	Social Enterprise Law Surveys
	Switzerland
	(Europe) Firm Pestalozzi
What jurisdiction(s) do you practice in?	Switzerland
What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ...	The most common for-profit organizational forms utilized by small and mid-size Enterprises (in the following "SME") in Switzerland are the sole proprietorship, the stock corporation and the limited liability company (in the following “LLC”). These organizational forms mainly differ with regard to risk-taking. As sole proprietorship, one natural person assumes risks on his own and is held liable up to the amount of both his business and private assets. In contrast, capital firms such as stock corporations and limited liability companies limit the financial risk to the contributed share capital, which must amount to at least CHF 100'000 in the case of a stock corporation and CHF 20'000 in the case of an LLC. Large companies mainly use the organizational form of a stock corporation. Under Swiss Law, companies can choose whether to pursue economic or non-economic purposes and achieve those purposes by conducting commercial activity. Typically, the stock corporation and the LLC pursue economic goals. A company is said to have an economic purpose if it seeks an economic advantage for the benefit of its members. The decisive factor is that the monetary benefit accrues to its members. However, this is by no means a mandatory requirement. Although rarely used for stock corporations, the company may just as well decide to pursue non-economic purposes. Non-economic purposes include both idealistic and charitable objectives. a. Companies that are seeking investor financing and will have multiple owners tend to form stock corporations. b. In Switzerland, there are no organizational forms specifically designed for Social Enterprises. However, according to the data basis published by SENS Suisse (an association that aims to promote impact-oriented companies), the majority of Social Enterprises in Switzerland are formed as LLC or cooperatives.
Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required...	Under Swiss Law, board members of stock corporations are generally required to adopt an approach that primarily benefits the shareholders. A company's board therefore cannot without the approval of all shareholders decide to retain or use benefits for purposes other than distribution to shareholders. However, social and moral requirements are increasingly gaining attention in the discussion on the corporate purpose. A number of other trends, such as the Social Responsibility movement, are now counteracting the principle of shareholder primacy. Such trends are an outgrowth of the so-called stakeholder approach, which aims to take greater account of the interests of employees, customers and the company as a whole. The focus hereby lies on the sustainable development of the company.
Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ...	No. On the question of whether new legal forms are needed in Switzerland to promote social entrepreneurship, the Federal Council concluded in its statement of August 22, 2018, that the existing legal forms of Swiss law (including stock corporations, LLCs, associations, foundations, and cooperatives) are appropriate for the implementation and development of social entrepreneurship. e. No timing or cost differences. f. Impact-oriented companies are widespread and diverse in Switzerland; they operate in various sectors of the economy and address sustainability goals.
Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat...	Yes. As stated in answer I./2., companies are in principle free to decide whether or not they operate as for-profit enterprises. However, there is an exception for the organizational form of associations that conduct a commercial activity. In this case, Swiss law excludes the pursuit of economic purposes. Social entrepreneurship is not regulated separately in Swiss law. Rather, the Social Enterprise is subject to the existing organizational forms. Thus, the general requirements of the organizational form chosen by the Enterprise apply and there is no difference in treatment. No (see answer above). No. Although there are organizational forms that allow for faster formation (such as associations and cooperatives), however, these are not hybrid since in Switzerland there is a numerus clausus for company forms (constraint of form). We are not aware of any statistics regarding this question.
Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.	Yes, worker-owned Enterprises are allowed under Swiss law. There is a variety of organizational forms that can be used for the incorporation of worker-owned Enterprises, such as stock corporations, LLCs, cooperatives and the general partnership. Stock corporations and LLCs: Both of these capital firms limit the financial risk to the contributed share capital and thus, its members do not assume financial obligations with their private assets. Cooperatives: In general, the incorporation process of cooperatives is simplified compared to corporations. There are for instance no regulations on capital contribution. On the other hand, cooperatives are bound by their mutual economic assistance purpose. Furthermore, the right of co-decision tends to slow down procedures. Other disadvantages appear regarding business transactions or capital markets transactions: due to the principle of one vote per head alliances with financial obligations are hindered. As there is no fixed share capital and thus, an insufficient credit base, cooperatives usually have limited access to the capital markets and ergo do not have access to equity capital. General partnerships: This organizational form is easy to establish and requires no share capital. In contrast to corporations with legal personality, the partners of general partnerships assume risks with their private assets jointly and severally, without limit for up to five years from the liquidation of the company.
Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.	No.
In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.	No.
Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.	No. Although there is no statutory obligation to comply with ESG standards in Swiss law, large internationally operating companies, in particular, are expected to address sustainability in terms of ESG. Various international frameworks for sustainability reporting are also relevant for Switzerland. International pressure ultimately leads to an increasing requirement for disclosure, which is currently (still) on a voluntary basis.
Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.	No.
Does your jurisdiction have any ESG requirements for investors? If it does, please describe.	No. As for Enterprises, there are no binding regulations for investors to comply with ESG requirements. Nevertheless, there is an increasing tendency for investors to finance Enterprises that meet ESG criteria. This development has been driven by various instruments such as the Investor Initiative "Principles for Responsible Investment".
Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi...	No, they are not required to look at ESG issues. However, there is a tendency for major investor classes to increasingly consider such factors (cf. above answer I./11.). Yes. Other factors taken into account by investors can be local linkage as well as low risk levels.
What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?	Social Enterprises receive grants, charitable investments, and traditional investments depending on their organizational form. Generally, Social Enterprises formed as Non-profits receive more grants and charitable investments, while Social Enterprises formed as for-profit corporations receive more traditional investments.
How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?	As of today, about one third of Swiss investments are linked to sustainability goals. This shows the increasing importance of sustainability criteria.
What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government...	There are no special government funding programs specifically for Social Enterprises as such. However, government fundings are available to Enterprises depending on the organizational form and industry.
Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?	No.
To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.	Enterprises are not required to disclose ESG factors, though some choose to do so for reasons of prestige.
How prevalent, if at all, are impact bonds in your jurisdiction?	Impact bonds are hardly widespread in Switzerland.
In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?	No.
Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a...	Crowdfunding is legal, allowing SME to solicit investment directly from individuals. Unlike other forms of financing, crowdfunding takes place without any intermediaries.
Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe...	There are tax exemptions available for Nonprofits generally, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form. a. If Social Enterprises, however, pursue a non-profit purpose, a tax exemption from Swiss corporate income and annual capital taxes is available, provided the non-profit purpose is exclusive of public benefit and the activities performed are e.g. of charitable, ecological, educational, scientific, humanitarian, cultural nature etc. Activities performed outside of Switzerland may benefit from a tax exemption, as the definition of the non-profit purpose is not limited to activities performed in Switzerland. However, the non-profit purpose may not be limited to a close circle of beneficiaries (e.g. family members, members of a particular profession etc.) and the activities performed by the legal entity must be of altruistic nature. This implies that certain sacrifices are done by the legal entity through its members, employees or third persons acting for the legal entity, e.g. members of governing bodies of the legal entities are only entitled to reimbursement of their expenses and may not be remunerated for their duties. It is possible to benefit from a partial tax exemption if a legal entity combines for-profit and non-profit activities. As a consequence, for-profit activities are subject to ordinary taxation, whereas non-profit activities are tax-exempt. This, however, requires a clear separation of these activities (also from an accounting viewpoint) and is rather burdensome. Therefore, organizations that have for-profit and non-profit activities usually set up two separate entities. The tax exemption does not comprise an exemption from Swiss VAT. However, for tax-exempt entities, the minimum annual turnover that requires VAT registration amounts to CHF 150,000 (instead of CHF 100,000 for for-profit entities). b. Tax exemptions are not limited to a specific type of legal entity. However, the most common legal forms for tax-exempt entities are foundations and associations. c. A tax exemption is not automatically granted to the legal entity and must be formally requested from the responsible tax authorities where the non-profit organization has its seat. It is advisable to obtain such confirmation prior to the set-up of the legal entity. Auxiliary commercial activities (for-profit activities) are permitted as long as they serve for the achievement of the non-profit purpose and are subordinated to the non-profit purpose and of minor importance compared to the legal entity’s assets and income. The assets of a tax-exempt legal entity must be used for its public benefit purpose and may never be returned to the founder, members, shareholders or its donors. If a tax-exempt entity is dissolved, any remaining funds must be transferred to another tax-exempt non-profit entity, which pursues a similar purpose. LLC and stock corporations must prohibit any dividend distributions or other type of financial benefits in favor of their shareholders.
Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?	No.
Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)	No.
Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?	No.
Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.	No.
What government operational support, resources, training or services, are available for small businesses or Social Enterprises?	The Confederation provides support for corporate financing. At the federal level, there are measures taken to facilitate access to credits or loans, e.g. the SME guarantee system, the Swiss Hotel Credit Company (in the following "SHCC") or technology funds. Additionally, cantons have the requisite economic political authority to set up financing programs for companies. Usually, they exercise this authority by offering a broad spectrum of financing options for companies and start-ups. Apart from financial support, the SHCC offers accommodation for Enterprises to develop business models and benchmarking as well as feasibility studies. Furthermore, unemployment insurance supports people who wish to start a business under a self-employed scheme. In this context, the unemployed persons can request a support guarantee of up to CHF 1 Million from a loan guarantee company. Innosuisse, the Swiss innovation agency, supports (small) companies to transform their business idea into a marketable product by providing financial aid, training programs and professional coaching modules. Eurostars is aimed at SME investing over 10% of their turnover in research and development. It enables SME to work with suitable European research teams and consolidate their competitiveness in expertise and innovation. The Technology Fund is intended to facilitate access to third-party funds for companies that produce innovative products aimed at reducing greenhouse gas emissions.
Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.	No.
Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.	No.
Is there a different bankruptcy system available for Social Enterprises?	No.
What are the average time and filing fees to form an Enterprise in your jurisdiction?	Depending on the organizational form, the basic filing fee for the formation of an Enterprise can range from CHF 80 (for sole proprietorship) to CHF 420 (for capital firms). The fees are regulated at the federal level in the Ordinance on the Fees for the Commercial Register. Notary costs, on the other hand, are regulated on a cantonal basis. With regard to the average time, this depends on the availability of the required documents. From the submission onwards, the average duration is one to two weeks.
What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well...	No certifications afford beneficial tax status or other beneficial legal status, but certain certifications may help bolster the Social Enterprise’s social impact claims and provide potential investors and stakeholders with additional information to accurately assess the social impact that the Enterprise makes. One example for such certification institutions is the globally known International Organization for Standardization.
Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.	Yes, startups can easily form and flourish in Switzerland. Statistics shows that the number of start-ups has risen steadily over the last 10 years. This is due to the stability of the Swiss economy and measures taken by the federal government and the cantons by facilitating the administrative and legal practice of SME.
Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.	The framework conditions for social enterprises are not very favorable. This is due primarily to the weak lobby in the political arena.
Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc...	The shareholders of a company are free to define a corporate purpose that falls within the scope of social entrepreneurship. Within the multitude of relevant interests to be taken into account, the interests of the common good are likely to be included in the considerations of the responsible bodies to a limited extent, even without an explicit statutory basis. Thus, under the current law, there are already various ways to realize Social Entrepreneurship.
In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.	No.
What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?	1. Laws may be enacted that provide tax benefits for Social Enterprises that use for-profit Enterprise forms. 2. State subsidization specifically for Social Enterprises.
What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?	Implementing a disclosure obligation with reference to ESG standards might allow investors and consumers to gain greater insight into the Enterprises' sustainability policies.
Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?	N/A

