assignment"?
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Old 10.12.2007, 20:47
swissbob
 
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Re: Swiss Sarl Vs UK Ltd. company

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Where does one register their arrival?

How long is a "longer assignment"?
Zurich has an online form here. Other Kantons probaably have something similar.

It's suitable for up to 90 days - over that you need to register 'properly'.
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Old 10.12.2007, 23:26
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Re: Swiss Sarl Vs UK Ltd. company

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For short visits, assuming EU citizenship, simply registering your arrival is enough but for longer assignments proper registration and permits are required. Why? It's the law.



If I read this right, you set up a company with a foreign director and owner. No problem there. The your clients worked on contracts in the UK without registering with the relavent authorities and, as I read it, without paying tax or social security? If that was so then it was (is) simply illegal.
Just to get this right in the UK until the change in National Insurance regulations which I believe was in 2001 you could indeed live working for a Ltd company and not pay tax or social security and it was legal. It was a loophole that was taken advantage of by many big names and eventually closed. You needed to have a foreign passport to do it but you could have been a UK and somewhere else dual national.

As to needing a permit, actually you do not as long as you do not take up residence here and as long as you are employed out of another country and as long as you do not overstep the max number of nights in Switzerland. I know of plenty of people who fly in Monday and leave Thursday for 30 weeks a year and have been doing it for years... One of them also won an award for being the best UK xxxx manager. I have left out the xxxx otherwise it would be a bit obvious. Point was they were only in the UK office on Fridays...
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Old 11.12.2007, 07:34
swissbob
 
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Re: Swiss Sarl Vs UK Ltd. company

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Just to get this right in the UK until the change in National Insurance regulations which I believe was in 2001 you could indeed live working for a Ltd company and not pay tax or social security and it was legal. It was a loophole that was taken advantage of by many big names and eventually closed. You needed to have a foreign passport to do it but you could have been a UK and somewhere else dual national.
You had to be paying social security contributions elsewhere and in one case I was very familiar with had to prove it. For tax, if you were in the UK for more than 180 days you were obliged to register and there was something about if 90 days continual you may have to register. Whatever, a work permit was required.

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As to needing a permit, actually you do not as long as you do not take up residence here and as long as you are employed out of another country and as long as you do not overstep the max number of nights in Switzerland. I know of plenty of people who fly in Monday and leave Thursday for 30 weeks a year and have been doing it for years... One of them also won an award for being the best UK xxxx manager. I have left out the xxxx otherwise it would be a bit obvious. Point was they were only in the UK office on Fridays...
I did that for almost a year . You could do Monday to Friday as long as you travelled on those days as travel days weren't counted. However, if you come and stay then the 90 day rule applies.
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