Swiss Association Law: What Do Associations Need to Know?

In Switzerland, people who want to work with others toward a common goal often form an association. Setting one up is straightforward, but there are clear legal rules to follow: Who makes the decisions? What rights do members have? Who is liable, and what are the accounting requirements? Here’s an overview of the most important aspects of association law in Switzerland.

How is the law governing associations regulated in Switzerland?

Swiss association law establishes the legal framework for forming or dissolving an association. The most important legal provisions are found in Articles 60 through 79 of the Swiss Civil Code (ZGB). Association law governs, among other things:

• which governing bodies an association needs,
• how members make important decisions,
• what responsibilities the board of directors assumes,
• what financial and legal obligations apply.

An association can act as a legally independent entity. To do so, it must have written bylaws that specify that the association exists as an independent organization and that provide information about its purpose, resources, and structure. This means that, legally speaking, the association is not simply the sum of its members. It is itself a “legal entity” and can enter into contracts, open a bank account, own property, or hire employees. This is relevant, for example, when the association has debts or enters into obligations.

What are the requirements for forming a club?

Anyone who wants to establish an association in Switzerland must meet a few basic requirements:

• Define the association’s purpose: The bylaws set forth what the association stands for.
• Put the bylaws in writing: They not only define the association’s purpose but also outline its structure, membership, and funding.
• Elect a board of directors: The board of directors is responsible for day-to-day operations and represents the association externally.
• Determine Funding: The organization can be funded through membership dues and donations, or it can raise money by hosting events. You can find out which foundations align with your organization’s mission by using the foundation search tool on Spheriq.

It’s easy to start a club. However, certain requirements must be met: The bylaws must be adopted at the first meeting. That’s why it’s called the “constitutive” meeting—from a legal standpoint, the club is established at that moment. It is therefore mandatory to prepare minutes of this meeting and have them signed by the board members.

Not every association must be entered in the commercial register. However, it is mandatory if, for example, the association operates a commercially managed business or is legally required to undergo an audit. This may apply, for instance, to an association that runs a large-scale business operation. Since 2023, this requirement has also applied to associations that primarily collect or distribute money or other assets abroad for charitable or similar purposes.

What governing bodies does an association need?

Association law provides for two central bodies: the general assembly and the board of directors. They perform different tasks and together form the foundation for the association’s organization.

The Association Meeting: Making Decisions Together

The association meeting (often referred to as the members’ meeting or general meeting) is the association’s highest governing body. It elects the board of directors, may remove board members from office, and decides on amendments to the bylaws and the dissolution of the association. Its other responsibilities depend on legal requirements and the bylaws. The board of directors must convene the meeting if one-fifth of the members request it.

Members can participate in decision-making at the meeting and vote on important matters. Unless the bylaws provide otherwise, each member has an equal vote, and resolutions are passed by a majority of the votes of the members present. This means that a motion is adopted if more than half of the members present vote in favor. Abstentions are therefore treated as “no” votes. Many bylaws therefore stipulate a majority of the votes cast instead. If a resolution violates the law or the bylaws, any member who did not vote in favor may challenge it within one month of becoming aware of it before the conciliation authority or the court at the association’s registered office.

Typical tasks of a club meeting include:

• Election and removal of the board
• Approval of the annual financial statements and the budget
• Amending the bylaws
• Admission and expulsion of members, unless the bylaws delegate this authority to the board
• Decisions regarding the direction of the association
• Decision on the dissolution of the association

The Board of Directors: Responsibility for Managing the Association

The Executive Board handles the association’s day-to-day operations. It represents the association externally and ensures that the resolutions of the general meeting are implemented.

The responsibilities of the Executive Board are:

• Organizing the association’s operations
• Managing financial resources
• Preparing the general meeting and the annual financial statements
• Entering into contracts
• Ensuring compliance with legal obligations

The bylaws specify the size of the board of directors and how its members are elected. They should also stipulate who represents the association externally and signs contracts. The rule is that two people must sign—the so-called “collective signature.” This ensures that important transactions are always approved by at least two board members.

