Setting up an association in Switzerland

The association (Verein) is the simplest and most widespread legal form in Switzerland for not-for-profit activities: sport, culture, education, social initiatives, but also professional and trade organisations. It is governed by Article 60 et seq. of the Civil Code and can be created at close to zero cost. Let’s look at what you really need.

When an association makes sense

The association is designed for an ideal, non-economic purpose: to promote a common aim among several people. It is not forbidden to carry out ancillary commercial activities (selling T-shirts, organising paid events), but profit cannot be the main purpose nor be distributed to the members. If the real objective is a business generating profits to be shared out, the correct form is another: GmbH, AG or cooperative.

You need at least two people to found it, although in practice more are advisable to give substance to the bodies.

Legal personality without a notary

Here lies the great advantage. The association acquires legal personality as soon as it adopts written statutes expressing the will to exist as an association, its purpose and its bodies. No notarial deed is required, no minimum capital is required, and — in most cases — no entry in the commercial register is required.

From that moment the association is an entity distinct from its members: it has its own assets, can open a bank account, enter into contracts and hire staff.

The statutes: the document that counts

The statutes are the heart of the association. They must state at least:

• the name and the registered seat;
• the purpose of the association;
• the resources (membership fees, donations, income from activities);
• the bodies and the rules of operation.

It is worth drafting them well from the outset: they define who decides what, how members are admitted and excluded, how the general meeting is convened, and what majorities are required. Badly drafted statutes are the leading cause of internal conflict.

The bodies: general meeting and committee

The general meeting is the supreme body: it approves the statutes and their amendments, elects the committee, approves the accounts and decides on dissolution. Each member generally has one vote.

The committee (or board) is the executive body: it manages the association and represents it externally. It signs contracts, keeps the accounts and carries out the decisions of the general meeting.

For associations of significant size an auditor may be required; for small entities it is often not necessary.

When entry in the commercial register is required

Entry becomes mandatory when the association carries out a commercial activity in a business-like form to achieve its purpose, or when it is subject to the audit obligation. Many small associations remain unregistered, and that is perfectly fine. Even when unregistered, the association still has legal personality.

Tax, VAT and social contributions

The association is in principle subject to tax on profit and capital, but can obtain an exemption if it pursues aims of public utility or purely ideal aims, under the conditions set by the cantonal tax authority. The exemption is not automatic: it must be requested and justified.

On the VAT front, the general rule applies: liability arises when the turnover from taxable supplies exceeds the threshold (CHF 100,000; for not-for-profit sports and cultural associations run on a voluntary basis the threshold is higher). Simple membership fees, in many cases, are not taxable considerations.

Finally, watch out for social contributions: if the association pays staff or coaches, it is an employer in every respect and must handle AVS/AI/IPG (state social insurances), ALV (unemployment insurance) and, above the thresholds, occupational pension provision LPP and accident insurance LAINF. Remuneration to committee members may also be subject to contributions.

Liability

As a rule, it is the association’s assets that answer for its debts, not the members’ personal assets. But this protection is not absolute: a committee that manages negligently, fails to pay social contributions or does not pay taxes may be personally liable. The simple form does not exempt anyone from due diligence.

How we help

We help you draft solid statutes, set up the bodies, assess the tax exemption and correctly manage contributions and accounting as the association grows. Let’s talk about your project.