Information below outlines the sole proprietorship (“Einzelfirma” / “Entreprise individuelle” / “Ditta individuale”) structure in Switzerland, including its legal framework, registration obligations, taxation, and social security requirements for the year 2025. This resource is designed for those evaluating self-employment or small business operation within Swiss jurisdiction.
Sole Proprietorship Status in Switzerland
Switzerland offers an accessible sole proprietorship option—the Einzelfirma (German), Entreprise individuelle (French), or Ditta individuale (Italian). This structure enables individuals (Swiss citizens or residents) to operate a business and invoice clients without incorporating a separate legal entity. The model is particularly popular among freelancers, independent professionals, and small business owners.
Availability and Registration Conditions
The sole proprietorship status is available nationwide, with some basic requirements:
- Eligibility: Open to Swiss citizens and residents.
- Registration: Mandatory in the cantonal commercial registry if annual turnover exceeds CHF 100,000; optional below this threshold, but generally recommended.
- Legal Form: No distinct legal entity is created. The business is identified with the owner personally, and the owner assumes unlimited liability for all obligations.
| Criterion | Requirement |
|---|---|
| Status Name | Einzelfirma / Entreprise individuelle / Ditta individuale (Sole proprietorship) |
| Eligibility | Swiss citizens and residents |
| Business Registration | Mandatory if turnover > CHF 100,000 per year |
| VAT Registration | Mandatory if turnover > CHF 100,000 per year |
| Personal Liability | Unlimited (owner responsible for all business debts) |
Taxation & Social Security
Under the sole proprietorship in Switzerland, all profit is considered the owner’s personal income. No corporate tax applies—only personal income tax and social security contributions. Each tax authority (federal, cantonal, and communal) assesses income separately, and tax rates vary significantly by location.
| Tax / Social Security | Base / Rate (2025) |
|---|---|
| Income Tax (Federal, Cantonal, Communal) | Progressive (approx. 10%–40% total, depending on canton & total earnings) |
| Corporate Tax | None (profits are taxed as personal income) |
| VAT Registration | Obligatory if turnover > CHF 100,000/year |
| Social Security (AHV/AVS) | Approx. 10–12% on net business income |
Profits are reported and taxed along with the owner’s other income. Income tax rates typically range from about 10% to 40%—the rate depends on total taxable income and the specific canton or municipality of residence.
Social security (AHV/AVS) contributions apply to net income from business activity, at a rate generally around 10-12% in 2025.
Liability Implications
The owner of a Swiss sole proprietorship is fully and personally liable for all business debts and obligations. There is no legal separation between personal and business assets under this structure.
Additional Administrative Points
- Optional Registration: For turnover under CHF 100,000, proceeding with commercial registration increases marketplace trust but is not legally required.
- Name Restrictions: The owner’s surname must be included in the business name (no added elements unless registered as a trademark).
Pro Tips for Operating a Sole Proprietorship in Switzerland (2025)
- Register Early: Even if your annual turnover may not exceed CHF 100,000 in the first year, starting the registration process early ensures smoother access to banking and contracting services.
- Track Income by Canton: Since total tax rates vary widely based on location, model your net income with different cantonal tax rates before choosing your primary place of residence.
- Plan Cash Flow for Social Security: Set aside approximately 10-12% of net self-employment income throughout the year to cover AHV/AVS social contributions at assessment time.
- Monitor VAT Thresholds: Closely track annual turnover to determine if VAT registration will become mandatory, and consider voluntary registration if approaching the limit.
Official Sources for Swiss Sole Proprietorship Regulations
- ch.ch – Starting a business
- kmu.admin.ch – Sole proprietorship overview
- estv.admin.ch – Direct federal tax for the self-employed
- seco.admin.ch – Self-employed work
This overview shows that the Swiss sole proprietorship structure is straightforward to establish, with a high level of legal certainty and relatively clear tax and social security requirements. Key considerations include mandatory registry and VAT registration thresholds, full owner liability, and progressive personal income tax rates that vary by canton. As always in Switzerland, the choice of canton significantly impacts the total tax burden and net income prospects for sole proprietors.