Starting a manufacturing company in Switzerland requires no licence: no professional register, no mandatory diploma, nothing to apply for before opening a factory. The barrier sits elsewhere. As soon as production relies on machines or serial operations and at least six workers, the cantonal authority may classify the business as an industrial undertaking under the Labour Act. That status makes plan approval mandatory before any construction work, requires an operating permit before the first day of production, and assigns Suva as accident insurer.
This guide follows those steps in order, then covers the three parameters that drive the economics of Swiss production: the 60% Swiss made rule, the abolition of industrial customs duties on 1 January 2024, and working time.
Contents
- A status, not a licence: the industrial undertaking
- Plan approval and the operating permit
- What the status changes in working time
- Location, legal form and financing
- Swiss made: the 60% of manufacturing cost rule
- Customs and VAT: zero duty on industrial products
- Staff: Suva, the optional MEM agreement and pensions
- Research, patents and taxation
- The pitfalls of an industrial project
A status, not a licence: the industrial undertaking
When you start a manufacturing company in Switzerland, the central legal question is not permission to produce but classification as an “industrial undertaking” within the meaning of Art. 5 of the Labour Act (LA). That classification does not follow from the founder’s declaration: the special provisions apply only by virtue of a classification decision issued by the cantonal authority.
The Act covers undertakings that use permanent fixed installations to produce, process or treat goods, or to produce, transform or transport energy, where one of three conditions is met.
| Criterion | What the Act says | What the ordinance adds |
|---|---|---|
| Machines or serial operations | They determine the way work is organised and at least six workers are employed on those activities | Commercial and technical office staff, apprentices, trainees, temporary staff and workers mainly employed outside the undertaking do not count (Art. 29) |
| Automated processes | They have a decisive influence on how work is organised | Technical equipment alone runs and monitors the installations, making human intervention normally unnecessary (Art. 30) |
| Particular hazards | The life or health of workers is exposed to them | In particular explosive, highly flammable or particularly harmful substances (Art. 31) |
Two practical consequences follow. An automated line can make an undertaking industrial with fewer than six production workers, and so can a small unit handling hazardous substances. And the authority does not simply wait: it seeks out undertakings that meet the definition, Suva may propose classification, and the employer completes a questionnaire on the relevant facts (Art. 32 Ordinance 4).
Plan approval and the operating permit
Industrial status triggers a two-step procedure before the cantonal authority: approval of the plans before building or converting premises, then an operating permit before production starts. Art. 7 LA is explicit: anyone intending to build or convert an industrial undertaking must submit the plans for approval to the cantonal authority, which requests a report from Suva, and the employer must apply for the operating permit before starting operations.
The plan file
The application is filed in writing, with plans and a descriptive statement (Art. 37 Ordinance 4). The plans include a site plan, plans of all rooms with their intended use, including canteens, changing rooms, toilets and emergency exits, elevations and sections, at a scale of 1:50, 1:100 or 1:200. They show the location of workstations, machines and installations such as pressure vessels, ventilation, conveying systems and flammable storage areas (Art. 38). The cantonal authority requests Suva’s report, and proposals expressly designated as orders become conditions of the approval.
The operating permit
Once the fit-out is complete, the authority grants the operating permit if the construction and layout match the approved plans. Where sufficient reasons require early start-up, it may grant a provisional permit, provided the measures necessary to protect the life and health of workers have been taken (Art. 43 Ordinance 4).
Non-industrial undertakings are also covered
Plan approval is not limited to industrial undertakings. Ordinance 4 also covers, among others, chemical and technical production plants, iron, steel and other metal foundries, iron processing, surface treatment such as galvanising or anodising, wood impregnation, waste disposal and recycling, and the storage of chemicals above the thresholds of the Major Accidents Ordinance (Art. 1(2)). A small surface treatment workshop can therefore be subject to it without ever being classified as industrial.
Important
Do not sign a final lease or start fit-out works before checking whether your activity is subject to plan approval: the premises must match the requirements, not the other way round. And no production starts before the operating permit. Timelines and fees depend on the canton; contact the competent cantonal labour inspectorate before fixing your schedule.
What the status changes in working time
Industrial status brings the maximum working week for production workers down from 50 to 45 hours. Art. 9 LA sets 45 hours for workers employed in industrial undertakings, as well as for office staff, technical staff and other employees, and 50 hours for all other workers.
