GMBH? AG? VAT or not?

Finance, Taxes, Banking, Insurance and Retirement
1
Waves a big flag and asks for help.

I have been here now 15years. I am married and I own my own company .. as I certain some of you know me...

So I turn over circa 250 - 300k swiss , last year it was near 400 but it was the EM footi so ...

VAT or not?

I allready have 160k orders this year.

I hear I can swap my sole trader status for a LTD or AG by using the value of my assests , in this case the equipment.

The company www.startups.ch claim to charge only 500.- for this "Inventory check" and all the work...

anyone else ever hear of this.

or what is an Llc company here?

Anyhow I just got out of a disaster year with a swiss partner who no decides the 5 year investment is not on... as he wants to retire in 2...

He is 62 I am 45....

Simon

www.backliner.ch

2
You have no choice on the VAT (MwsT) - last time I looked the threshold was about 70K. If you have been turning over the sort of figures mentioned be prepared to pay the MwsT due in past years when you were over the threshold - and a nice big interest payment too. They are even more tenacious than the tax authorites.

startups.ch appear to offer a pretty good service and you can get the price down by using their partners for insurance, bank account, etc. I know a couple of start ups that used them - no complaints and way cheaper than using a solicitor.

3
If you turned over 75K a year you where already required to pay MwSt.

There is a standard way to found an Ltd (AG or GmbH) with your actual business assets. This cost generally more then found it with money and buys the assets in.

Also be careful because the regulations for AG and GmbH have changed last year.

If you are interested in having more know how how Swiss Companies works in Finance and Business Law our EBC*L (European Business Competence License) course would be of interest for you

Good luck and a GmbH or AG is a good way I think to cut down the financial owners risk even you may pay more taxes then.

4
And that would be where?

5
Thanks for the advice, the history is that up untill last year the company was in my wifes name , we have been trading since 2000. Her accountant has allways dealt with the tax issues and allways advised us not to do the VAT thing.

We closed the company in 2008 because of a partnership deal where I took our material , clients and income to the other company ( an AG ) and they gave me a regular wage as an employee.

The deal was a low wage but a % of the profit from our equipments usage & the idea of investing in the next 5 years.

Sadly the partner decided to back out at the end of last year , leaving me with not only no money from the % deal but also me without work.

So I have had to re start , getting the clients back was not hard and as I said I now on the way .

What did I learn ... don't trust a hand shake & if like me you didnt keep a signed copy of the agreement ... live and learn.

SP

6
Why do you want to be an AG? Legally it just means you have shares rather than parts, perhaps from a marketing perspective it sounds more established, but no other real benefits and possibly more admin (audit requirement, more comprehensive accounts). If you are not even aware you should be VAT registered you might be out of your depth on the latter. D

7
it's more to do with 2 things.

1. Self employed here means no child allowance or unemployment benifits. So as a LLC or AG I can employ myself

2. Personal risk - at the moment my house is on the line and we want to get the bussiness finances away from our personal .

We took lots of advice about the Mwst , and as most of the rentals we had were NOT in switzerland , ivoices being paid from the UK or the US .. the advice was NOT to charge tax.

I guess that at that time less than 1/5 of the income was here .

Now the situation is different ( circa 160k+ in switzerland )

Accounts , Audits .. I let the proffessional accountants deal with that of course.

SP

8
If you already have a GmbH you have limited liability. Unless you are providing personal guarantees to eg the bank. That isnt going to change with an AG.

You can employ yourself with a GmbH.

There might be some issues surrounding GmbH in sole ownership, as an AG you will have to have more than one shareholder for sure.

It sounds like many of your supplies are VAT exempt, the threshold only relates to VATable supplies. You OP was a bit vague.

It also sounds like you are already getting plenty of professional advice, so it might be helpful to narrow your question to us to take account of what you have been advised so far.

You shouldnt ignore the costs of an AG.. with your level of turnover you dont really want to **** it away on fees for nothing.

D

9
Ahh I reread your post... you dont have a "company of your own" right now, you are a sole trader with a business of your own. So you are right about liability and being able to employ yourself etc.

I would have thought a GmbH was what you are after.

Daniel

10
As the owner of an AG or GmbH you will however not receive any unemployement benefit should you get "unemployed".

But other than that, I still think it makes sense to create a GmbH rather than being self employed.

11
Arghh.. while I was posting, you posted about wife, previous employment status, being ripped off by your previous partner etc.

