In 2002, Switzerland was ranked 15th in the World Economic Forum’s Global Competitive Index, but by 2009, it climbed up the list to the first position.
Workforce and taxes
Switzerland is very open to foreigners
and has a diverse population. 22% of the whole population is made up from residential and temporary foreign workers which make for a high educated multilingual employment force
. It also provides the employers with the choice of four languages besides English and these are German, French, Italian and Romansh. They are highly productive and create high-quality products and services. The majority of Swiss managers
have more international experience than average.
Foreign businessmen who intend to invest in Switzerland
should know that this country has one of the friendliest tax systems in the world. Many tax incentives
are offered on both federal as well as cantonal level in Switzerland, in order to attract companies to establish operations and invest in their jurisdictions
. In some cantons new investors can profit for a period of up to ten years of taxes free business
. This possibility, of being able to benefit from partial or full corporate income tax breaks
for up to 10 years is also possible at a federal level.
However, tax breaks are available for investment projects that meet certain requirements, for example creation of new jobs or non-competition with existing businesses. When it comes to cantonal level, business incentives are generally granted in connection with the creation of at least 10 to 20 new local jobs. The Government also offers subsidized loans up to 25% of financing packages in order to encourage infrastructural investment in tourist facilities, communications and training facilities.
You can read about the reasons to invest in Switzerland in the infographic below:
Switzerland is one of the top 10 wealthiest countries in the world but it can be expensive to live in. However, the social benefits by far manage to outweigh the costs: the public transportation system is very good and it offers the best health care system in the world.
It is viewed as one of the most appropriate countries to raise healthy, multilingual children due to its excellent education system, at the state school and academic level, also providing dual vocational training system. Children raised in Switzerland are provided with the opportunity to attend world-renowned universities, technical institutes or valuable R&D institutions.
If you want to invest in Switzerland and also move to this country, you should know that the Swiss have a great respect for personal privacy and have no prejudice against wealthy people. The residents enjoy great political stability not being exposed to war since 1515. The country offers the highest personal safety in Europe and social harmony. Switzerland remains the country with the highest quality of living according to a governmental survey, and it also has no official religious state.
Switzerland became perfect destination for investors
due to its bank secrecy and monetary security policies. Strategically located on the continent of Europe, Switzerland has an accessible and first-rate infrastructure
network for international trades. Its stability is also provided by the agreements signed with the European Union that offer a similar business environment as inside the EU. For instance, when carrying trading activities, foreign companies must use the EORI number in Switzerland
, although this country does not have the EORI system implemented here.
The Swiss franc has been rightfully viewed as a refuge through the years due to its stability over times. It was the currency of choice in the 1970s for Americans looking to escape rampant inflation because few other asset classes offered this much protection. Also nowadays, in a prolonged period of on-again off-again crisis, the Alpine country’s currency is viewed as one of the world's most popular safe-haven investment destinations.
Therefore judging from its political neutrality to its banking secrecy, the country has reputation for protecting valuables. But if adding strong economy, low national debt, low inflation, currency and price stability, low unemployment, efficient capital markets and a highly professional international banking system, Switzerland becomes a safe and appealing investment destination in its own right.
Switzerland's Rating for Investments
Every investor managing a company in Switzerland
must always pay attention to the country's credit rating. There are several rating agencies that evaluate every country’s economy on an annual basis and then award them with a rating. Basically this credit rating is an evaluation of the country’s ability to pay back its debt. A sovereign credit rating is the rating of a government; it indicates the risk level of the investment environment in a certain country. This is a complex indicator composed of numerous factors such as political risk, currency stability, GDP and many others. The most renowned rating agencies are Standard & Poor’s, Moody’s, Fitch.
All 3 major credit agencies mentioned above awarded a AAA credit rating for Switzerland. This is the highest rate that can be obtained and it means reflects a stable economy and low risks for foreign investors decided to open Swiss companies. AAA has an exceptional degree of creditworthiness and in means that the country can easily meet its financial commitments. The indicator is a measure of trust, often used by investors to gauge the credit worthiness of the country and therefore impacting Switzerland’s borrowing costs.
In a report issued in May 2014 Fitch agency announced the extension of AAA rating for Switzerland, stating that Switzerland is a “highly advanced, well diversified and wealthy economy with strong governance and a track record of sound economic policy”. The country managed to surpass the global financial and Eurozone crisis due to its durable economy with an increasing GDP indicator for the past 5 years.
The country’s public finances are strong in comparison to other European countries and investments opportunities are numerous. All measures applied by the Government regarding the fiscal framework are characterized by prudence and they confer strong credibility to the investment opportunity.
These measures also succeed in attracting foreign investors by applying tax reductions in certain Swiss cantons.
Businessmen looking to invest in Switzerland or find out more information about the types companies that can be opened here or about the double tax treaties that were signed in order to attract foreign investors can receive more details from our team of incorporation experts.
Most Attractive Investment Industries in Switzerland
Switzerland offers numerous investment opportunities for foreign entrepreneurs. Some of them are in the key economic sectors of the country and others can also be found in other emerging investment sectors with high potential. The Swiss Government also offers investment incentives in the form of reduced rates that can apply at a federal and canton level. If you want to invest in Switzerland and wish to know more about the available aid for investors, our Swiss company formation consultants can help you.
The key sectors for foreign investment in Switzerland include the financial and banking sectors, the travel and tourism sector, medical and security equipment, construction, information technology and telecommunication, pharmaceuticals and others. Sectors that have a high potential for new investments are the bio- and nano- technology sectors or high-tech equipment. The trade sector is also a well-developed one in Switzerland.
Switzerland, a top investment destination for the construction sector
Over the last decade, only several European states have shown a steady growth rate of the investments, and Switzerland is included in this category, alongside with Sweden, Austria, Norway, Germany and Belgium.