Individual responsibilities may be divided among the board members or delegated to the executive management. Many board members serve in an honorary capacity. However, this does not alter their legal obligations: They must perform their duties diligently and act in the best interests of the association.

What rights and obligations do association members have?

Members may participate in the association’s activities within the framework of the bylaws and have a say in association meetings. This means they can participate in elections and votes and cast their ballots (e.g., election of the board, budget, or amendments to the bylaws). In doing so, they must comply with the bylaws and valid association decisions. This may include the obligation to pay an annual membership fee.

Membership, Expulsion, and Resignation

In principle, every person is free to decide whether to join an association. However, there is generally no legal right to membership. An association may specify the requirements for admitting new members in its bylaws. Ideally, the bylaws clearly state whether prospective members must submit an application and who decides on their admission. The bylaws may also govern the expulsion of a member. If no such provision exists, expulsion is possible only by resolution of the general meeting and for good cause.

In addition, resignation is also governed by law. Members may generally resign with six months’ notice, effective at the end of the calendar year or a specified association period. This right to resign is mandatory: The bylaws may make resignation easier—for example, by allowing a shorter notice period—but they may not exclude or make it more difficult. It is therefore advisable to review the bylaws before resigning.

Who is liable for a club’s debts?

If an association can no longer pay its bills, someone must cover the outstanding amounts. As a general rule, the association pays its debts using its own assets. Members are not normally required to cover these debts with their personal assets. However, there is one exception: If the bylaws expressly provide for personal liability of the members, they may, under certain circumstances, also be personally liable for the association’s debts. Therefore, the relevant provisions should be carefully defined when the association is founded and reviewed before joining.

When is the board of directors personally liable?

Under certain circumstances, members of the board of directors may also be held personally liable for damages. This is possible, for example, if they breach their duties and thereby cause damage.

A hypothetical example: At a club party, the railing around the stage is loose. The board is aware of this but does not have it repaired or secure the area. If someone were to fall from the platform and injure themselves, not only the club but also a responsible individual could be held personally liable under certain circumstances.

Whether this is actually the case depends, of course, on the specific circumstances and the legal requirements. Not every problem automatically leads to personal liability.

One risk that many people underestimate is social security contributions: If an association with employees fails to pay AHV contributions, board members may be personally liable (Art. 52 AHVG). Anyone who pays wages should therefore ensure that contributions are calculated and paid on an ongoing basis.

What types of insurance are recommended for clubs?

Depending on the association’s activities, it may be advisable to obtain coverage against certain liability risks. Association liability insurance can cover damages caused by the association or insured individuals to others. For individual events, the association can also take out event liability insurance. For the board of directors, there is also directors and officers liability insurance (known as “D&O”), which can cover claims arising from breaches of duty in the management of the association.

Which types of damage are actually covered depends on the specific policy. Clubs should therefore check whether and how their regular activities and events are covered. If a club employs staff, it must also comply with labor and social security regulations. These include, for example, registration with the AHV, mandatory accident insurance, and—above a certain salary threshold—occupational pension coverage (BVG).

Insurance naturally incurs costs. For this reason, the board carefully weighs which risks the club can bear—and where taking out insurance is truly the only option.

What accounting requirements apply to nonprofit organizations?

Every club must keep records of its income, expenses, and financial position. The board of directors is responsible for this. In principle, this can also be done using a simple ledger, affectionately known in Switzerland as a “Milchbüechli ledger.” Just as the milkman used to do, expenses are recorded in one column and income in the other; the totals are calculated at the bottom of the page, and the balance is reconciled with the cash on hand and the bank account.

For associations that must be entered in the commercial register, additional regulations regarding bookkeeping and financial reporting apply. In such cases, the “Milchbüechl” method of bookkeeping is generally insufficient; instead, double-entry bookkeeping is mandatory. The specific requirements that apply depend, among other things, on whether the association is required to maintain commercial accounting records.

