Which legal form is suitable for an IT company in Switzerland?
The suitable legal form depends primarily on how great your risk is, whether you are founding alone or in a team and how professionally you want to appear towards customers, investors and partners.
For the start, three variants are usually eligible: sole proprietorship, LLC or stock corporation. A sole proprietorship is simple and cheap. It arises practically with the commencement of the self-employed activity. However, a commercial register entry is mandatory for sole proprietorships if a sales revenue of at least CHF 100'000 was achieved in the last financial year (Art. 931 Abs. 1 OR). Below this threshold, registration is voluntary (Art. 931 Abs. 3 OR).
The disadvantage of the sole proprietorship is the personal liability. If you assume project responsibility with your IT company, support customer systems, process sensitive data or implement larger software projects, this risk can become relevant. That is why many founders in the IT sector choose an LLC.
The LLC is a separate legal entity. It only arises with the entry in the commercial register (Art. 779 Abs. 1 OR). For the foundation, a public deed, articles of association and the appointment of the corporate bodies are required (Art. 777 Abs. 1 OR). The share capital is at least CHF 20'000 (Art. 773 Abs. 1 OR). For many IT service providers, SaaS providers and agencies, the LLC is therefore a good middle ground between manageable capital requirements and professional structure.
The stock corporation is also a separate legal entity and arises with the entry in the commercial register (Art. 643 Abs. 1 OR). The share capital is at least CHF 100'000 (Art. 621 Abs. 1 OR), whereby at least CHF 50'000 must be paid up upon establishment (Art. 632 Abs. 2 OR). It is particularly suitable if you want to take on investors, structure shareholdings clearly or grow more strongly later on.
If you need support with the topic of foundation, Jurata will be happy to help you at any time with the Gründungsservice.
Which contracts does an IT company need from the very beginning?
An IT company should clarify its most important contractual foundations early on, because many disputes do not arise from bad will, but from unclear expectations.
At the beginning stands the principle that a contract is concluded by concordant mutual expression of intent (Art. 1 Abs. 1 OR). This can happen expressly or implicitly (Art. 1 Abs. 2 OR). Precisely for this reason, you should not rely on the fact that "it is clear" what was meant in IT projects. The more technical a project is, the more precisely performance, deadlines, acceptance, remuneration and responsibility should be described.
For IT companies, particularly important are a service contract or project contract, General Terms and Conditions, a software development contract, a maintenance or support contract, a SaaS contract, a data processing agreement for data protection issues and, in the case of team foundations, a shareholder agreement or shareholder binding agreement.
With project contracts, you should clearly regulate whether you only work on a time and material basis or owe a concrete result. A fixed price without a clean specification of services is dangerous. If the customer expects additional functions later, a dispute over the scope can quickly arise. Therefore, change requests, acceptance processes and cooperation obligations of the customer belong in the contract.
With support and maintenance contracts, it is primarily about reaction times, availability, escalation, exclusions and liability. Anyone offering a cloud platform or a SaaS product should additionally regulate what happens in the event of outages, how backups are handled, what usage rights the customer receives and when an account may be blocked or terminated.
Who owns the code?
For an IT company in Switzerland, the question of the code is often more important than the question of the laptop on which it was written. Computer programs are expressly considered works within the meaning of copyright law (Art. 2 Abs. 3 URG). This means: Software can be protected by copyright, provided it meets the legal requirements.
It is particularly important that the transfer of individual copyrights does not automatically include all other partial rights. According to the law, the transfer of a right contained in copyright only includes other partial rights if this is agreed (Art. 16 Abs. 2 URG). In practice, this means: If a customer is to use, edit, resell or exclusively receive your software, this must be clearly stated in the contract.
A special case applies to employees. If a computer program is created in an employment relationship in the exercise of official activities and in fulfillment of contractual duties, the employer alone is entitled to exercise the exclusive rights of use (Art. 17 URG). This is important for own employees.
With freelancers, external developers and agency partners, however, you should not simply rely on this rule. There, what was agreed in the contract is decisive. If you work with external developers, the contract should therefore expressly regulate which rights to code, documentation, designs, databases, interfaces and reusable components are transferred to your company or remain with the developer.
What does data protection mean for IT companies?
Data protection is not a side issue for IT companies. As soon as you process personal data, you must respect the principles of the Data Protection Act. Personal data must be processed lawfully (Art. 6 Abs. 1 DSG). The processing must be carried out in good faith and must be proportionate (Art. 6 Abs. 2 DSG). Furthermore, data may only be collected for a specific and recognizable purpose for the data subject (Art. 6 Abs. 3 DSG).
In practice, this affects almost every IT company. Contact forms, newsletters, CRM systems, support tickets, log files, analytics tools or user accounts can already contain personal data. If you additionally host customer data, support systems or have access to databases of your customers, data protection becomes even more important.
A central duty is transparency. Anyone who collects personal data must inform the data subjects appropriately (Art. 19 Abs. 1 DSG). At least the identity and contact details of the controller, the purpose of processing and, if applicable, recipients or categories of recipients must be communicated (Art. 19 Abs. 2 DSG). Therefore, an IT company usually needs a comprehensible privacy policy.
Just as important is data security. Controllers and processors must ensure data security appropriate to the risk through suitable technical and organizational measures (Art. 8 Abs. 1 DSG). For an IT company, this does not just mean good passwords. It is about access concepts, role rights, encryption, backups, logging, update processes and clear internal responsibilities.