Social Enterprise Law Surveys

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What jurisdiction(s) do you practice in?

Switzerland

What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ...

The most common for-profit organizational forms utilized by small and mid-size Enterprises (in the following "SME") in Switzerland are the sole proprietorship, the stock corporation and the limited liability company (in the following “LLC”). These organizational forms mainly differ with regard to risk-taking. As sole proprietorship, one natural person assumes risks on his own and is held liable up to the amount of both his business and private assets. In contrast, capital firms such as stock corporations and limited liability companies limit the financial risk to the contributed share capital, which must amount to at least CHF 100'000 in the case of a stock corporation and CHF 20'000 in the case of an LLC. Large companies mainly use the organizational form of a stock corporation.

Under Swiss Law, companies can choose whether to pursue economic or non-economic purposes and achieve those purposes by conducting commercial activity. Typically, the stock corporation and the LLC pursue economic goals. A company is said to have an economic purpose if it seeks an economic advantage for the benefit of its members. The decisive factor is that the monetary benefit accrues to its members. However, this is by no means a mandatory requirement. Although rarely used for stock corporations, the company may just as well decide to pursue non-economic purposes. Non-economic purposes include both idealistic and charitable objectives.

a. Companies that are seeking investor financing and will have multiple owners tend to form stock corporations.

b. In Switzerland, there are no organizational forms specifically designed for Social Enterprises. However, according to the data basis published by SENS Suisse (an association that aims to promote impact-oriented companies), the majority of Social Enterprises in Switzerland are formed as LLC or cooperatives.

Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required...

Under Swiss Law, board members of stock corporations are generally required to adopt an approach that primarily benefits the shareholders. A company's board therefore cannot without the approval of all shareholders decide to retain or use benefits for purposes other than distribution to shareholders. However, social and moral requirements are increasingly gaining attention in the discussion on the corporate purpose. A number of other trends, such as the Social Responsibility movement, are now counteracting the principle of shareholder primacy. Such trends are an outgrowth of the so-called stakeholder approach, which aims to take greater account of the interests of employees, customers and the company as a whole. The focus hereby lies on the sustainable development of the company.

Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ...

No. On the question of whether new legal forms are needed in Switzerland to promote social entrepreneurship, the Federal Council concluded in its statement of August 22, 2018, that the existing legal forms of Swiss law (including stock corporations, LLCs, associations, foundations, and cooperatives) are appropriate for the implementation and development of social entrepreneurship.

e. No timing or cost differences.

f. Impact-oriented companies are widespread and diverse in Switzerland; they operate in various sectors of the economy and address sustainability goals.

Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat...

Yes. As stated in answer I./2., companies are in principle free to decide whether or not they operate as for-profit enterprises. However, there is an exception for the organizational form of associations that conduct a commercial activity. In this case, Swiss law excludes the pursuit of economic purposes.

Social entrepreneurship is not regulated separately in Swiss law. Rather, the Social Enterprise is subject to the existing organizational forms. Thus, the general requirements of the organizational form chosen by the Enterprise apply and there is no difference in treatment.
No (see answer above).
No. Although there are organizational forms that allow for faster formation (such as associations and cooperatives), however, these are not hybrid since in Switzerland there is a numerus clausus for company forms (constraint of form).
We are not aware of any statistics regarding this question.

Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.

Yes, worker-owned Enterprises are allowed under Swiss law. There is a variety of organizational forms that can be used for the incorporation of worker-owned Enterprises, such as stock corporations, LLCs, cooperatives and the general partnership.

Stock corporations and LLCs:

Both of these capital firms limit the financial risk to the contributed share capital and thus, its members do not assume financial obligations with their private assets.

Cooperatives:

In general, the incorporation process of cooperatives is simplified compared to corporations. There are for instance no regulations on capital contribution.
On the other hand, cooperatives are bound by their mutual economic assistance purpose. Furthermore, the right of co-decision tends to slow down procedures. Other disadvantages appear regarding business transactions or capital markets transactions: due to the principle of one vote per head alliances with financial obligations are hindered. As there is no fixed share capital and thus, an insufficient credit base, cooperatives usually have limited access to the capital markets and ergo do not have access to equity capital.

