Set Up a Project Office in India from Switzerland

How to Set Up a Project Office in India from Switzerland

A Project Office (PO) in India allows a Swiss company to establish a temporary presence specifically to execute a project for which it has secured a contract from an Indian entity. Unlike a Liaison Office (restricted to non-commercial activities) or a Branch Office (for ongoing commercial operations), a project office is tied to a specific contract and ceases to exist once the project is completed.

Project offices are particularly well-suited for Swiss companies in sectors such as engineering, infrastructure, power, pharmaceuticals, precision instruments, and IT services that have won project contracts from Indian companies or government bodies. With the EFTA-India Trade and Economic Partnership Agreement (TEPA) entering into force on October 1, 2025, and EFTA states committing USD 100 billion in FDI to India over 15 years, Swiss companies are poised for expanded project-based engagement in India. Approximately 328 Swiss companies already operate in India, and 110 manufacture locally through subsidiary structures.

Swiss companies benefit from the general permission route for establishing project offices. Unlike entities from Hong Kong or China that require specific RBI approval, Swiss companies can establish a project office through an Authorized Dealer (AD) Category-I bank without direct RBI involvement, resulting in significantly shorter timelines.

FDI Route & Regulatory Requirements

Project office establishment is governed by the Foreign Exchange Management Act (FEMA) and RBI regulations. Swiss companies benefit from a straightforward regulatory pathway.

General Permission Route

Under the FEMA (Establishment in India of a Branch Office or a Liaison Office or a Project Office) Regulations, 2016, the RBI has granted general permission to foreign companies to establish project offices in India, provided the following conditions are met:

• The company has secured a contract from an Indian entity to execute a project in India
• The project is funded by inward remittance from abroad, or
• The project is funded by a bilateral or multilateral international financing agency, or
• The project has been cleared by an appropriate Indian authority, or
• The Indian entity awarding the contract has been granted a term loan by a public financial institution or bank in India

As a non-land-border country, Switzerland is eligible for this general permission route. The application is processed entirely at the AD bank level, without being referred to the RBI for specific approval. This is a major advantage over entities from China, Hong Kong, Pakistan, or Bangladesh, which must obtain prior RBI approval regardless of funding source.

Specific Permission Route (When Required)

If the Swiss company's project does not meet any of the general permission criteria, or if the company's principal business falls in a sector where 100% FDI is not permitted under the automatic route, the application must be submitted to the RBI through the AD bank for specific approval. This is relatively uncommon for Swiss companies given Switzerland's favorable regulatory standing.

2025 Draft Regulations Update

The RBI's October 2025 draft regulations propose several changes relevant to project offices:

• Separate books of accounts: Project offices executing multiple projects must maintain separate books for each project
• Principle-based activity restriction: Project offices may not undertake activities prohibited or under the approval route as per FDI policy
• Streamlined UIN allotment: AD banks report establishment details post-approval, and the RBI allots the UIN based on submitted data
• Continuation of general/specific approval routes: The two-track system is maintained, with Swiss companies continuing to benefit from the general route

EFTA-India TEPA Framework

The TEPA agreement enhances the bilateral framework for Swiss project-based investments. While it does not directly modify project office establishment procedures, it provides enhanced market access, stronger investment protections, and a commitment of USD 100 billion in EFTA FDI to India over 15 years. The EFTA Desk launched in February 2025 provides guidance and support for Swiss companies investing in India, which can be valuable for companies navigating project office establishment.

Permitted Activities

A project office in India may carry out activities strictly related to the approved project:

• Executing the specific project contract awarded by the Indian entity
• Managing project operations, sub-contractors, and personnel
• Procuring materials and services necessary for project execution
• Coordinating technical deliverables with the Indian counterparty
• Any ancillary activities necessary for the project's completion

Activity Limitations

A project office cannot undertake activities beyond the scope of the approved project contract. Additional projects require either fresh AD bank approval or modification of the existing approval. Under the 2025 draft regulations, multiple projects through a single office require separate books of accounts for each project.