When does an IT company need a data processing agreement?
A data processing agreement is usually necessary if an IT company processes personal data on behalf of a customer. This is the case, for example, if you run a SaaS platform, host customer data, have support access to personal data or support systems within the scope of IT outsourcing.
The Data Protection Act allows processing by a processor if the data is processed in the way the controller itself would be allowed to do, and no statutory or contractual duty of confidentiality prevents this (Art. 9 Abs. 1 DSG). The controller must also make sure that the processor can guarantee data security (Art. 9 Abs. 2 DSG). A transfer to third parties is only permitted with the prior authorization of the controller (Art. 9 Abs. 3 DSG).
In practice, this means: If you process customer data on behalf, you should not just write "data protection" into the GTC. You need clear rules on purpose, instructions, security measures, subprocessors, deletion, return of data and control rights.
Which taxes must an IT company consider?
In terms of taxes, sole proprietorship, LLC and stock corporation differ significantly. In a sole proprietorship, the profit is taxed as income from self-employed activity. Income from commercial, industrial, trade and other self-employed activities is taxable (Art. 18 Abs. 1 DBG).
In the case of an LLC or stock corporation, the company itself is taxed as a legal entity. Capital companies such as stock corporations and corporations with limited liability belong to the taxable legal entities (Art. 49 Abs. 1 lit. a DBG). This has consequences for corporate income tax, capital tax and the private taxation of wages or dividends. The specific burden also depends heavily on the canton and the municipality.
Accounting is also important. Legal entities are obliged to keep accounts and file financial reports (Art. 957 Abs. 1 Ziff. 2 OR). Sole proprietorships must keep full accounts and file financial reports according to the following OR provisions if they have achieved at least CHF 500'000 in sales revenue in the last financial year (Art. 957 Abs. 1 Ziff. 1 OR). Below this, they must at least record income, expenses and assets (Art. 957 Abs. 2 Ziff. 1 OR).
At what point is an IT company liable for VAT?
VAT is often relevant early on for IT companies, because services, software development, licenses, SaaS subscriptions and consulting can quickly generate high turnover. In principle, anyone who operates a business regardless of legal form, purpose and profit intent and provides services domestically or has their registered office, domicile or permanent establishment domestically is liable for tax (Art. 10 Abs. 1 MWSTG).
Among others, anyone who generates less than CHF 100'000 in turnover from non-exempt services at home and abroad within one year is exempt from tax liability (Art. 10 Abs. 2 lit. a MWSTG). As soon as the tax liability begins, the person or company must register with the ESTV within 30 days without being requested to do so (Art. 66 Abs. 1 MWSTG).
If you are liable for VAT, invoices must contain certain details. These include in particular the name and location of the service provider, a reference to registration in the register of taxable persons, the VAT number, the name and location of the recipient of the service, the date or period of the service, the type and scope of the service, the consideration, the tax rate and the tax amount (Art. 26 Abs. 2 MWSTG).
What should you do before the first customer project?
Before you accept the first major contract with your IT company in Switzerland, you should prepare your legal basis. This includes choosing the appropriate legal form, a clean company name, the commercial register question, a separate business account, accounting, tax and VAT assessment, standard contracts, data protection documents and clear regulations on usage rights.
This preparation is particularly worthwhile for IT projects. A single unclear contract can be more expensive than the entire foundation. If you do not regulate, for example, whether the customer only receives a right of use or whether the entire source code is transferred, this can affect your business model later. If you do not have a data processing agreement even though you host customer data, a data protection risk arises. And if you recognize the VAT liability too late, it can become administratively unpleasant.
Conclusion: Good IT starts with a good structure
Anyone who wants to found an IT company in Switzerland should start cleanly not only technically, but also legally. The most important decisions concern legal form, contracts, data protection, rights to the code, accounting and taxes.
For small, low-risk activities, a sole proprietorship can be sufficient. For professional IT services, SaaS offers or larger customer projects, an LLC is often the more robust structure. A stock corporation becomes particularly interesting when investors, shareholdings or strong growth are planned.
The best time for clean contracts, data protection documents and basic tax decisions is not after the first conflict, but before the first major project.
Frequently asked questions about IT companies in Switzerland
Do I need an LLC for an IT company?
No, an LLC is not mandatory. You can also start with a sole proprietorship. However, an LLC is often useful if you want to appear more professional, structure liability risks or found with several people.
Do I have to register my IT company in the commercial register?
An LLC or stock corporation must be registered in the commercial register. A sole proprietorship must be registered if it achieved at least CHF 100'000 in sales revenue in the last financial year (Art. 931 Abs. 1 OR).
Who owns software that I develop for customers?
That depends on the contract. Computer programs are protected by copyright (Art. 2 Abs. 3 URG), and individual usage rights are only transferred as far as agreed (Art. 16 Abs. 2 URG). Therefore, the contract should clearly regulate whether the customer receives a simple usage right, an exclusive right or the source code.
From what turnover do I have to settle VAT?
In principle, the exemption from VAT is relevant as long as less than CHF 100'000 in turnover from non-exempt services is achieved within one year (Art. 10 Abs. 2 lit. a MWSTG). If the tax liability is reached, registration must take place within 30 days (Art. 66 Abs. 1 MWSTG).