General partnerships:

This organizational form is easy to establish and requires no share capital.
In contrast to corporations with legal personality, the partners of general partnerships assume risks with their private assets jointly and severally, without limit for up to five years from the liquidation of the company.

Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.

No.

In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.

No.

Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.

No. Although there is no statutory obligation to comply with ESG standards in Swiss law, large internationally operating companies, in particular, are expected to address sustainability in terms of ESG. Various international frameworks for sustainability reporting are also relevant for Switzerland. International pressure ultimately leads to an increasing requirement for disclosure, which is currently (still) on a voluntary basis.

Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.

No.

Does your jurisdiction have any ESG requirements for investors? If it does, please describe.

No. As for Enterprises, there are no binding regulations for investors to comply with ESG requirements. Nevertheless, there is an increasing tendency for investors to finance Enterprises that meet ESG criteria. This development has been driven by various instruments such as the Investor Initiative "Principles for Responsible Investment".

Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi...

No, they are not required to look at ESG issues. However, there is a tendency for major investor classes to increasingly consider such factors (cf. above answer I./11.).

Yes.
Other factors taken into account by investors can be local linkage as well as low risk levels.

What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?

Social Enterprises receive grants, charitable investments, and traditional investments depending on their organizational form. Generally, Social Enterprises formed as Non-profits receive more grants and charitable investments, while Social Enterprises formed as for-profit corporations receive more traditional investments.

How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?

As of today, about one third of Swiss investments are linked to sustainability goals. This shows the increasing importance of sustainability criteria.

What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government...

There are no special government funding programs specifically for Social Enterprises as such. However, government fundings are available to Enterprises depending on the organizational form and industry.

Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?

No.

To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.

Enterprises are not required to disclose ESG factors, though some choose to do so for reasons of prestige.

How prevalent, if at all, are impact bonds in your jurisdiction?

Impact bonds are hardly widespread in Switzerland.

In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?

No.

Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a...

Crowdfunding is legal, allowing SME to solicit investment directly from individuals. Unlike other forms of financing, crowdfunding takes place without any intermediaries.

Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe...

There are tax exemptions available for Nonprofits generally, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form.

a. If Social Enterprises, however, pursue a non-profit purpose, a tax exemption from Swiss corporate income and annual capital taxes is available, provided the non-profit purpose is exclusive of public benefit and the activities performed are e.g. of charitable, ecological, educational, scientific, humanitarian, cultural nature etc. Activities performed outside of Switzerland may benefit from a tax exemption, as the definition of the non-profit purpose is not limited to activities performed in Switzerland. However, the non-profit purpose may not be limited to a close circle of beneficiaries (e.g. family members, members of a particular profession etc.) and the activities performed by the legal entity must be of altruistic nature. This implies that certain sacrifices are done by the legal entity through its members, employees or third persons acting for the legal entity, e.g. members of governing bodies of the legal entities are only entitled to reimbursement of their expenses and may not be remunerated for their duties.

It is possible to benefit from a partial tax exemption if a legal entity combines for-profit and non-profit activities. As a consequence, for-profit activities are subject to ordinary taxation, whereas non-profit activities are tax-exempt. This, however, requires a clear separation of these activities (also from an accounting viewpoint) and is rather burdensome. Therefore, organizations that have for-profit and non-profit activities usually set up two separate entities.

The tax exemption does not comprise an exemption from Swiss VAT. However, for tax-exempt entities, the minimum annual turnover that requires VAT registration amounts to CHF 150,000 (instead of CHF 100,000 for for-profit entities).

b. Tax exemptions are not limited to a specific type of legal entity. However, the most common legal forms for tax-exempt entities are foundations and associations.

c. A tax exemption is not automatically granted to the legal entity and must be formally requested from the responsible tax authorities where the non-profit organization has its seat. It is advisable to obtain such confirmation prior to the set-up of the legal entity.