When must an association have its books audited?

Certain associations must have their annual financial statements audited by a professional auditing firm. Such an audit is required if an association exceeds at least two of the following thresholds in each of two consecutive fiscal years:

• 10 million Swiss francs in total assets: The association has correspondingly high assets.
• 20 million Swiss francs in revenue: The association generates a correspondingly high annual revenue.
• 50 full-time positions: The association employs more than 50 full-time employees on average per year.

In this case, an auditing firm must review the books and annual financial statements. An expert verifies whether the association’s funds have been properly accounted for, whether the financial statements match the receipts, and whether the association’s assets have been correctly recorded. The audit requirement primarily applies to larger associations or, for example, when a member is personally liable for debts according to the bylaws. For most small associations, this special provision is not relevant. Many bylaws, however, provide for auditors selected from among the members to review the annual financial statements for the association’s general meeting.

Regardless of the audit, transparent accounting is an important foundation. This allows the board to keep track of the financial situation and be accountable to members, funding agencies, and donors.

By the way: Special attention should be paid to the cash fund—that is, the safekeeping of cash, “bills and coins.” Since many clubs have established membership fees or collections, cash is often collected. It’s good practice to accept cash payments only for small amounts and to deposit them into the club’s account as soon as possible. Otherwise, it unfortunately happens all too often that a few hundred francs suddenly go missing from the club’s cash box—these are usually never found, but the search for the culprit can sometimes drag on for years in the meeting minutes.

Do clubs have to pay taxes?

Clubs are not automatically exempt from taxes. Whether they have to pay taxes depends on the club’s purpose, as well as its income and assets. In general, clubs may be subject to income and capital gains taxes.

Membership dues are not included in taxable income. Under the direct federal tax system, economic profits of 5,000 Swiss francs or more are subject to taxation. Many cantons, however, have their own exemption thresholds, some of which are significantly higher. In addition, associations can apply for tax exemption if they pursue charitable or public purposes. Exemption is granted under certain conditions and is determined by the relevant tax authority. Practices vary widely among cantonal agencies. While the legal basis for tax exemption is the same throughout Switzerland, some cantons impose additional requirements, thereby making it considerably more difficult to obtain tax exemption.

The duration of the procedures also varies. While, for example, a decision is typically issued within 3–4 weeks in the canton of Basel-Stadt, the same review often takes half a year in the canton of Zurich. In most cases, it’s worth seeking a brief consultation or a quick review from a specialist familiar with the tax exemption process before submitting an application. This helps avoid common mistakes.

A tax exemption does not mean that an association is exempt from all tax obligations. Depending on its activities, it may, for example, be required to file a value-added tax return (for nonprofit associations as well as volunteer-run sports and cultural associations, this applies only once annual revenue reaches 150,000 Swiss francs, rather than the usual 100,000 Swiss francs) or comply with the applicable regulations regarding payroll for salaried employees. It is therefore worthwhile to clarify the tax situation early on. Especially when it comes to donations, membership dues, and grants, organizations should know which rules apply to them.

How does an association fulfill its legal obligations?

Good club organization starts with clear bylaws and defined responsibilities. Over time, requirements may change—for example, as the club grows, new staff are hired, or larger events are organized.

These points will help you keep track of all your obligations:

• Keep the bylaws up to date: Changes to responsibilities, membership dues, or voting procedures should be clearly defined.
• Document decisions: Minutes provide clarity on which resolutions were passed and who is responsible for them.
• Manage finances transparently: Clear and traceable bookkeeping facilitates oversight and reporting.
• Assess Liability Risks: Depending on the nature of your business, insurance policies and safety measures should be reviewed regularly.
• Understand Your Legal Obligations: The commercial register, taxes, human resources administration, and data protection may entail additional requirements.

Note: This article provides general guidance on association law in Switzerland and is not a substitute for individual legal or tax advice. For more complex questions regarding topics such as tax exemptions or labor law obligations, it may be advisable to seek expert advice.