Switzerland is a safe haven for investments and an excellent location for companies seeking a foothold in Europe.
Switzerland is celebrated for its safe and stable government, secure economy, and high standard of living. Although not a member of the EU, the country enjoys strong trade links with the bloc and is part of the Schengen Area—an ID-free travel zone made up of 27 countries, mostly European. People can stay in the zone for up to 90 days in a 180-day period.
For these reasons, Switzerland is a popular choice for multinationals looking to gain a foothold on the continent of Europe. Many U.S. businesses use the country as a testing ground for their European ambitions.
While incorporating a business in Switzerland is generally straightforward, there are a number of factors that overseas investors need to take into account. In our latest Doing Business Internationally webinar, Jurgen Borgt, managing director for CSC Switzerland, and Emma Holthuizen, business development manager, discuss the why and how of Switzerland as an investment destination.
Doing business in Switzerland: an innovation and talent hub
Switzerland is a small country with a highly skilled domestic labor pool. In addition, the country’s famously high standard of living attracts people from across Europe and further afield. Together, domestic and foreign workers contribute to the second-highest GDP per capita in the world.[1] They also contribute to Switzerland’s reputation as one of the world’s great innovation hubs. The country has been named the most innovative in the world by the World Intellectual Property Organization for the past 12 years.[2] Swiss-based businesses register more patent applications per million inhabitants than those of any other nation.[3]
Switzerland’s economy is focused on a few specialist areas. It’s a leader in high-tech, knowledge-based fields such as chemical production, plastics, and biotech. The finance sector is particularly important to the economy, contributing about 213,000 full-time jobs.[4]
These factors, alongside Switzerland’s location at the heart of Europe, convince large numbers of multinationals to set up shop in the country. But what do they need to know before they do?
The “United States of Switzerland”
Switzerland’s political system bears some resemblance to the U.S., which is why it’s sometimes called the United States of Switzerland. Three levels of government share power with the federal government at the top tier, followed by cantons—roughly equivalent to U.S. states—and then communes that oversee local services.
The important thing here is that this system has a bearing on tax levels and other factors that make regions more or less advantageous for certain business activities. The federal corporate tax rate is 8.5%, but the overall corporate tax burden can be anywhere between 12% and 21%, depending on where your company is based.
Many holding companies, for example, choose to set up in Zug, a charming lakeside tourist town that is also home to thousands of registered businesses benefiting from the region’s low corporate tax rates. On the other hand, operational businesses often favor Lucerne, which offers a mix of low taxes and well-developed urban infrastructure. Despite higher tax rates, Zurich and Bern are international cities that attract financial services businesses from around the world, thanks to top-tier infrastructure and large populations of highly qualified professionals.
Wherever they set up in Switzerland, businesses benefit from a wide network of double taxation treaties, making it a positive location for tax overall.
Entity management in Switzerland
To take advantage of those benefits, Switzerland offers a complete range of business entities for companies and funds. Branch offices are easy to set up for those wanting a testbed for European expansion. Limited companies are the most common business entity in the country, while special purpose vehicles (SPVs) are typically used by private equity funds investing in Swiss assets. Whichever you choose, there are a couple of things to remember. In Switzerland, a notary has to be contracted to incorporate a company, and at least one director has to be a Swiss resident.
CSC can help in both instances. In fact, we provide a one-stop shop for corporate services in Switzerland, from entity formation to corporate accounting, tax filings, and reporting. Switzerland is a natural first step for multinationals with an eye on the huge and prosperous European market. CSC can help support your ambitions with a full portfolio of Entity Management and Administration services.
Why CSC?
CSC offers a full suite of corporate services in Switzerland, from entity formation to liquidation, and everything in between.
CSC provides knowledge-based solutions for every phase of the business life cycle. We help businesses form entities, maintain compliance, execute transaction work, and support real estate, M&A, and other corporate transactions in hundreds of US and international jurisdictions.
We work with some of the world’s largest banks and commercial lenders to reduce risk in their lien portfolios, improve their transaction speeds, and create a secure environment for their financial processing needs. We also provide solutions for secure real estate document preparation and recording.
We are the trusted partner for 90% of the Fortune 500®, nearly 10,000 law firms, and more than 3,000 financial organizations. Headquartered in Wilmington, in the US state of Delaware, since 1899, we are a global company capable of doing business wherever our clients are—and we accomplish that by employing experts in every business we serve.
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