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Business Management
David Merz | Founding Partner
Zurich, May 30, 2023
Choosing the right location is crucial when it comes to starting a business. In this blog post, we present a detailed comparison between Switzerland and Germany to help you make the right decision, discover the respective framework conditions, and learn what advantages and challenges both countries have for start-ups.
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Many entrepreneurs choose to set up their companies in Switzerland due to the attractive tax system. Tax rates for companies in Switzerland are generally lower than in Germany. Additionally, some cantons offer further tax breaks to attract companies and strengthen the business environment.
Switzerland has an excellent reputation as a stable and secure business location. The political system is stable, and the country has a strong currency, the Swiss franc. These factors create a reliable environment for companies and make planning and executing business strategies easier.
Setting up a company in Switzerland is generally quicker and easier than in Germany. At Nexova, we support you as trustees throughout the entire process, from choosing a legal form to registration and accounting.
We ensure that you take all the necessary steps and meet all the legal requirements so that you can focus on growing your business.
Calculate the costs of your company incorporation here.
A key advantage of setting up a company in Germany is its large domestic market with over 83 million potential customers. For a company that wants to offer its products or services primarily in Germany, it makes sense to be based there.
Germany has an excellent infrastructure that facilitates the trade and transport of goods. This can be a decisive factor for companies that rely on efficient logistics.
In Germany, there are numerous programs offering entrepreneurs financing assistance and support. Companies can apply for these at both federal and state levels and are particularly interesting for start-ups and innovative companies.
Choosing the right location for your company is an important decision that will affect your business, its success and long-term development. In this section, we will focus on the legal differences between Switzerland and Germany while setting up a company to give you a better understanding of the legal requirements in both countries.
Switzerland has various legal forms for setting up a company. The most common ones are:
Various legal forms are available in Germany too:
The incorporation process for a company in Switzerland varies depending on the legal form chosen. For GmbHs and AGs, the most important steps are:
The formation process in Germany depends on the legal form chosen. For GmbHs, UGs and AGs, the most important steps are:
It is important to note that the formation process in Germany for UGs and GmbHs usually takes longer than in Switzerland, as there are more bureaucratic hurdles to overcome.
Switzerland has a three-tier tax system consisting of federal, cantonal, and municipal taxes. Tax rates vary by canton and municipality, leading to some competition between cantons. Therefore, companies can benefit from attractive tax rates and tax relief.
Tip: In our blog post “Tax comparison for companies 2022”, you will find a detailed overview of the tax rates for Swiss cantons.
In Germany, companies also have to pay various taxes, including corporate income, trade, and turnover taxes. Tax rates are generally higher than in Switzerland and there are fewer opportunities for tax optimisation.
In both countries, employers are obliged to pay social security contributions for their employees. However, the social security systems differ in their benefits and contribution rates. In Switzerland, social security contributions are generally lower than in Germany, which reduces labour costs for companies.
Swiss labour law is generally less strictly regulated than German labour law. Working hours are more flexible and there are fewer regulations regarding notice periods and occupational health and safety. This can be advantageous for companies as they have more flexibility in personnel management.
German labour law is more comprehensive and protects workers better than Swiss labour law. There are stricter regulations regarding working hours, workers’ co-determination rights, and protection against dismissal. These regulations can be challenging for companies, especially if they are familiar with different legal systems.
Financing is a crucial factor for the success of a start-up. The following section provides an overview of the different financing options and investor landscapes in Switzerland and Germany.
We cover government funding programmes, venture capital, and crowdfunding platforms to give you an insight into the different options for funding your start-up.
The Swiss government offers various funding programmes to support start-ups and innovative companies. These include:
Germany also offers a variety of government funding programmes for start-ups and innovative companies:
The Swiss venture capital scene is small, yet very active compared to other European countries. Several venture capital firms focus on financing start-ups in different industries. Some of the best-known Swiss venture capital firms are Redalpine, investiere.ch, and Swisscom Ventures.
Germany has a dynamic and growing venture capital landscape. Many German and international venture capital firms invest in German start-ups and support them in scaling their business models. The best-known German venture capital firms include Earlybird, HV Capital, and High-Tech Gründerfonds.