DTAA Benefits for Swiss Companies

The India-Switzerland DTAA (in force since 1994, revised 2010) has critical implications for project offices, particularly regarding Permanent Establishment (PE) classification and taxation of project profits.

Permanent Establishment Classification

A project office in India typically constitutes a Permanent Establishment of the Swiss parent company under Article 5 of the DTAA. A construction site, installation or assembly project, or supervisory activities connected therewith constitute a PE if they last more than 183 days within any 12-month period. Given that most projects executed through a PO exceed this threshold, the project office will almost always be classified as a PE.

Tax Implications

As a PE, the project office's profits attributable to Indian operations are taxable in India at the foreign company tax rate of 35% (plus applicable surcharge of 2%-5% and 4% health and education cess), resulting in an effective rate of approximately 37.13%-38.22%. Profits are determined based on the project office's separate accounts and the arm's length principle.

Key Treaty Rates (Post-MFN Suspension)

• Interest: Withholding tax capped at 10%
• Royalties: Withholding tax capped at 10%
• Fees for Technical Services: Withholding tax capped at 10%
• Dividends: 10% (previously 5% under MFN clause, reverted from January 2025)

MFN Clause Suspension and Tax Planning

Switzerland's suspension of the MFN clause from January 2025 primarily impacts dividend taxation. For project offices, the direct effect is limited since profit remittances are not dividends. However, other cross-border payments (interest, royalties, technical service fees) between the project office and the Swiss parent remain subject to the base treaty rates. Swiss companies should work with tax advisors to optimize the remittance structure.

Double Taxation Relief

The DTAA provides for tax credit mechanisms allowing the Swiss parent company to claim credit for taxes paid in India on project office profits, preventing double taxation. The project office must file Form 15CA/15CB for all outward remittances. A CA certificate (Form 15CB) is required for remittances exceeding INR 5 lakh.

Document Requirements & Authentication

Switzerland has been a member of the Hague Apostille Convention since March 11, 1973. Documents require an apostille from the relevant Swiss cantonal authority.

Documents Required from Switzerland

• Commercial Register Extract (Handelsregisterauszug): Of the Swiss parent company, certified by the cantonal Commercial Registry Office, apostilled
• Articles of Association (Statuten): Of the Swiss entity, apostilled
• Board Resolution: Authorizing the establishment of a project office in India, apostilled
• Audited Financial Statements: Of the Swiss parent for the latest 3 financial years, apostilled
• Power of Attorney: In favour of the authorized representative in India, apostilled
• Passport copies: Of the authorized representative in India, notarized
• Copy of the Project Contract: Awarded by the Indian entity, apostilled
• Project Details: Scope, duration, value, and funding source of the project
• Banker's Certificate: From a Swiss bank confirming the parent company's financial standing

Documents Required in India

• Form FNC (Application for Establishment of Branch/Liaison/Project Office)
• Registered office address proof (rental agreement + NOC from landlord + utility bill)
• Digital Signature Certificate (DSC) for authorized representative
• Form FC-1 for registration with the Registrar of Companies

Apostille Process in Switzerland

Each canton has its own competent authority (Kantonale Beglaubigungsstelle) for issuing apostilles. For Zurich-registered companies, the Bezirksgericht Zürich handles apostilles; for Geneva, the Chancellerie d'État. The Swiss Federal Chancellery apostilles federal documents. Fees range from CHF 15-30 (approximately EUR 10-20), with processing typically taking 1-5 working days depending on the canton. Documents must be notarized by a Swiss notary before the apostille is affixed.

Step-by-Step Registration Process

Swiss companies benefit from the general permission route, making the project office establishment process faster and simpler than for land-border country entities.

Step 1: Secure Project Contract

The prerequisite is a specific project contract awarded by an Indian entity, clearly defining project scope, timeline, deliverables, and value. Ensure the contract specifies the funding source (inward remittance, international financing, appropriate authority clearance, or Indian term loan). Timeline: Precondition (before application).

