What is a branch
Branches are establishments and permanent establishments in which a commercial, industrial or commercial activity is carried out for an indefinite period of time. The branch is the third most common form of incorporation in Switzerland and can be established by both domestic and foreign companies. Regardless of the location, the company must make an entry in the commercial register at the Swiss headquarters.
However, the form of formation is to be viewed differently than a classic subsidiary. In the following article we explain the differences and discuss the advantages and disadvantages of the branch office. In addition, we ask ourselves the question for whom and why it is worth setting up a branch office.
Difference between a branch and a subsidiary
The branch does not appear as a separate company with its own legal form, but is linked to the parent company. The Commercial Code describes this as a branch that is spatially separate from the main business and is created as an additional, long-term center of the business. The branch office is legally and organizationally part of the parent company, but still has to act independently externally. Such action is supported by the following points:
- Spatial separation with own manager
- Own bookkeeping and accounting
- Own company assets – with independent administration
The branch office is, so to speak, an intermediate form of an independent company and a department. This means that the branch has neither rights nor obligations, as this is regulated by the parent company. Thus, as the name suggests, the branch can also be referred to as a company.
In the case of a subsidiary, on the other hand, an independent company is created that is separate from the parent company. Unlike a branch, it is a company. When establishing the company, of course, the respective laws on the legal form must be observed.
Establish a branch in Switzerland as a foreign company
It is possible for companies from abroad to set up a branch in Switzerland. However, this is then subject to Swiss law. Swiss law is particularly important in external relationships. Another important point is that an authorized person resident in Switzerland must be entered in the commercial register when the company is founded.
Summary and conclusion
The step of setting up a branch office has to be well thought out. In some cases, the foundation is tied to complex regulations, such as the organization and construction. The cost of setting up an independent branch is comparable to the cost of setting up an independent company that is separate from the main branch.
The main advantage is certainly that no minimum capital is required when starting up. However, costs can arise if the parent company’s documents have to be translated, as these should always be in the official language. Furthermore, the establishment must be entered in the commercial register. There are also costs for this. Now the question arises for you as an entrepreneur, which path you would like to take to expand your locations. We are happy to advise you and show you the individual options.