In Switzerland, several crowdfunding platforms enable start-ups and projects to receive financial support from a broad public. The best-known Swiss crowdfunding platforms are Wemakeit, Funders, and Crowdify.
Germany also has several crowdfunding platforms that support start-ups in financing their projects. Some of the best-known German crowdfunding platforms are Startnext, Seedmatch, and Companisto.
Business angels are private investors who support start-ups financially and contribute their expertise, experience, and network. In Switzerland, several business angel networks help start-ups find suitable investors. These include Business Angels Switzerland (BAS) and SICTIC.
Germany also has an active business angel scene that supports start-ups in financing and scaling. The country’s most important business angel networks include Business Angels Netzwerk Deutschland (BAND), Business Angels Club Berlin-Brandenburg, and German Start-ups Association.
In Switzerland, companies benefit from attractive tax conditions, political stability, and a simplified start-up process. The German economy offers a larger domestic market, an excellent infrastructure, and extensive funding opportunities.
Legal differences exist mainly in the foundation processes and available legal forms. From a fiscal point of view, corporate taxes in Switzerland are usually lower than in Germany. In terms of social security contributions and labour law, Switzerland is more flexible, while Germany offers stronger employee protection.
Financing options for start-ups vary in both countries, with both offering government funding programmes, a venture capital scene, crowdfunding opportunities, and business angel networks. Depending on individual needs and goals, the choice of location should be carefully considered in order to create the best possible foundation for the success of your business.
As an experienced Swiss fiduciary company in the field of company formation and accounting outsourcing, Nexova supports both Swiss and German entrepreneurs in choosing the optimal location and company formation in Switzerland.
As every company is unique, the choice of location is also very individual. Nexova takes the time to understand your business goals and requirements and provides you with tailor-made advice. Our team of experts will guide you through the entire start-up process and help you avoid potential stumbling blocks.
Nexova offers a comprehensive service for all aspects of company formation. Our services include location advice, company formation, registration of your company, and bookkeeping, as well as other administrative and support services. This allows you to focus on your core business and trust that your company formation is in good hands.
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When I founded my company a year ago, I needed a reliable fiduciary partner. In addition to pure accounting, Nexova also offers me very good advice on all aspects of labor law. Thanks to the E-Post solution, I no longer even have to worry about my company mail and can focus purely on my service activities. My contacts at Nexova are always very friendly and pleasant to deal with. The complete package is simply TOP and I can only recommend Nexova!
Top company & friendly owners. A highly recommended trustee.
Very good and competent advice!
Professionally at a very high level. They are very good with Excel and could also support us with automation of processes.
I had a few questions about remote work and was advised super and free of charge. Thank you very much!
Very good service. Good and competent advice with friendly staff. I can definitely recommend
The Nexova team is very professional and I felt they always had my best interests at heart. I highly recommend Nexova and will continue to refer my clients to them and trust them with my business.
I am impressed with their outstanding service, especially in the field of accounting services, they demonstrate a professional approach and exceptional attention. As a lawyer, I have found Nexova to be a valuable partner in the financial world.
I had an excellent consultation with Nexova AG regarding withholding tax. Their expertise is remarkably extensive and their guidance was invaluable, I highly recommend their services. A first class experience.
The Nexova Team is an important partner to our startup, enabling us to pass all of our accounting, tax and payroll duties. We specially value their expertise with Startups and flexibility, which allows us to plan and manage our financials effectively and to focus on the bottom line of our operations.
We are very satisfied with Nexova as our trustee. Thanks to the Teams group chat, I can always count on very fast response times (of a few minutes). The Teams Chat group is great. With our old trustee, we had to write mails and always had to wait a long time for an answer and on top of that we were charged for every little question. Fortunately, this is not the case with Nexova.
Nexova solved my problem with a non-paying tenant quickly and efficiently. I was simply overwhelmed with the situation and glad for the competent legal advice. Nexova handled everything from the reminder with threat of termination, to representation in court, to the police eviction quickly, efficiently and also inexpensively. Many thanks for the valuable help.