Step 2: Document Preparation & Apostille

Prepare all required documents in Switzerland, have them notarized by a Swiss notary, and obtain apostilles from the relevant cantonal authority. Include the project contract in the apostilled document set. Begin early, as different cantons have varying processing times. Timeline: 1–2 weeks.

Step 3: Submit Form FNC to AD Category-I Bank

File the completed Form FNC with all supporting documents (including the project contract and funding proof) with an AD Category-I bank in India. Under the general permission route, the AD bank can approve the application directly without referring it to the RBI, provided the general permission criteria are met. Timeline: 2–3 weeks.

Step 4: Obtain RBI Unique Identification Number

Once the AD bank approves the application, the RBI allots a Unique Identification Number (UIN). This UIN is required for all subsequent regulatory filings, tax registrations, and compliance reporting. Timeline: 1–2 weeks.

Step 5: Register with Registrar of Companies

File Form FC-1 with the ROC within 30 days of establishing the project office (Section 380, Companies Act, 2013). The ROC issues a certificate of registration. Timeline: 1–2 weeks.

Step 6: Obtain PAN & TAN

Apply for a Permanent Account Number (PAN) and Tax Deduction Account Number (TAN). Both are essential for tax filings, TDS compliance on payments to contractors and employees, and banking operations. Timeline: 1–2 weeks.

Step 7: Open Bank Account

Open a current account with the AD bank. All project-related inward remittances and domestic payments flow through this account. The AD bank requires the approval letter, UIN, ROC certificate, PAN, and project contract. Timeline: 1–2 weeks.

Step 8: Commence Project Execution

Begin project operations within the scope defined in the approved contract. Maintain separate books of accounts for the project office. The project must be commenced within 6 months of the approval letter.

Timeline & Costs

Swiss companies benefit from significantly shorter timelines thanks to the general permission route.

Realistic Timeline Breakdown

Fee Breakdown

• AD bank processing fee: Varies by bank (typically INR 10,000–25,000)
• ROC registration (Form FC-1): INR 6,000
• PAN application: INR 107
• TAN application: INR 65
• Stamp duty: Varies by state of registration
• Professional fees: INR 30,000–80,000 (for CA/CS handling AD bank and ROC filings)
• Apostille fees (Switzerland): CHF 15–30 per document
• Swiss notarization fees: CHF 100–500 per document (varies by canton)
• Project-specific costs: Site setup, equipment, workforce mobilization (funded via inward remittance)

Post-Registration Compliance

Project offices have specific compliance obligations tied to both their operational nature and the project lifecycle.

Annual Filings

• Annual Activity Certificate (AAC): Submitted to the AD bank, certified by a Chartered Accountant, within 6 months of the financial year end. Must confirm project progress and adherence to approved activities
• Financial Statements (Form FC-3): Filed with the ROC within 6 months of the close of the financial year
• Income Tax Return: Filed by October 31 each year. Project offices are taxed as foreign companies at 35% (plus surcharge and cess)
• GST Returns: Monthly/quarterly if GST registered (likely required for project execution activities)
• FLA Return: Annual Foreign Liabilities and Assets return to RBI by July 15

Project-Wise Accounts

Under the 2025 draft regulations, project offices executing multiple projects must maintain separate books of accounts for each project. This ensures transparency in profit attribution, facilitates accurate tax filings, and simplifies closure proceedings for individual projects.

Fund Remittance

Project office profits can be remitted to the Swiss head office after payment of applicable Indian taxes. Each remittance requires Form 15CA/15CB filing. The DTAA provides tax credit mechanisms to prevent double taxation on remitted profits.

Closure Upon Project Completion

A project office must be closed upon completion of the project. The closure process involves: obtaining a CA certificate confirming all tax liabilities are settled; submitting a closure application to the AD bank; filing Form FC-4 with the ROC; and repatriating remaining funds (after settling all Indian liabilities) through the AD bank. The AD bank verifies full compliance before approving fund repatriation.

Critical Compliance Point

Non-submission of the AAC within the prescribed timeframe triggers account freezing by the AD bank. If not submitted for three consecutive years, the RBI may initiate closure proceedings. Swiss companies must establish a compliance calendar from the outset.