- Overtime: no more than two hours a day, and 170 hours per calendar year for workers on a 45-hour week, against 140 hours for those on 50 hours (Art. 12 LA).
- Night and Sunday work: regular or periodic night or Sunday work requires authorisation from SECO; temporary work requires cantonal authorisation. The worker’s consent is required, and temporary Sunday work carries a 50% wage supplement (Art. 17 and 19 LA).
For shift production, the timetable for night work authorisations is therefore built alongside the plan file: a line designed to run around the clock without SECO authorisation stands idle at night.
Location, legal form and financing
A Swiss manufacturing company is almost always set up as a capital company. The public limited company, with CHF 100,000 of capital of which at least CHF 50,000 paid in, fits where investors finance the installations; the limited liability company, with CHF 20,000, suits a smaller workshop. The incorporation steps are set out in our guide to the incorporation of a company in Switzerland.
Location turns on zoning: production may only be established where the land use plan allows it, and each canton organises its industrial and business zones. Machine tools are often financed through leasing, whose accounting and tax treatment we cover in our article on leasing in Switzerland.
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Swiss made: the 60% of manufacturing cost rule
An industrial product may carry a Swiss indication of source if at least 60% of its manufacturing cost is generated in Switzerland and a significant manufacturing step takes place there. The Trade Mark Protection Act (TmPA) puts it as follows: the source of other products, in particular industrial products, corresponds to the place where at least 60% of their manufacturing cost is generated (Art. 48c(1) TmPA).
| Cost item | Treatment in the 60% calculation |
|---|---|
| Manufacturing and assembly | Included |
| Research and development | Included |
| Quality assurance and certification required by law or standardised across the industry | Included |
| Packaging | Excluded |
| Transport | Excluded |
| Marketing, promotion and after-sales service | Excluded |
| Natural products and raw materials unavailable in Switzerland, under the conditions of the Act | Excluded |
The rule has a direct organisational consequence: the threshold is demonstrated through cost accounting, product by product. The Act adds a qualitative requirement: the indication must correspond to the place where the activity that gave the product its essential characteristics took place. Our Geneva subsidiary RISTER covers the practical use of the label in its article on the Swiss made label.
Customs and VAT: zero duty on industrial products
Since 1 January 2024, Switzerland no longer levies customs duties on industrial products, whatever their origin. SECO states that all import duties on industrial products (chapters 25 to 97 of the HS) have been abolished, irrespective of the origin of the goods. Agricultural products, chapters 1 to 24 and a few products of chapters 35 and 38, remain outside that abolition.
- Imported raw materials, components and machines enter free of customs duty, which lowers the cost of assembling in Switzerland.
- Import VAT remains due, at the standard rate of 8.1% for most goods, and is recovered as input tax by a VAT-registered business.
- Proof of origin is no longer required for industrial products intended to remain in Switzerland, but it is still needed for re-export and origin cumulation: an exporting company therefore continues to document the origin of its inputs.
The tariff structure was simplified on the same date, with the number of tariff lines falling from 9,114 to 7,511. The procedures themselves are described in our guide to Swiss customs duties.
Staff: Suva, the optional MEM agreement and pensions
Industrial status also determines the accident insurer. Art. 66 of the Accident Insurance Act places workers of industrial undertakings within the meaning of Art. 5 LA under compulsory insurance with Suva, together with those of undertakings that work metal, wood, plastics, stone or glass with machines. Choosing a private insurer is not an option for them.
Unlike construction, the machinery, electrical and metal industry has no generally binding collective agreement. The MEM collective agreement, renewed from 1 July 2023 to 30 June 2028, covers around 100,000 employees in some 530 companies, but Swissmem describes it as an optional choice for its member companies. A non-member sets its conditions within the framework of the Code of Obligations and the Labour Act, while remaining attentive to industry pay levels and, in cantons that have one, to the cantonal minimum wage.
Occupational pension contributions apply above the statutory salary threshold, and payroll administration for shift work is part of our administration services for Swiss companies.
Research, patents and taxation
A manufacturer that develops its own products can use two cantonal instruments: an additional deduction of up to 50% of research and development expenditure, and a reduction of up to 90% on profit from patents (patent box), with total relief capped at 70% of taxable profit. Direct federal tax offers neither.
