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View Poll Results: Have you got a business are interested in how to do things here or save (avoid) tax?
Would like to have a business but boy don't know where to start 163 39.76%
Am a contractor but my pimps are asking me to bend over and hold my ankles every month 27 6.59%
I am a freelancer doing it myself (so to speak) and want to know more 110 26.83%
I have my own legally structured company and don't like paying so much to everybody 51 12.44%
I am employed but am always interested in any way to reduce tax 52 12.68%
I think this is a waste of breath you oxygen thief 7 1.71%
Voters: 410. You may not vote on this poll

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  #21  
Old 26.07.2007, 13:49
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Re: Help for Businesses/Freelancers in CH

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A point to note is that regardless of the level of salary you pay the employee, the AHV deductions will have to be paid. In the first illustration showing the "bad" case you included both the employer and employee deductions from your comany (AHV/IV/OE/ALV for example).

In the second "this-is-better example" you listed the deductions once a salary was been decided, and pointed out the reduced deductions. While what you have written is correct, it is worth pointing out that the (salary dependant) employers contributions portion will still have to be made from the overall revenue received by your company.

dave
Indeed you are correct because the company is obliged to pay half. However you maybe did not notice that I talked later about the "full cost salary" in other words both sides of the equation. The interesting point is that this still produces a profit because simply put you are removing the 30% of deductions that are necessary on that part of the salary and additionally you reduce your tax burden due to having a lower salary - could call it a double wammy...
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  #22  
Old 26.07.2007, 13:49
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Re: Help for Businesses/Freelancers in CH

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The one thing I suspect most people would like..is a crib sheet for tips on allowable expenses and useful manoeuvres (assuming the person has control over their company). Worth their weight in gold...

dave
That will come in the part on expenses... How much do you think they will weigh?
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  #23  
Old 26.07.2007, 19:35
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Re: Help for Businesses/Freelancers in CH

Thanks Richard!

Last edited by Blaze; 15.11.2007 at 20:07.
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  #24  
Old 26.07.2007, 19:43
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Re: Help for Businesses/Freelancers in CH

Much appreciated.

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Anybody got any burning issues to resolve now.

Last edited by Blaze; 15.11.2007 at 20:07. Reason: Irrelevant post...
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  #25  
Old 29.07.2007, 16:49
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Re: Help for Businesses/Freelancers in CH

Great info. A question that arises from this, though not directly relevant to the topic, is how to move from being a contractor via an agency to organising work via your own GmbH.

Will UBS and Credit Suisse work directly with an IT contractor who's using a GmbH (or AG) company?

Thanks
hbunny
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  #26  
Old 30.07.2007, 08:38
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Re: Help for Businesses/Freelancers in CH

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Great info. A question that arises from this, though not directly relevant to the topic, is how to move from being a contractor via an agency to organising work via your own GmbH.

Will UBS and Credit Suisse work directly with an IT contractor who's using a GmbH (or AG) company?

Thanks
hbunny
I can answer this question quite easily. Yes major companies not just banks will work directly with a GmbH or AG or SA even with a Ltd. The fact that there is a company between the person doing the work and the company employing the person means that any liabilities are assumed by the contracting company and not by the major company. There can be times where there are other reasons not to establish such relationships but in these cases it has nothing to do with the structure of the contracting company but is due to preferred supplier rules. Becoming a preferred supplier is then the answer though as a "one man" company you will not achieve this...

Agencies too will accept a relationship with a contractor company but you do need to tread carefully as there are certain laws which will prohibit this basically to stop non-payment of dues to contractors in the event the company is declared bankrupt.
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  #27  
Old 30.07.2007, 10:16
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Re: Help for Businesses/Freelancers in CH

Thinking about it, isn't it easier for an agency to pay a GmbH/AG rather than a contractor? The agency would pay the GmbH the billed hours + VAT, rather than have to do the extra work of doing the deductions (AHV, tax, pension, ...) for a contractor.