An important aspect is that most of the investments that were developed in the last years were related to the construction sector, a trend which has also been present in Switzerland.
The construction sector in Switzerland is a major component of the local economy and it is important to know that, prior to the economic crisis, it represented 24% of the country’s gross domestic product (GDP). During the economic crisis, the sector decreased its activity to a historic low, but since then, over the years, the construction sector recovered, reaching a level of 24,5% of the GDP. Our team of consultants in company registration can offer more details on the legislation regulating the construction sector in this country and can help you invest in Switzerland in any sector you are interested in.
Other top investment sectors in Switzerland
Businessmen who want to invest in Switzerland can find relevant investment opportunities in the following sectors as well, as mentioned below:
- • financial sector;
- • trade;
- • chemicals and plastics;
- • services sector;
- • electronics and energy;
- • watchmaking industry;
- • insurance.
Investing in Switzerland
Switzerland is not a member of the EU or the EEA but has concluded a free trade agreement with the EU and other bilateral agreements. The country has also signed several bilateral investment conventions. Foreign investors in Switzerland are guaranteed to have freedom of establishment, however certain terms and conditions apply for purchasing property and acquiring the necessary permits for living and working in Switzerland.
International companies also choose the country to set up branches
or subsidiaries. Switzerland remains an important investment destination
and an attractive destination for foreign companies that want to expand their activities.
Zurich, Geneva and Zug Canton - the best places to invest in Switzerland
The Top 25 European Cities of the Future and Top 25 European Regions of the Future for 2016/2017 show Switzerland with 3 cities
and 3 cantons present in the rankings.
The tops place Swiss cities Zurich
, Geneva and Basel among the best in their category and Zug, Zurich and Geneva Cantons among the best in their category. Zurich ranks 6th, Geneva
ranks 13th and Basel ranks 19th in the top. With respect to cantons, Zug
was placed on the 6th position, Zurich on the 14th and Geneva on the 18th places. The tops measure the investment landscape
of European cities and regions and represent important tools for assessing the levels of Foreign Direct Investment (FDI) in the near future.
The Swiss Stock Market-one of the most secure investment instruments
The Stock Market in Switzerland comprises the largest securities traded on the Zurich SIX Exchange. Switzerland has a second stock exchange located in Berne which offers a large portion of the total stocks traded in this country. Companies in Switzerland benefit from the security one of the largest stock markets in Europe provides and have a wide variety of financial instruments to trade.
Swiss Legislation for Foreign Investments
Switzerland’s National Bank accepts two types of investments, the direct ones and the portfolio ones. The direct investment is the one where general capital is made in order to influence a business’ activities abroad in a direct manner and for a long period of time. Direct investments in Switzerland can be made by establishing a subsidiary or an office abroad or if an investor that owns 10% of the company’s shares has voting rights. Portfolio investments in Switzerland are made by capital investments in order to directly influence company management. Portfolio investments are represented by debt certificates, dividend-paying securities and fund certificates.
Economic Importance of Foreign Investment for Switzerland
For all countries, therefore for Switzerland too, international investments are very important
for economic growth. Switzerland is a renowned country for direct investments
due to its exporting industrial goods and services, but it also receives great capital investments from abroad. The number of investors interested in opening companies in Switzerland
is continuously increasing.
The Role of SECO in International Investment
The State Secretariat for Economic Affairs (SECO) is the authority that establishes the regulations and law disciplines for foreign investments with the scope of protecting bilateral investments and agreements (BITs) against international law breaching. SECO negotiates terms of market access in order to get correct and non-discriminatory activities and it is also involved in formulating the investment policy for the Swiss Confederation.
Double Tax Treaties in Switzerland
Foreign businessmen who would like to invest in Switzerland should know that this country has signed double tax treaties with a large number of countries in order to insure it avoids the situation when the foreign investors are taxed both in Switzerland and their country of residence. The purpose of all treaties is to make sure the Swiss business environmentis as attractive and friendly as possible.
International agreements for foreign investments in Switzerland
Switzerland has adhered to the most important international treaties in order to create favorable conditions for foreign investors. Some of these treaties are:
- - The World Trade Organization (WTO) - Switzerland has created its investment rules according to the General Agreement on Trade and Services (GATS) and the Agreement on Trade-Related Investment Measures (TRIMS) of the WTO.
- - The Organization for Economic Co-Operation and Development (OECD) - According to the Code of Liberalization of Capital Movements of the OECD Switzerland will not discriminate any foreign investor member of the OECD.
- - Bilateral Investment Promotion and Protection Agreements (BITs) - Switzerland has negotiated bilateral treaties and free trade agreements (FTAs) with other countries in order to protect foreign investments.
Benefits of foreign businessmen who choose to invest in Switzerland
Foreign investors mainly benefit from the same tax regulation and corporate laws as any national investor, but there are also other advantages for investors. Some of these advantages are:
- - The freedom of establishment ;
- - The freedom of purchasing Swiss holdings;
- - The possibility of buying and owning real estate properties;
- - Subsidies for bank credits;
More details related to the Swiss taxation system, as well as the main reasons to invest in Switzerland, are available in the following short video:
Opening a company in Switzerland
At last, registering a Swiss business remains one of the best ways of investing in Switzerland. Foreign citizens from EU and non-EU countries are allowed to set up companies here provided that they have a solid business plan which will have a positive impact on the economy and employment market. Apart from the variety of structures one can choose from, the taxation system is one of the greatest incentives for those coming to invest in Switzerland.
Our specialists in company formation in Switzerland
can assist foreign entrepreneurs no matter their investment plans are through business consultancy services. Please contact
our company formation specialists who will give you the insights and advice you need.