University of Mississippi eGrove Touche Ross Publications Deloitte Collection 1-1-1978 Switzerland, Liechtenstein; Business study Touche Ross International Follow this and additional works at: https://egrove.olemiss.edu/dl_tr Part of the Accounting Commons, and the Taxation Commons Recommended Citation Touche Ross International, "Switzerland, Liechtenstein; Business study" (1978). Touche Ross Publications. 793. https://egrove.olemiss.edu/dl_tr/793 This Article is brought to you for free and open access by the Deloitte Collection at eGrove. It has been accepted for inclusion in Touche Ross Publications by an authorized administrator of eGrove. For more information, please contact [email protected]. business study Switzerland liechtenstein Touche Ross International business study Switzerland liechtenstein 1978 edition Contents PART ONE — SWITZERLAND I. SWITZERLAND IN BRIEF II. INVESTMENT FACTORS III. TRADE AND COMMERCE IV. LABOUR CONDITIONS V. BUSINESS PRACTICES AND INFORMATION VI. FORMS OF BUSINESS ENTITIES VII. ACCOUNTING AND AUDITING VIII. TAXATION IN SWITZERLAND PART TWO — LIECHTENSTEIN IX. LIECHTENSTEIN IN BRIEF X. FORMS OF BUSINESS ENTITIES XI. TAXATION IN LIECHTENSTEIN Touche Ross International Preface to Second Edition This study is one of a series of Business Studies designed for the use of Touche Ross professional staff in all countries and for interested clients. Users of the study should ascertain whether the information given here has been superseded by later developments. Specific business questions or problems may have legal and tax ramifications that are beyond the scope of this Business Study and the assistance of professional ad- visers is recommended. Suggestions for revisions should be sent to the Touche Ross International Executive Office. The official currency for Switzerland and Liechtenstein is the Swiss franc, and all amounts quoted in this Business Study are in Swiss francs (SF). At the end of January 1978, the approxi- mate Swiss franc exchange rates with other currencies were: SF1 = US $ 0.50 £ Sterling 0.26 Deutsche Marks 1.07 French Francs 2.39 Dutch Guilders 1.14 Japanese Yen 121.42 Readers should check in the financial press for subsequent variations in these rates. March 1978 ©1978 Touche Ross & Co., all rights reserved First edition published 1969. Second edition 1978 Printed in the United States of America Introduction Switzerland is important to many people, often for quite different reasons. To the international tax specialist, it is a country with moderate taxation, liberal treatment of foreign-owned enterprises, agreements with many other countries for the elimination of double taxation, and favourable treatment of special forms of enterprise. To the industrialist, it is a country for careful consideration when a European location is being planned be- cause of its central position in Europe, its well-developed financial services and communications network, and its economic strength. To the potentate with a fortune to preserve, it may suggest thoughts of a safe, anonymous haven for his funds. And to the visitor, it is a land of unsurpassed scenic grandeur with picturesque Alpine inns and efficiently run mountain and lake resorts. A second edition of this Business Study is required because attitudes to Switzerland have changed somewhat since the 1960s. There are several reasons for this: on one hand, many foreign corporations now prefer to base their operations within the European Common Market, and on the other, acute labour shortages, high exchange rates, shortages of office and residential accommodation, and severe permit restrictions for bringing in managerial staff from home locations have all contributed toward mak- ing the setting up of new operations in Switzerland progressively more dif- ficult. Moreover, the recession of the mid-seventies has proved, as elsewhere, the worst in the post-war period. Nevertheless, Switzerland remains a strong and stable country that offers many advantages to the foreign investor, and although some corporations have moved out and the rate of new ones moving in has slowed, Switzerland continues to attract its share of foreign business. The country is well placed to benefit from world economic recovery, especially as customs barriers to its exports are largely being dismantled. Another advantage is that Switzerland is a favourable tax location without suffering from the disadvantages of a pure tax haven. The tiny Principality of Liechtenstein can be conveniently described in the same Business Study as its bigger neighbour, for it is in economic union with Switzerland and shares many of its regulations and customs. Despite these links, Liechtenstein is a sovereign independent state with its own taxation and company laws, whose special features