Handbook for Investors. Business Location in Switzerland

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Handbook for Investors. Business Location in Switzerland. April 2012 Edition invest-in-switzerland.com Publication data Editor Osec, Communication and Marketing, Zurich Text Generis AG, Schaffhausen Text chapter 10 PricewaterhouseCoopers AG, Zurich Proofreading WWT - Worldwide Translation Services, Weesen Translations WWT - Wordlwide Translation Services, Weesen Design effact AG, Zurich Print Sonderegger Druck AG, Weinfelden Total print run 24,000 copies Languages Chinese, English, French, German, Italian, Japanese, Portuguese, Russian Welcome.

Dear Reader

In many respects Switzerland is a country with many attractive location advantages. This is shown, for example, in research and innovation, in the working conditions, infrastructure, the central location within Europe, in the economic-political environment and the standard of living. The fact that Switzerland is one of the most attractive business locations in the world is also proved by various rankings, which make clear statements about the competitiveness, innovation or the stability of a country. The latest issue of our handbook provides you, as an investor or consultant, with a good basis from which to choose the right company location and to be able to position yourself ideally in the Dr. Eric Scheidegger Daniel Küng global competitiveness. In this document you will find out what Ambassador CEO Osec we mean with our core messages on location policy «Safety and Deputy Director, State trust», «Fast and easy», «Innovation and technology» and «Quality Secretariat for Economic and life». Switzerland is not just a popular holiday destination, but Affairs SECO also rewards entrepreneurial initiative and relocations from abroad. Furthermore, you will find the addresses of our representatives, who work around the world and will support you in your business ventures. They are your first point of contact and are also there for you personally at any time to offer fast, confidential and competent information and consultation. In addition the handbook shows you the addresses of the cantonal and regional business promotion agencies as well as many useful associations, organizations and service providers. As an entrepreneur you are just as welcome as a direct investor. In our country you will find politicians and authorities at all levels, from national to local, who feel obliged to company-friendly economic policies. Our national government works together with the cantonal authorities and the business promotion agencies to ensure that Switzerland remains an attractive company location and place to live.

Dr. Eric Scheidegger Daniel Küng Ambassador CEO Osec Deputy Director, State Secretariat for Economic Affairs SECO

Handbook for Investors 2012 3 Table of contents.

Advantages offered by Switzerland...... 7 3.3.1 Patents...... 30 3.3.2 Brands...... 31 1. Switzerland – facts and figures. 3.3.3 Designs...... 32 1.1 Geography...... 9 3.3.4 Copyright...... 32 1.2 Climate...... 10 3.4 Product provisions and product liability...... 32 1.3 Political system...... 10 3.4.1 Foodstuffs...... 33 1.3.1 Federal structure...... 10 3.4.2 Pharmaceutical products...... 33 1.3.2 Separation of powers at federal level...... 10 3.4.3 Medical devices...... 34 1.3.3 Direct democracy and the concordance 3.5 Land use planning and environmental system...... 11 protection...... 34 1.3.4 Political stability and social harmony...... 11 3.5.1 Building and zoning...... 34 1.4 Public finances...... 12 3.5.2 Environment...... 35 1.5 Neutrality...... 13 1.6 Population...... 13 4. Switzerland and Europe. 1.7 Cosmopolitan and international outlook...... 13 4.1 Trade and direct investments...... 36 1.7.1 Languages and cultural heritage...... 13 4.2 Political and economic cooperation...... 36 1.7.2 Direct investments and Swiss corporations 4.2.1 Free movement of persons...... 37 abroad...... 14 4.2.2 Schengen Agreement...... 37 1.7.3 International organizations...... 15 4.2.3 Elimination of technical barriers to trade...... 37 1.8 Switzerland in figures...... 16 4.2.4 Research...... 38 4.2.5 Rail, road and air transport...... 38 2. Economic structure. 4.2.6 Public procurement...... 38 2.1 Gross domestic product and industry 4.2.7 Trade in agricultural products...... 39 structure...... 17 4.2.8 Taxation of savings income...... 39 2.2 International integration...... 19 4.3 The euro...... 39 2.2.1 Goods and services trade...... 19 2.2.2 Direct investments...... 20 5. Establishing and managing a company. 2.3 Key industry clusters...... 21 5.1 Corporate structures...... 40 2.3.1 Chemicals, pharmaceuticals and 5.1.1 Stock corporation (AG)...... 41 biotechnology...... 21 5.1.2 Limited liability company (GmbH)...... 41 2.3.2 Medical technology...... 21 5.1.3 Branch office...... 44 2.3.3 Financial services...... 22 5.1.4 Limited partnership for collective investments....44 2.3.4 Machinery, electrical engineering and metals 5.1.5 Sole proprietorship...... 44 industry...... 22 5.1.6 General partnership...... 44 2.3.5 Watch industry...... 23 5.1.7 Joint venture...... 44 2.3.6 Information technology...... 23 5.1.8 Ordinary partnership...... 44 2.3.7 Cleantech...... 24 5.2 Accounting...... 44 2.3.8 Commodities trading...... 24 5.3 Auditing...... 45 2.3.9 Headquarters functions...... 25 5.4 Establishing a business...... 45 5.4.1 Procedure...... 45 3. Economic framework. 5.4.2 Entry in the commercial register...... 47 3.1 International exchange of goods and services....27 5.4.3 Foundation costs...... 47 3.1.1 Free trade agreements, WTO and elimination of trade restrictions...... 27 6. Visas, residence and work permits. 3.1.2 Customs and excise...... 27 6.1 Entering the country and visas...... 49 3.1.3 Rules of origin...... 28 6.1.1 Visa regulations...... 49 3.2 Protection of free competition...... 28 6.1.2 Application procedure...... 52 3.3 Protection of intellectual property...... 28 6.2 Residing in Switzerland...... 53 6.2.1 Reunification of families...... 54