Common Challenges for Swiss Companies

1. Contract Prerequisite

A project office can only be established after the Swiss company has secured a specific project contract from an Indian entity. The company cannot set up the office speculatively while bidding for contracts. Swiss companies in the bidding phase should consider a liaison office as a temporary measure for market engagement during the pre-contract period.

2. Higher Effective Tax Rate

Project offices are taxed at the foreign company rate of 35% (plus surcharge and cess), resulting in an effective rate of approximately 37.13%-38.22%. This is significantly higher than the 25%-30% rate for domestic Indian companies or subsidiaries. For large, long-duration projects, Swiss companies should evaluate whether incorporating a subsidiary would be more tax-efficient.

3. Scope Limitation

Activities are strictly limited to the approved project contract scope. Taking on additional projects requires fresh AD bank approval. This inflexibility can be challenging for Swiss companies that win multiple contracts in India. Each additional project may require a separate approval or a consolidated arrangement with separate books of accounts.

4. MFN Clause Suspension and Remittance Planning

While the MFN suspension does not directly affect project office profit remittances (which are not dividends), it signals a broader shift in the India-Switzerland tax relationship. Swiss companies should engage tax advisors to optimize their cross-border payment structure, particularly for royalties, interest, and technical service fees flowing between the project office and the Swiss parent.

5. Swiss Franc Currency Risk

Project costs budgeted in CHF may fluctuate relative to INR, impacting profitability. Swiss companies with large India projects should consider hedging arrangements through the AD bank. The EFTA-India TEPA framework may eventually facilitate more predictable financial flows, but currency risk management remains the company's responsibility.

6. Closure Complexity

Closing a project office upon project completion requires settling all Indian tax liabilities, obtaining CA clearance, filing with the AD bank and ROC, and repatriating remaining funds. While the process is more straightforward for Swiss companies (no additional security scrutiny), it still requires careful planning to ensure no compliance gaps that could delay fund repatriation.

Frequently Asked Questions

Can a Swiss company establish a project office under the general permission route?

Yes, provided the project meets at least one general permission criterion: the contract is funded by inward remittance, international financing, appropriate authority clearance, or an Indian term loan. The AD bank can approve the application directly without RBI referral, resulting in a streamlined process taking 4-8 weeks.

What type of contract is required to establish a project office?

The Swiss company must have a secured contract from an Indian entity to execute a specific project in India. The contract must define scope, timeline, and value. The project must be funded through one of the approved methods. Without a specific contract, a project office cannot be established—a liaison office or branch office would be the appropriate alternative.

Is a project office taxable in India?

Yes. A project office typically constitutes a Permanent Establishment under the India-Switzerland DTAA and is taxable on profits attributable to Indian operations at the foreign company rate of 35% plus surcharge and cess (effective rate approximately 37.13%-38.22%). The DTAA provides tax credit mechanisms to prevent double taxation.

How does the MFN suspension affect a Swiss project office?

The MFN clause suspension primarily impacts dividend taxation, not project office profit remittances. For project offices, the direct effect is limited. Cross-border payments such as interest, royalties, and technical fees remain at the base treaty rate of 10%. Swiss companies should review their remittance structure with tax advisors.

How long does it take to set up a project office from Switzerland?

Under the general permission route, the process typically takes 4-8 weeks. This is significantly faster than the 12-22 weeks required for Hong Kong entities, which need specific RBI approval. Swiss companies benefit from AD bank-level approval without RBI involvement.

Can a project office take on additional projects?

Not automatically. A project office is established for a specific contract. Additional projects require fresh AD bank approval. Under the 2025 draft regulations, project offices with multiple projects must maintain separate books of accounts for each project.

What happens when the project is completed?

The project office must be closed. The closure process involves settling all Indian tax liabilities, obtaining CA certificates, filing closure with the AD bank, deregistering with the ROC via Form FC-4, and repatriating remaining funds through the AD bank after full compliance verification.