Differences between cantons are wide: patent box relief reaches 90% in Zurich, Zug and Lucerne, 60% in the canton of Vaud and 10% in Geneva. We set out these mechanisms in our guide to starting a SaaS company in Switzerland.
My Swiss Company advice
Set up cost accounting per product in the first year, isolating manufacturing, assembly, research and quality costs generated in Switzerland. The same tool serves three purposes: demonstrating the 60% Swiss made threshold, calculating the nexus ratio of a patent box, and steering your cost prices.
The pitfalls of an industrial project
The first is fitting out before having the plans approved: no canteen, insufficient emergency exits, undersized ventilation, and the works have to be redone.
The second is counting the six workers your own way. What counts is the people employed in production, and an automated installation or a hazardous substance is enough to classify the undertaking without reaching that threshold.
The third is planning shift production without applying for night or Sunday work authorisations, which fall to SECO when the work is regular.
The fourth is displaying “Swiss made” on the basis of an estimate: without a documented calculation of manufacturing cost, the indication of source is open to challenge.
The fifth concerns customs: believing that the abolition of duties removes all formalities, when import VAT remains due and proof of origin is still needed for export.
FAQ: starting a manufacturing company in Switzerland
Do you need a permit to open a factory in Switzerland?
Setting up the company requires no licence. However, an undertaking classified as industrial by the cantonal authority must have its plans approved before building or converting its premises, then obtain an operating permit before starting production (Art. 7 LA). Some non-industrial businesses, such as foundries or surface treatment workshops, are also subject to plan approval.
When is a business considered industrial?
Under Art. 5 LA, where it uses fixed installations to produce, process or treat goods and either machines or serial operations determine the work with at least six production workers, or automated processes have a decisive influence, or workers are exposed to particular hazards. The status applies only after a classification decision by the cantonal authority.
What is the working week in an industrial undertaking?
The maximum working week is 45 hours for workers in industrial undertakings, as for office and technical staff, against 50 hours for other workers. Overtime is capped at 170 hours per calendar year for workers on 45 hours, against 140 hours for those on 50 hours (Art. 9 and 12 LA).
How can a product carry the Swiss made indication?
At least 60% of its manufacturing cost must be generated in Switzerland, counting manufacturing, assembly, research and development, quality assurance and certification, but not packaging, transport or marketing. A significant manufacturing step must also have taken place in Switzerland (Art. 48c TmPA).
Are customs duties still payable on imported industrial components?
No. Since 1 January 2024, Switzerland has abolished all import duties on industrial products of chapters 25 to 97 of the Harmonised System, whatever their origin. Import VAT remains due, and proof of origin is still required for re-export and origin cumulation.
Must an industrial undertaking apply a collective agreement?
Not necessarily. The MEM collective agreement, valid from 1 July 2023 to 30 June 2028, is an optional choice for Swissmem member companies and has no general binding force. Workers of an industrial undertaking are, however, compulsorily insured against accidents with Suva (Art. 66 AIA).
Sources
- Federal Act on Employment in Business, Trade and Industry (Labour Act, SR 822.11), Art. 5, 7, 8, 9, 12, 17 and 19
- Ordinance 4 to the Labour Act (SR 822.114), Art. 1, 29 to 32, 37, 38, 42 and 43
- Trade Mark Protection Act (TmPA, SR 232.11), Art. 48 and 48c
- Swiss Federal Institute of Intellectual Property, Swissness
- SECO, Abolition of customs duties on industrial products
- Federal Act on Accident Insurance (AIA, SR 832.20), Art. 66
- Swissmem, social partners continue the MEM collective agreement
Conclusion
Starting a manufacturing company in Switzerland is free, but operating one means clearing a set of steps in a strict order: classification by the cantonal authority, plan approval before the works, operating permit before production, night work authorisations for shifts. Around that core, three levers drive profitability: industrial customs duties at zero, a Swiss made claim that must be demonstrated through cost accounting, and cantonal relief for research and patents.
My Swiss Company SA is a Swiss Corporate Services Provider in Geneva, Lucerne and Zug, serving clients in more than 20 countries through its Swiss company formation services. We structure the company and its financing, then run the cost accounting, VAT and payroll of your production. To scope your project, let’s talk.
