Incorporation with Contributions in Kind: What You Need to Know in Switzerland

What is a contribution in kind?

In a formation with contributions in kind, share or registered capital is provided not in cash, but in assets such as:

• Machinery and vehicles
• IT infrastructure or office equipment
• Intellectual property rights (patents, trademarks)
• Equity interests in other companies
• Claims or existing assets from a sole proprietorship

This option is valuable when founders already own business assets they want to contribute.

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Requirements for a formation with contributions in kind

Legally permitted but requires specific formalities:

1. ‍Contribution agreement: written, notarized, specifying assets, value, and contributor.‍
2. Founders’ report: proves the assets are economically useful and equal in value to the capital.‍
3. Auditor’s confirmation: a licensed auditor verifies the valuation.‍
4. Commercial register entry: full disclosure of assets and valuation.

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Advantages

• No liquidity burden
• Effective use of existing assets
• Flexibility for founders with business resources

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Risks and challenges

• Valuation uncertainty
• Tax implications (VAT, income tax)
• Liability if assets are overvalued
• More complexity and costs at incorporation

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Example: LLC formation with company car

A founder contributes a company car worth CHF 20,000 as capital. This requires: a written agreement, professional valuation, notarization, and disclosure in the register.

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When is it worthwhile?

• No cash available but business assets exist
• Assets are needed for company operations
• Converting a sole proprietorship into a PLC/LLC

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Conclusion

Contributions in kind offer opportunities for entrepreneurs but demand careful preparation and strict compliance.

Recommendation: consult a fiduciary or legal advisor to avoid mistakes and ensure legal security.

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Setting up a company in Switzerland: a complete guide