I'm most interested in this topic as I'm trying to move to the contracting side of IT here in Zürich.
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  #28  
Old 30.07.2007, 10:58
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Re: Help for Businesses/Freelancers in CH

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Thinking about it, isn't it easier for an agency to pay a GmbH/AG rather than a contractor? The agency would pay the GmbH the billed hours + VAT, rather than have to do the extra work of doing the deductions (AHV, tax, pension, ...) for a contractor.

I'm most interested in this topic as I'm trying to move to the contracting side of IT here in Zürich.
Yes it is easier for the agency but then again the payroll once setup is also straightforward to expand. There are certain risks with being involved with a GmbH relating to permits but that is another story.

Ultimately the agency likes to have control and the best way to have that is to have the contractor on the payroll...
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  #29  
Old 05.08.2007, 14:22
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Re: Help for Businesses/Freelancers in CH

I've got so many other questions related to this, so sorry if this is too much!

Company Location

What about the location of the company? Can I have a GmbH based in Zug or Obwalden even though I'm working and living in Zürich? Does this require a virtual office in the company's home canton? Would there be any benefit in this?

Taking Money out of the Company

And how do we get the rest of the money out of the GmbH so it avoids paying tax on profit? Pay it as a dividend? That will attract 35% withholding tax, but it avoids paying the insurances. I believe the withholding tax can be used to offset other tax liabilities because the tax burden will most likely be lower than 35%?

I've just checked the book, "Switzerland Business & Investment Handbook" and it's saying that dividends are paid out of profits, so that money suffers from double taxation - taxed as a company profit, then taxed when paid as a dividend!

Tax at Source - or Not?

I had asked my Gemeinde before about switching from tax-at-source to a tax return basis and they said it was upto the employing company. So this would mean the GmbH could choose to pay the employee salary gross of tax (but with the insurance deductions)?

Or is it better to slip beneath the tax-return radar (assuming other potential taxable assets) and pay a salary of 120,000 CHF or less with tax-at-source?

Which books/websites (besides this excellent site) cover these topics?

While I was looking around the low-tax canton websites, I discovered this one that offers fixed-price company formation. I have no affiliation with this company and I have no idea if they are good/bad/indifferent. As always, DYOR (Do Your Own Research).

Sorry for all these questions, but it's an interesting topic!
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  #30  
Old 07.08.2007, 12:58
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Re: Help for Businesses/Freelancers in CH

Thanks for the thread, Richard. Hopefully when I can figure out what I can bill people as here in Switzerland, your tips will help out a lot. Thanks again.
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  #31  
Old 07.08.2007, 13:13
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Re: Help for Businesses/Freelancers in CH

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I've got so many other questions related to this, so sorry if this is too much!

Company Location

What about the location of the company? Can I have a GmbH based in Zug or Obwalden even though I'm working and living in Zürich? Does this require a virtual office in the company's home canton? Would there be any benefit in this?

Taking Money out of the Company

And how do we get the rest of the money out of the GmbH so it avoids paying tax on profit? Pay it as a dividend? That will attract 35% withholding tax, but it avoids paying the insurances. I believe the withholding tax can be used to offset other tax liabilities because the tax burden will most likely be lower than 35%?

I've just checked the book, "Switzerland Business & Investment Handbook" and it's saying that dividends are paid out of profits, so that money suffers from double taxation - taxed as a company profit, then taxed when paid as a dividend!

Tax at Source - or Not?

I had asked my Gemeinde before about switching from tax-at-source to a tax return basis and they said it was upto the employing company. So this would mean the GmbH could choose to pay the employee salary gross of tax (but with the insurance deductions)?

Or is it better to slip beneath the tax-return radar (assuming other potential taxable assets) and pay a salary of 120,000 CHF or less with tax-at-source?

Which books/websites (besides this excellent site) cover these topics?

While I was looking around the low-tax canton websites, I discovered this one that offers fixed-price company formation. I have no affiliation with this company and I have no idea if they are good/bad/indifferent. As always, DYOR (Do Your Own Research).

