Contributions in kind in Switzerland: forming an LLC or SA with assets

What is a contribution in kind?

A founder transfers an asset to the company in exchange for membership interests or shares. The asset replaces some or all of the cash contribution used to pay up the capital.

The minimum share-capital requirements remain unchanged: an LLC (Sàrl/GmbH) requires at least CHF 20,000, fully paid up. An SA/AG requires at least CHF 100,000 of share capital, with at least 20% of each share and CHF 50,000 in total paid up.

This differs from the company buying an asset after incorporation. It also differs from a loan: a loan creates a repayable liability, whereas an asset contributed in exchange for shares forms part of equity funding.

“Forming a company without money” is therefore misleading. Machinery may cover capital but cannot immediately pay the notary, rent or wages. If the structure is still undecided, compare a Swiss LLC and an SA first.

Four cumulative conditions for eligible assets

Article 634 of the Swiss Code of Obligations sets the conditions; the corresponding SA rules also apply to LLCs through Article 777c.

For real estate, availability takes account of the unconditional right to require entry in the land register.

Your personal know-how or a promise to work for a year does not meet these tests. Software may qualify if the relevant rights are owned and transferable. Spending CHF 30,000 developing it does not automatically establish a CHF 30,000 contribution value.

Review financed assets, third-party rights and licensed property carefully. Paying instalments on a leased car does not mean you own it.

Three practical examples

Equipment already owned

A founder setting up a Geneva workshop owns a machine valued at CHF 12,000 and other equipment valued at CHF 5,000. She contributes both plus CHF 3,000 cash to form a CHF 20,000 LLC. The valuations must be supported and acceptable for verification; they are not simply the original invoice totals.

Before other transactions, the company has CHF 17,000 of equipment and only CHF 3,000 cash. The capital is paid up, but its liquidity reserve is small.

A business vehicle

Document ownership, condition, current value, financing and restrictions. Prepare transfer, insurance and accounting arrangements. A three-year-old vehicle’s original new price is not its current value.

An existing sole proprietorship

A sole proprietorship may include equipment, stock, receivables and debts. Assess the whole business being transferred, including contracts and tax treatment. A list of assets without the liabilities is insufficient. This is a business transfer, not merely the contribution of a laptop.

Documents and incorporation procedure

Assess feasibility before booking the signing appointment.

1. Inventory the assets: identify each item, owner, condition and associated rights.
2. Support the valuation: gather invoices, photographs, descriptions, market comparisons and specialist valuations where needed.
3. Prepare the contribution agreement: it must be in writing; a public deed is required where the asset transfer itself requires it, notably for real estate.
4. Prepare the founders’ report: explain the contributions and why their values are justified.
5. Obtain an auditor’s confirmation: a licensed auditor checks the report and confirms its completeness and accuracy.
6. Finalise the articles and incorporation deed: include the legally required contribution details and submit the registration.

The auditor does not take over the founders’ responsibility for documenting the assets. A technical valuation can support the assessment but does not replace verification of the founders’ report.

Opting out of the annual audit does not waive this incorporation verification. They are different requirements.

The common formation steps are covered in setting up a Swiss LLC. Any cash portion follows the capital deposit account procedure.

When does an in-kind contribution make sense?

It is most useful where the assets have meaningful value and will be used by the company. It can transfer an existing operating base without requiring the same amount of cash a second time.

Allow for extra documentation, valuation, the founders’ report, verification, clauses and transfer instruments. A few documented machines, a software asset and real estate can involve very different work.

Request an itemised quotation covering:

• Preparation of the file and contribution agreement.
• Any specialist valuation.
• Verification of the founders’ report.
• Notarial and registration fees.
• Tax analysis and opening accounting entries for a business transfer.

A standard formation package does not automatically include these services. Compare the complete cost with cash incorporation and the liquidity you must retain anyway. For low-value equipment, additional complexity can outweigh the benefit.

Tax consequences to check before signing

A contribution is not automatically tax-exempt. Treatment depends on the contributor, whether the asset belongs to private or business wealth, its tax value and the transaction itself.

A sole-proprietorship business transfer to a company can qualify for tax-neutral treatment if the conditions are met. Federal Tax Administration Circular 5a discusses continued Swiss tax liability, carry-over tax values, the business requirement and the consequences of selling the received interests within five years. This treatment does not apply indiscriminately to every contributed asset.

Real estate taxes, VAT and stamp duties may also need review. Analyse them before fixing contractual values. A value acceptable for capital coverage does not resolve every tax question. For a material or complex transaction, discuss whether an advance tax ruling is appropriate.

Checklist before choosing this route

For each asset, list the description, owner, original purchase price, proposed current value, evidence and restrictions.

Then calculate three amounts: capital covered by assets, cash needed to complete the contribution, and cash remaining after costs. The last figure indicates whether the company can operate immediately after registration. Include it in the start-up cash-flow forecast.

The notary, auditor and accountant should use the same file version. The agreement, founders’ report, articles of association and opening balance sheet must agree. A late asset or valuation change may require several documents to be updated.

Frequently asked questions