Starting a business abroad is a dream for many. Founding your own company in a foreign country can be both exciting and challenging. It requires adaptation to a new culture, a different economic environment, and local legal frameworks. From understanding labour laws and overcoming financial hurdles to building a local network or finding the right premises – there are many challenges to overcome. Furthermore, depending on the country and business sector, approval by local authorities may be crucial for operating your business. Good preparation is key for success. This guide outlines key steps to make your self-employment abroad a success.
Understanding the Most Important Steps
If you are planning to start your own business abroad, you must go through several fundamental steps:
Getting to Know the Country and Its People
Starting a business abroad is a big step. If you don’t just want to set up a business but also become at home in the country, there’s more to consider than just the economic framework. Get to know the country and its people. See whether you and your family feel comfortable, and whether you can picture yourself working long hours in the country – not just being on holiday. If you come to the conclusion: you have the right business idea and the right place for your dream of moving abroad – now the real work begins.
Work Permits and Legal Documentation
First, you need to prepare the necessary documents to apply for a work permit in the host country for your planned business activity. It’s essential to find out about the specific requirements for both a residence and work permit – both in general and specifically for your type of business and activity.
Investor Visa
In some cases, starting a business in your new country of residence may also benefit your visa situation, as many countries offer an investor visa. If your business involves a significant financial investment, you may qualify for an investor visa – depending on the country. This type of visa is generally granted to foreign nationals who invest a set minimum amount (according to national laws) into a local business, create jobs and contribute to the host country’s economic development.
Typical requirements for an investor visa include:
- Proof of available investment funds and their lawful origin;
- A detailed business plan outlining strategy, economic benefits and job creation;
- Relevant professional or entrepreneurial experience (depending on the country);
- A minimum investment amount, which may range between €100,000 and €500,000 or more depending on the country.
An investor visa often offers additional benefits, such as extended residence permits, visa opportunities for family members, and in some cases, a path to permanent residency or citizenship.
Understanding Local Laws
Every country has its own business regulations and legal requirements. It is therefore essential to familiarise yourself with the laws in the country where you want to establish your business. You need to determine which legal structure is most suitable for your company – whether that’s a limited liability company, a public limited company, or a sole proprietorship – and whether specific licences are required. Employment law, social security regulations and, of course, tax rules are also important. It also makes sense to consider in advance what would happen if you wanted to sell or dissolve your business. What is the market like for a potential sale? Can money be transferred out of the country without restrictions? What kind of taxes apply?
Choosing the Right Legal Structure
One of the first steps is choosing the appropriate legal form. As a Swiss citizen, you may be familiar with the GmbH (limited liability company) or AG (public limited company), which are common in Switzerland. However, not all countries offer the same options. If you plan to run a small business without employees, a freelance or sole trader structure may be sufficient. If you intend to grow or hire staff, a more formal structure with limited liability is often the better choice. Always clarify whether there are any restrictions for foreigners.
Local Permits and Licences: Navigating Bureaucracy
Simply setting up the business is often not enough. Depending on the sector, you may need additional permits or licences – for example in healthcare, hospitality or financial services. Depending on your plans, you may also need building permits, or there may be restrictions on which types of businesses can operate in which areas. Be sure to clarify in advance what is needed to operate legally.
Within the EU, the free movement of people and services can simplify processes, which may make it easier for Swiss citizens to get started. However, you must still comply with local regulations.
Don’t underestimate the fact that administration in other countries may function differently than in Switzerland, that procedures may be unfamiliar and that language barriers may exist. Allow plenty of time and inform yourself about possible pitfalls.
Tax Residency and Double Taxation
A particularly complex issue when self-employed abroad is the tax situation. You need to clarify where your business – and where you personally – are considered tax residents, and what level of taxation you can expect for both. Switzerland has concluded double taxation agreements (DTAs) with over 100 countries to prevent income or assets from being taxed twice. Nonetheless, it is still possible to be subject to taxation in more than one country. Especially if you are working across borders, it is important to seek advice from tax professionals.
What Do Double Taxation Agreements Cover?
DTAs determine which country has the right to tax which income or assets. They do not always eliminate double taxation entirely, but they generally include measures to reduce it – such as tax exemptions or credit methods. In the “exemption with progression” method, for example, income is exempt from tax in one country but taken into account for determining the tax rate in the other. In the credit method, taxes paid in the other country can be at least partially credited to taxes in the country of residence.
Bank Account and Financial Planning
When or after establishing your business, you will usually need to open a business bank account in the country of operation. The requirements for this may be more complex than in Switzerland. Some countries impose additional conditions on foreign nationals or require specific documentation. Check this early on.
Your financial planning should also be thorough and include unforeseen circumstances: this includes liquidity planning, access to local financing, and understanding possible tax incentives for foreign entrepreneurs. Especially if you are new to the country, obtaining local financing can be very difficult. Also, include potential cost increases or delays in your business start-up in your budget.
Challenges of Operating Abroad with a Swiss Bank Account
Swiss banks are now known for their strict adherence to anti-money laundering laws and international regulations. The global trend towards increased transparency also plays a role. Switzerland is part of the Common Reporting Standard (CRS), which mandates information exchange with foreign tax authorities.
Moreover, Swiss banks are often cautious regarding certain industries or countries – such as cryptocurrencies or gambling. Business dealings with “high-risk countries” are frequently subject to additional scrutiny or are entirely excluded.
For foreign businesses without a subsidiary or permanent establishment in Switzerland, the hurdles to obtaining a Swiss business account are typically very high, so it is often unrealistic to obtain one for a company founded abroad. There may be a temptation to use your private Swiss bank account for business purposes – but this could lead to the account being closed by the bank. So, make sure to look into this early as well.
Insurance: Protecting Your Business
As in Switzerland, thorough risk coverage is also essential abroad. This includes liability insurance for business operations, accident insurance for employees, or sector-specific coverage. Legal requirements vary depending on the country – some insurances are mandatory. Good insurance coverage protects you against unforeseen risks.
Protecting Intellectual Property
If your business model is based on innovation, technology or creativity, protecting your intellectual property is especially important. Find out about the registration of trademarks, patents and copyrights in the host country – laws vary in each country.
Utilising Local Expertise
To avoid administrative, legal or tax issues, it is advisable to consult local professionals – such as accountants, lawyers and tax advisers. They know the local legal framework and can help ensure your market entry is compliant. Networking with others can also help, for example through chambers of commerce, Swiss diplomatic missions or Swiss clubs.
A Rewarding Entrepreneurial Journey Abroad
Starting a business abroad offers exciting opportunities for personal growth and business diversification. With careful planning, thorough research and professional guidance, your chances of success as an international entrepreneur are strong.
Best of luck with your international adventure!