Auxiliary commercial activities (for-profit activities) are permitted as long as they serve for the achievement of the non-profit purpose and are subordinated to the non-profit purpose and of minor importance compared to the legal entity’s assets and income.

The assets of a tax-exempt legal entity must be used for its public benefit purpose and may never be returned to the founder, members, shareholders or its donors.

If a tax-exempt entity is dissolved, any remaining funds must be transferred to another tax-exempt non-profit entity, which pursues a similar purpose.

LLC and stock corporations must prohibit any dividend distributions or other type of financial benefits in favor of their shareholders.

Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?

No.

Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)

No.

Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?

No.

Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.

No.

What government operational support, resources, training or services, are available for small businesses or Social Enterprises?

The Confederation provides support for corporate financing. At the federal level, there are measures taken to facilitate access to credits or loans, e.g. the SME guarantee system, the Swiss Hotel Credit Company (in the following "SHCC") or technology funds. Additionally, cantons have the requisite economic political authority to set up financing programs for companies. Usually, they exercise this authority by offering a broad spectrum of financing options for companies and start-ups.

Apart from financial support, the SHCC offers accommodation for Enterprises to develop business models and benchmarking as well as feasibility studies.
Furthermore, unemployment insurance supports people who wish to start a business under a self-employed scheme. In this context, the unemployed persons can request a support guarantee of up to CHF 1 Million from a loan guarantee company.
Innosuisse, the Swiss innovation agency, supports (small) companies to transform their business idea into a marketable product by providing financial aid, training programs and professional coaching modules.
Eurostars is aimed at SME investing over 10% of their turnover in research and development. It enables SME to work with suitable European research teams and consolidate their competitiveness in expertise and innovation.
The Technology Fund is intended to facilitate access to third-party funds for companies that produce innovative products aimed at reducing greenhouse gas emissions.

Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.

No.

Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.

No.

Is there a different bankruptcy system available for Social Enterprises?

No.

What are the average time and filing fees to form an Enterprise in your jurisdiction?

Depending on the organizational form, the basic filing fee for the formation of an Enterprise can range from CHF 80 (for sole proprietorship) to CHF 420 (for capital firms). The fees are regulated at the federal level in the Ordinance on the Fees for the Commercial Register. Notary costs, on the other hand, are regulated on a cantonal basis.

With regard to the average time, this depends on the availability of the required documents. From the submission onwards, the average duration is one to two weeks.

What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well...

No certifications afford beneficial tax status or other beneficial legal status, but certain certifications may help bolster the Social Enterprise’s social impact claims and provide potential investors and stakeholders with additional information to accurately assess the social impact that the Enterprise makes. One example for such certification institutions is the globally known International Organization for Standardization.

Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.

Yes, startups can easily form and flourish in Switzerland. Statistics shows that the number of start-ups has risen steadily over the last 10 years. This is due to the stability of the Swiss economy and measures taken by the federal government and the cantons by facilitating the administrative and legal practice of SME.

Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.

The framework conditions for social enterprises are not very favorable. This is due primarily to the weak lobby in the political arena.

Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc...

The shareholders of a company are free to define a corporate purpose that falls within the scope of social entrepreneurship. Within the multitude of relevant interests to be taken into account, the interests of the common good are likely to be included in the considerations of the responsible bodies to a limited extent, even without an explicit statutory basis. Thus, under the current law, there are already various ways to realize Social Entrepreneurship.

In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.

No.

What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?

1. Laws may be enacted that provide tax benefits for Social Enterprises that use for-profit Enterprise forms.

2. State subsidization specifically for Social Enterprises.

What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?

Implementing a disclosure obligation with reference to ESG standards might allow investors and consumers to gain greater insight into the Enterprises' sustainability policies.

Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?

N/A

Social Enterprise Law Surveys

Switzerland

Social Enterprise Law Surveys

Switzerland

Members