give it an importance to foreign investors quite disproportionate to its size. This Business Study is therefore in two parts: Part One deals with Switzerland and Part Two with Liechtenstein. English is spoken comparatively widely in Swiss and Liechtenstein busi- ness circles, but translations of terms have been provided when deemed helpful. Although Switzerland has three official languages, German, French, and Italian, translations are given only in the first two of these ex- cept at the end of Chapter 7, as comparatively few Swiss enterprises use Italian. Translations appear in italics, with the German first. This Business Study has been written by G. K. Dykes and J. A. Newman of the Touche Ross office in London, England, with the active cooperation of G. Badan and P. Prisi of Touche Ross Geneva and Zurich, respectively, and of Dr. B. Güggi and his colleagues of the General Trust Company, Vaduz. Linda S. Avelar Director of International Publications March 1978 Table of Contents PART ONE — SWITZERLAND CHAPTER I SWITZERLAND IN BRIEF 1 The Country 1 Location and area 1 Geographical features and regions 2 Climate 2 Natural resources 3 Major cities 3 The People 3 Population 4 Labour force 4 Languages 5 Education 5 Religion 5 History 7 Life in Switzerland 8 Government and the Economy 8 Federal government 9 Cantonal and local government 10 Politics, the referendum, and the initiative 11 The judiciary 11 Economic trends 13 Foreign investment 14 The cantons at a glance CHAPTER II INVESTMENT FACTORS 15 Investment Incentives 15 Advantages of investment in Switzerland 16 Problems facing investors 16 Tangible incentives 17 Formalities and Procedures 17 Rules applicable to new businesses 17 Permits and licences 17 Regulated trades 17 Register of Commerce 19 Status of foreign-owned businesses 19 Sources of Finance 19 Structure of the banking system 19 The National Bank 19 Commercial banks 20 Other banks 20 Federal bank law 20 Types of bank finance 21 Other sources of finance 22 The stock exchanges 22 Regulations for listing 24 The prospectus 25 Banking customs and payment procedures 25 Bank secrecy 26 Currency and Exchange Controls 26 Currency 26 Exchange markets and practices 27 Swiss exchange controls 27 Pressure on the franc 28 Discouragement of foreign speculation 28 Investments by Swiss banks 28 Freedom from controls 29 Exchange controls of foreign investors' own countries CHAPTER III TRADE AND COMMERCE 31 Foreign Trade 32 Licences and controls 32 Customs duties 33 Other duties and taxes 34 Documentation 34 Free ports and transit arrangements 34 Marketing Practices 34 Advertising and promotion 35 Selling and distribution methods 36 Agents 37 Trade credit conditions 38 Patents, Trademarks, and Copyrights 38 Patents 39 Trademarks 39 Copyrights 39 Business names 39 Laws Affecting Business Operations 39 Monopolies and restrictive practices 40 Mergers 40 Prices and incomes controls 40 Insurance practices 41 Environmental and health considerations 41 The Code of Obligations 41 Information required on business documents 42 Real estate 43 Authorised signatories CHAPTER IV LABOUR CONDITIONS 45 The Labour Force 45 Availability 46 Recruitment 47 Position of Foreign Nationals 47 Documents and procedures 49 Labour law and social security 49 Terms and Conditions of Employment 49 Wage rates 50 Bonus practices 50 Overtime 50 Paid leave 51 Working hours 51 Contracts of employment 52 Termination of employment 52 Other rules 53 Fringe Benefits and Social Security 53 Fringe benefits 53 Social security 54 Benefits 56 Costs 56 Labour-Management Relations 57 Unions 57 Employers' associations 57 Labour courts 57 Employee participation in management CHAPTERI V BUSINESS PRACTICES AND INFORMATION 59 Information for Visitors 59 Best travel months 59 Entry requirements and currency restrictions 60 Transport and communications 61 Hotels and restaurants 61 Tipping 61 Business Hours 61 The working day 61 Commercial hours 62 Government offices 62 Banks and shops 62 Time factors 62 Business Practices 62 The businessman's approach 63 Public holidays 63 Weights and measures 63 Dates 64 Writing conventions 64 Business cards and letters CHAPTER VI FORMS OF BUSINESS ENTITIES 65 Principal Business Entities 65 Summary of business forms 67 Corporations — The AG-SA Form 67 Formation 67 The simultaneous method 68 The successive method 68 Corporate name 69 Articles of incorporation 70 Cost of incorporation 70 Shares and shareholders 70 Rules about shareholders 71 Registered and bearer shares 71 Minimum capital and share size 71 Classes of share 72 Management 72 Directors and executives 74 Shareholders in general meeting iv 76 Statutory auditors 76 Capital, reserves, and dividends 76 Capital 76 Reserves 77 Dividends 77 Losses 77 Loan capital 78 Registration and