Legal & Compliance · Lesson 5 of 5
Penalties & Risk Management
Consequences of non-compliance and how to protect your company
Tax Non-Compliance Penalties
Swiss tax authorities impose penalties for late filing, underreporting, and tax evasion:
- Late filing: Interest at 3–5% per annum on outstanding taxes
- Tax evasion (negligent): Fine of 1–3x the evaded tax
- Tax fraud (willful, falsified documents): Criminal prosecution, up to 3 years imprisonment
- VAT late filing: CHF 200–5,000 per late return plus interest
Social Security Non-Compliance
Failure to register and pay AHV social contributions is treated very seriously in Switzerland. The compensation fund can hold managers personally liable, including pursuing claims across borders under bilateral agreements.
Voluntary Disclosure
Switzerland offers a favorable voluntary disclosure (straflose Selbstanzeige) program — if you proactively report past underpayments before an investigation begins, penalties are typically waived on the first occurrence. Act promptly if you discover compliance gaps.
Risk Management Best Practices
- Engage a Swiss fiduciary from day one — the cost is far less than penalties
- Set up a tax provision in your accounts (30% of pre-tax profit for a standard Zug company)
- Use a reputable domiciliation service that stays current with regulatory changes
- Review contracts annually with a Swiss attorney for regulatory alignment
- Maintain adequate insurance: professional liability, D&O (directors and officers)