Fast-Growing Start-Ups in Switzerland
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The Federal Council Bern, 29 March 2017 Fast-growing start-ups in Switzerland Report of the Federal Council in response to the Postulate 13.4237 Derder from 12 December 2013 644.3/2005/02344 \ COO.2101.104.2.2214917 Contents 1 Summary .................................................................................................................... 7 2 Adopted measures and potential future action areas ........................................... 10 3 Mandate and starting point ..................................................................................... 12 3.1 The Derder Postulate (13.4237) ................................................................................. 12 3.2 Reference to the Federal Council’s report on venture capital in Switzerland .............. 13 3.3 Definition of terms ...................................................................................................... 13 3.4 Definition of the subject of the report .......................................................................... 14 4 The situation of entrepreneurship and fast-growing start-ups in Switzerland .... 15 4.1 Entrepreneurship in Switzerland and in international comparison .............................. 15 4.1.1 Introduction ........................................................................................................... 15 4.1.2 The GEM conceptual framework ........................................................................... 15 4.1.3 International comparison of Total Early-Stage Entrepreneurial Activity (TEA)........ 16 4.1.4 Factors of influence on entrepreneurship .............................................................. 17 4.1.5 Opportunity costs for entrepreneurs in Switzerland ............................................... 23 4.1.6 Conclusion for entrepreneurship in Switzerland and in international comparison ... 24 4.2 Statistical data on the development of fast-growing start-ups in Switzerland .............. 25 4.2.1 Data on high-growth companies ............................................................................ 25 4.2.2 Conclusion ............................................................................................................ 28 4.3 The venture capital market in Switzerland .................................................................. 29 4.3.1 Investment in venture capital in Switzerland and in international comparison ........ 29 4.3.2 Conclusion ............................................................................................................ 30 4.4 Conclusions for the situation of entrepreneurship and fast-growing start-ups in Switzerland ................................................................................................................ 30 5 Public financing options in Switzerland ................................................................. 31 5.1 Cantonal financing options ......................................................................................... 31 5.1.1 Object of the survey of the Swiss cantons ............................................................. 31 5.1.2 Overview of cantonal financing offers .................................................................... 31 5.1.3 Conclusion ............................................................................................................ 34 5.2 Guarantees and loans of the Confederation ............................................................... 34 5.2.1 Commercial guarantees ........................................................................................ 34 5.2.2 Swiss Association for Hotel Financing (SGH) ........................................................ 35 5.2.3 Technology fund .................................................................................................... 35 5.3 Review of a Confederation financing programme for start-ups ................................... 35 5.3.1 Description of a potential Confederation financing programme for start-ups .......... 36 5.3.2 Assessment regarding the introduction of a Confederation financing programme for start-ups ................................................................................................................ 39 5.3.3 Conclusion ............................................................................................................ 40 5.4 Conclusions regarding public financing options in Switzerland ................................... 40 6 The fiscal environment in Switzerland ................................................................... 40 6.1 Introduction ................................................................................................................ 40 6.2 Profit tax for legal entities ........................................................................................... 41 6.2.1 Starting point ......................................................................................................... 41 644.3/2005/02344 \ COO.2101.104.2.2214917 2/116 6.2.2 Progressive cantonal taxes on profits .................................................................... 41 6.2.3 Reduction of cantonal profit tax ............................................................................. 41 6.2.4 Conclusion ............................................................................................................ 41 6.3 Income tax for natural persons ................................................................................... 42 6.3.1 Starting point ......................................................................................................... 42 6.3.2 Taxation of employee profit participation ............................................................... 42 6.3.3 Dividend taxation ................................................................................................... 43 6.3.4 Conclusion ............................................................................................................ 43 6.4 Cantonal taxation of enterprise equity ........................................................................ 43 6.4.1 Introduction and fiscal development ...................................................................... 43 6.4.2 Overview ............................................................................................................... 44 6.4.3 Fiscal significance ................................................................................................. 44 6.4.4 Economic assessment .......................................................................................... 45 6.4.5 Conclusion ............................................................................................................ 45 6.5 Cantonal wealth tax for natural persons ..................................................................... 45 6.5.1 Starting point ......................................................................................................... 45 6.5.2 Valuation of unlisted enterprises............................................................................ 45 6.5.3 Parliamentary motions ........................................................................................... 46 6.5.4 Economic assessment .......................................................................................... 46 6.5.5 Conclusion ............................................................................................................ 47 6.6 Cantonal fiscal incentives for start-ups and business angels ...................................... 47 6.6.1 Cantonal tax breaks for newly founded enterprises ............................................... 47 6.6.2 Selected cantonal tax incentives for investors ....................................................... 47 6.6.3 Other cantonal tax incentives that benefit start-ups ............................................... 47 6.7 Tax breaks under the federal government's regional policy ........................................ 48 6.8 Tax treatment of fund managers ................................................................................ 48 6.8.1 Significance of the location of fund management for start-up financing ................. 48 6.8.2 Tax treatment von fund managers ......................................................................... 48 6.8.3 International comparison of taxation ...................................................................... 49 6.8.4 Conclusion ............................................................................................................ 49 6.9 Review of additional fiscal measures of the Confederation ........................................ 50 6.9.1 Repeal of the time limit for loss carryforwards ....................................................... 50 6.9.2 Introduction of an investment deduction for start-up investors ............................... 51 6.10 Conclusions regarding the fiscal environment in Switzerland ..................................... 51 7 Public financing options and tax incentives in other countries ........................... 52 7.1 Public hedging instruments (guarantees) ................................................................... 52 7.2 Overview of foreign public financing options .............................................................. 53 7.2.1 Overview of state equity programmes of OECD countries ..................................... 54 7.2.2 Examples of equity programmes in OECD countries ............................................. 54 7.3 European Investment