It all sounds very complicated and its very hard for others to give you sensible opinions with only small portion of the relevant facts.

Daniel

12
First of all the CHF75,000 limit is based on total turnover and not just sales in Switzerland and second of all, even though you are not allowed to charge VAT on invoices abroad, you must still account for VAT on such sales! There are a special set of forms for doing this - I've used them in the past.

The bottom line is that you have got bad advice in the past, so make sure you pick good advisors for the future - make sure

Good luck,

Jim.

13
As you have written, that most sales where oversee you are right not chargin MwSt. as it counts on export from Switzerland and no MwSt. is necassary. But now as you sell over 75K in Switzerland for this you mind have to collect and pay the MwSt.

Information on EBC*L can be found on http://www.ebcl.ch . At awewa ( http://www.awewa.ch ) we are a registred test center in Switzerland and do also offer preparation courses. The preparation course will be about 20-30 hours. Our information on the awewa site is only in german, so should you have any questions or being interested in information in English feel free to contact me here at EF

14
No it's based on sales inside Switzerland, see http://www.estv.admin.ch/d/mwst/them.../allgemein.htm

Arent you confusing reverse charging of VAT on invoices from abroad (ie inputs) with accounting for VAT on exempt sales?

Otherwise, I agree the OP needs an advisor who can explain in plain language the choices involved.

D

15
Audiodruid, apologies if my posts last night had an inappropriate tone to them. It sounds like you are having a frustrating time to say the least.

I re-read you posts and looked at your profile, where you say you do stage management for touring rock groups and run a music equipment rental buisiness.

Your wife had a company (GmbH?), but last year you transferred the equipment, customers etc to a third party's (Mr X) company (GmbH?). You were to receive a salary and profit share from the company. He has reneged on the (unwritten) deal, leaving you starting from scratch.

You are asking how to set up the new business, because one key aspect is to get the protection offered an employee?

Several points:

VAT

- your sales are a mixture of services (ie your time and experience) provided largely/in part abroad on tour, and equipment rental provided I would guess largely in Switzerland

- to know if its an export what counts for VAT is the point at which the service is provided, not the country to where you are sending the invoice

- so if your services are being provided abroad (ie to organise overseas concerts) even if you are working in Switzerland then you can invoice without VAT

- equipment rental provided in Switzerland will be subject to VAT if you qualify, irrespective of where you are sending the invoices

- to qualify for VAT you have to anticipate having more than 75000chf VATable supplies in Switzerland in the next twelve month period

- you will need to carefully analyse your business plan to understand if this is likely to be reached

- I get the feeling you are mostly dealing with companies that are VAT registered themselves, if this is the case you are probably indifferent to being VAT registered or not since they can recover the VAT.. so I would err to the side of caution and register if you think you are close to the limits

- note however that the tax and VAT accounting for internationally touring artists and their companies is by definition very complex

- if your wife owned the previous business as a GmbH, and then it was Mr X's GmbH, and now you are starting as a sole trader or GmbH, these are legally all seperate businesses

Companies

- I know it wasnt your question in the OP, but even without a formal agreement, I am amazed you can be completely out in the cold without remedy... emails, equipment transfers, the fact he employed you etc should all be evidence of an intent to contract.. a couple of hours legal advice might be a worthwhile investment to see if you can salvage something from the deal (eg at least get the equipment back)

- sounds like a GmbH is what you need, without external investors I see little point going for an AG, cheaper to set up and administer going forward

- again, a couple of hours legal advice will help... I dunno maybe if your wife owns the company you can be employed by it, but then again in CH couples are treated much more jointly than say in the UK

All the best

Daniel

16
Not quite - I own my GmbH. I pay regular and full AHV-contributions (unemployment) for myself and for my assistant and there is no reason why I should not benefit if I had to fire myself

17
Sorry to let you know that that is not the case. Unless you totally liquidate the company, you'll get nothing.

http://www.rav.zh.ch/internet/vd/awa...raehnlich.html

18
Not quite. You can sell the company before you fire yourself (or rather, the new owner fires you).

19
True, that is an other alternative.

20
This was about 8 or 9 years ago so the rules may have changed, but from what I recall it was a really daft exercise: first you filled out one form declaring the sales and paying VAT on it (even though you had not collected any), then you filled out a second form to let them know that it was actually exempt sales and claim back the VAT that you had just paid!!! They then paid you back the money with interest on it, in the end I was up a couple of hundred francs, but it was definately not worth the effort in volved.....

Jim.