Sorry for all these questions, but it's an interesting topic!
I will answer all of these within the next two weeks...
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  #32  
Old 17.08.2007, 14:49
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Re: Help for Businesses/Freelancers in CH

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An initial investment of at least 10000 for a GmbH and 50000 for an AG is currently required. This will change as of 01.01.2008
I don't think this is currently correct, unless it applies by Canton. I just set up a GmbH in Zürich in May and had to deposit 20000. I believe the current figure for an AG is 200000.
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  #33  
Old 17.08.2007, 15:05
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Re: Help for Businesses/Freelancers in CH

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I don't think this is currently correct, unless it applies by Canton. I just set up a GmbH in Zürich in May and had to deposit 20000. I believe the current figure for an AG is 200000.
No it is correct.

It will change though with the new "Juristische Person" law to be introduced Jan 1st, so it is not such bad advice to start with 20K. At this point indeed all new GmbH must be 20K and must have a formal revisionstelle ie accountancy firm that checks the books and signs off on them and sends a bill for 10K! There are also other changes such as being able to set up a GmbH as a single person and not requiring two people.
Point being this has not yet come into force and until it does it might not - there is always a chance that a law will not be implemented even after it has been announced.

What you might have done is completed your statutes with a fully liberated capital instead of partially liberated. In this case you would need to pay the said 20K... And to demonstrate this I too was involved in a GmbH in Zürich in July and this was 50% liberated cost was 10K. Admittedly it will go to 100K in due course but the setup cost was 10K...
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  #34  
Old 24.08.2007, 23:38
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Re: Help for Businesses/Freelancers in CH

Thanks for sharing such great information. If you are currently living in Switzerland and working for a company on a B permit and you want to set up a company as you've described - will your B permit be extended if you choose to establish a company rather than working for one?
Thanks.
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  #35  
Old 25.08.2007, 21:53
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Re: Help for Businesses/Freelancers in CH

Thanks for the great thread Richard!

Have I understood correctly that the social contributions (AHV etc.) are the same for the employer as for the employee? I am trying to figure out how much the total cost of an employee is.

Another thing, are there some restrictions in which positions a contracted person can work in Switzerland? Could I theoretically make a contract and work as the managing director for another company? (Not that this is a very likely scenario)

Cheers,
Pekka
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  #36  
Old 27.08.2007, 11:20
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Re: Help for Businesses/Freelancers in CH

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Thanks for sharing such great information. If you are currently living in Switzerland and working for a company on a B permit and you want to set up a company as you've described - will your B permit be extended if you choose to establish a company rather than working for one?
Thanks.
It all depends on what you mean by company. But basically the answer is, you can usually make it so.
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  #37  
Old 27.08.2007, 11:24
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Re: Help for Businesses/Freelancers in CH

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Thanks for the great thread Richard!

Have I understood correctly that the social contributions (AHV etc.) are the same for the employer as for the employee? I am trying to figure out how much the total cost of an employee is.

Another thing, are there some restrictions in which positions a contracted person can work in Switzerland? Could I theoretically make a contract and work as the managing director for another company? (Not that this is a very likely scenario)

Cheers,
Pekka
Work on the principle that an employee costs around 108% of salary plus company pension plus expenses. There are indeed restrictions. There are two points here. Some professions are not possible in some cantons ie they are forbidden and others require official permission as indeed the case of your contractor working as the MD of another company would (probably)

Sorry for the opaqueness of the anwers but you have not exactly provided enough detail to provide a concrete answer and there are many alternatives available...
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  #38  
Old 27.08.2007, 12:52
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Re: Help for Businesses/Freelancers in CH

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Work on the principle that an employee costs around 108% of salary plus company pension plus expenses.
Thanks, this is the approximate I was looking for. I will come back to the role question later, when things proceed. I will have to do my own homework as well.
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  #39  
Old 30.08.2007, 04:56
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Re: Help for Businesses/Freelancers in CH

Did not get time for MwSt at the moment but I did do this. Statuten.
All companies need them and here is a blanko version for a GmbH.

Questions? I know it is in German by the way...
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File Type: zip Statuten - SAMPLE.zip (10.3 KB, 96 views)
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  #40  
Old 30.08.2007, 05:26
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Re: Help for Businesses/Freelancers in CH

Just wanted to thanks, Richard. I fall into the freelancer category but all the information you've provided in this thread is extremely useful, cheers.
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