From sole proprietorship to Sàrl, without tax on the move
The business has grown, and so have the risks, and a sole proprietorship (raison individuelle) is no longer enough. Moving to a Sàrl (GmbH) does not mean starting over, provided you follow three tax rules.
The short answer
You can contribute your sole proprietorship to a Sàrl without being taxed on its hidden reserves, if the business is transferred, Swiss tax liability continues and the tax values are carried over. If you sell the shares within five years, the tax saved is clawed back.
The exact conditions: transfer of a business or a separate part of a business, continued Swiss tax liability, takeover at the last tax value; subsequent taxation if the shares are sold within five years above that value.Source: art. 19(1)(b) and (2) LIFD · checked on 27 September 2026
Key point: the move is neutral on the day of the contribution. It stops being neutral if you sell too soon.
Why move to a Sàrl
- Liability. As a sole proprietor, you are liable for the business's debts with everything you own. In a Sàrl, the company's debts are secured only by the company's assets art. 794 CO.
- Separation. The business becomes a separate legal entity, which can take in a partner or be passed on more easily.
- Your status changes. You become an employee of your own company, which changes your social insurance and your taxation. This, more than tax, is often the deciding factor.
Two routes to get there
A sole proprietorship does not "convert" in the strict legal sense, which is reserved for companies. The move is made in one of two ways:
- Found a Sàrl with a contribution in kind: the sole proprietorship is contributed to the company when it is founded and pays up the capital, in full or in part, with the rest paid in cash. The minimum capital is CHF 20,000 art. 773(1) CO.
- Transfer the assets to a Sàrl under the Mergers Act. Condition: open to sole proprietorships entered in the commercial register: transfer of all or part of the assets and liabilities to another legal entity art. 69(1) Mergers Act.
Registration of the sole proprietorship in the commercial register is therefore a prerequisite for the second route. It is compulsory anyway from revenue of at least CHF 100,000 in the previous financial year.Source: art. 931(1) CO · checked on 27 September 2026
The five-year period
For five years after the contribution, selling the shares for more than the value carried over triggers back tax on the reserves that were not taxed. The move to a Sàrl should therefore be planned together with what comes next: a sale, a new partner, a succession.
What this guide does not cover
Moving to an SA, contributing real estate, which needs its own review, VAT on the business taken over, and how to split the new managing partner's pay between salary and dividend.
Checked on 27 September 2026.