Kreidenwerk is now official! Here’s how to create a game development studio in Switzerland.

Going Corporate

Hey all, Kai here! I hope you had a good start to the new year. I just moved back to my home country of Switzerland after working abroad for over three years, and I’ve got an announcement to make: We’re a company now!

Kreidenwerk, translating to “Crayon Works”, faithfully served as my online CV and blog for many years now. And as of this month, it is a company registered in my hometown of Lucerne responsible for the development of Legion Hearts.

While I didn’t particularly enjoy all the paperwork, it was an enlightening process and I thought I’d put together a post covering the business side of game development. Please keep in mind though that none of the following information is to be considered legal advice in any shape or form.


When creating a society or company in Switzerland, you can choose from a multitude of different legal forms. Fortunately, only three of them are really relevant when it comes to most businesses, which are:

  • Aktiengesellschaft (AG) ≈ PLC 
  • Gesellschaft mit beschränkter Haftung (GmbH) ≈ LLC
  • Einzelfirma ≈ Sole Proprietorship

“Aktiengesellschaft” or “stock corporation” is a company whose stocks can be traded on the stock market. “Gesellschaft mit beschränkter Haftung” or “company with limited liability” is effectively a private company. Lastly, we have sole proprietorships which are an extension of an individual rather than a separate corporate entity.

In our case, the GmbH turned out to be the best fit. A sole proprietorship didn’t offer all the benefits of being a company, and as we won’t be trading stocks any time soon we were quite happy to forego all the paperwork and cost associated with an AG.

Note: These legal forms originate from different laws and are not direct equivalents to their English counterparts. As such, “Kreidenwerk GmbH” cannot be translated even if the correspondence is in another language as it would be misleading.


If you want to set up a GmbH, you need a required minimum share capital of 20,000 CHF. The company must also have at least one shareholder and one company director. Additionally, it is required to have at least one local director and a registered office in Switzerland. That would be me, me, me, and my office, which happens to be a separate room in my flat.

I hired an agency to help me with all the legalese that inevitably finds its way into Swiss paperwork, and here are some of the documents we created together:

Articles of association: This is the foundational document outlining the purpose and makeup of the company. It also cements certain rules, such as the ability of a chairman or chairwoman to override the vote of the board of directors.

Deed of incorporation: This document declares that I have fulfilled all obligations to create the company. It also confirms the share capital deposit and the resulting division said shares.

Stampa/LF Declaration: These documents state that I do not have any undeclared assets, liabilities or debts, and that no foreign entities associated with Kreidenwerk wish to obtain real estate in Switzerland.

Work contract: It may sound redundant, but I did in fact have to sign a work contract between myself and my company. It’s a document required by almost every financial and government institute in Switzerland.

Contractor agreement: This is an agreement between my company and my former employer that outlines my services in lieu of a work contract. The client thus pays my company for my services, which in turn pays my salary. This middle step is important, and I’ll get to it in the next section.

Non-disclosure agreement: There are certain business aspects that I wouldn’t want the freelancers I work with to disclose publicly and vice versa. A possible topic could be the exact amount of money involved in order to not lose leverage when negotiating with other entities.

Terms of service: While not relevant now, this document covers the legal basis for services we’ll offer in the future. Specifically, selling the game and granting access to its online multiplayer component.

Privacy policy: This covers what kind of data we track about visitors and how we process that data as seen here. TL;DR: We record page traffic and visit duration from all users, and keep the first name and email address of all newsletter subscribers.

Note: Not all of these are required and you might need something different depending on your circumstances. I would however recommend that you put down everything on paper that can be put down on paper.


The primary financial requirement to form a GmbH is the aforementioned minimum share capital of 20’000 CHF, which can be a cash or in-kind deposit. Once the company is formed, this deposit is transferred to your business account. Below are the other formation expenses we incurred:

  • Registration in the Commercial Register – 800 CHF
  • Signature Certification  – 50 CHF
  • Business Bank Account – 150 CHF
  • Company Logo – 500 CHF
  • Legal Assistance – 500 CHF
  • Office Equipment – 2’000 CHF
  • Trademark Registration – 800 CHF
  • Website and Domain Name – 200 CHF

Total: 5’000 CHF

This entire process took about 3 weeks to complete. Switzerland handles almost all important communication via snail mail, so it’s a bit on the slower side. Doubly so if you make a mistake, so triple check all your paperwork!

Life and Taxes

Apart from making it easier to eventually sell a product, the primary benefit of having a company is being able to write off our development costs on tax returns. Let’s consider the following two scenarios with an income of 70’000 CHF a year:

1. I earn a salary of 70’000 CHF a year and spend 30’000 CHF of that back on Legion Hearts.

  • Income Tax: 8’400 CHF
  • Social Security Contribution: 4’500 CHF
  • Total: 12’900 CHF

2. My company generates a revenue of 70’000 CHF a year, spends 30’000 CHF back on Legion Hearts, pays a salary of 30’000 CHF and dividends of 10’000 CHF to myself.

  • Revenue Tax: 500 CHF
  • Employer SS Contribution: 2’400 CHF
  • Income Tax: 3’000 CHF
  • Social Security Contribution: 1’900 CHF
  • Total: 7’800 CHF

As you can see, just subtracting the development costs before I pay my own salary reduces the taxable income significantly. This alone pays back the formation costs of the company within a year and doesn’t include the multitude of other ways to receive business tax credits.

Note: All numbers are simplified approximations. Exact figures vary depending on your place of residence and the location of your business and more. Additionally, you should expect to charge more money as a contractor as you’ll be paying more expenses out of pocket compared to an employee.

What is VAT

Switzerland taxes most goods and services with a Mehrwertsteuer (MwSt) or VAT of 7.7% that replaces the sales tax found in other countries. While Swiss companies generating less that 100’000 CHF of revenue per year are not required to levy the VAT in Switzerland, they can choose to do so. The advantage is that if you do, your business can write off VAT that it incurs itself. This is beneficial in our case, but your mileage may differ.

Additionally, a Swiss company selling goods or services abroad does not have to charge VAT as the client is subject to foreign VAT abroad. Conversely, procuring goods or services abroad is also VAT exempt in that country as those taxes are levied in Switzerland.

Lastly, a small difference to the US here: Consumer goods must include the VAT in their display price. So if you ever see Legion Hearts being sold on this site for 39.99 CHF for example, you won’t be charged VAT on top of that.


Want to create your own company in Switzerland or curious about an aspect of it? Here’s a couple of resources that helped me out greatly:

  • Startups & IFJ: Agencies that found the company for you. Their blogs are also goldmines for getting frequently asked questions answered.
  • KMU: The official government website for small businesses. It covers everything you’re legally required to do and provides various statistics about the economy.
  • Tax Calculator: Does what it says.
  • AHV-IV: Official website about the Swiss social security system. Useful to calculate your contributions.
  • Zefix: Business name index. You can check if your desired name is available.
  • IGE/IPI: Institute for Intellectual Property. You can read up on Swiss IP laws here and also search for existing IP that might conflict with yours.

In any case, I hope you enjoyed this glimpse into the business side of things. We’ll cover funding, expenses and day to day operations as part of our devlog as well, so get subscribed if you’d like to learn more!