4 Handbook for Investors 2012 6.3 Residing in Switzerland without gainful 8.4.4 Night work, working on Sundays and public employment...... 54 holidays...... 74 6.3.1. Stays of up to three months...... 54 8.4.5 Holidays and public holidays...... 74 6.3.2. Longer stays...... 54 8.5 Notice of termination and short-time working.....75 6.3.3 Special case: Students...... 55 8.5.1 Notice periods and protection against 6.4 Residing in Switzerland with gainful dismissal...... 75 employment...... 55 8.5.2 Short-time working and mass redundancies...... 76 6.4.1 Recognition of professional qualification...... 56 8.6 Social insurance...... 76 6.4.2 Residence and employment of EU/EFTA 8.6.1 Old age and survivors’ insurance (OASI)...... 78 citizens...... 57 8.6.2 Disability insurance (DI)...... 78 6.4.3 Residence and employment of non-EU/EFTA 8.6.3 Accident insurance (AI)...... 78 citizens...... 58 8.6.4 Health insurance and daily sickness benefits.....78 6.4.4 Trainees/interns...... 58 8.6.5 Compensation for loss of income and 6.5 Naturalization...... 59 maternity benefits...... 79 8.6.6 Unemployment insurance (UI)...... 79 7. Real estate. 8.6.7 Occupational pension scheme...... 79 7.1 Looking for the right property...... 60 8.6.8 Family allowances...... 80 7.1.1 Residential and commercial properties...... 60 8.7 Recruitment...... 80 7.1.2 Temporary accommodation and furnished 8.7.1 Public employment service...... 80 apartments...... 61 8.7.2 Employment agencies...... 80 7.2 Commercial properties...... 61 8.7.3 Head-hunters...... 81 7.2.1 Rental...... 61 8.7.4 Staffing / Temporary employment agencies...... 81 7.2.2 Purchase...... 62 7.3 Residential properties...... 63 9. Financial center and capital market. 7.3.1 Rental...... 63 9.1 Banks...... 82 7.3.2 Purchase...... 63 9.1.1 Structure and general conditions...... 82 7.4 Legal aspects: building permits...... 66 9.1.2 Supervision...... 83 7.5 Legal aspects: purchase of real estate 9.1.3 Services...... 83 by persons abroad...... 66 9.1.4 Protection of deposits...... 84 7.5.1 No permit required...... 66 9.1.5 Taxation of savings income...... 84 7.5.2 Permit required...... 67 9.2 Swiss stock market: SIX Swiss Exchange...... 84 7.5.3 Reasons for permit...... 67 9.3 Business lending and real estate financing...... 85 7.5.4 Execution...... 67 9.3.1 Financing of current business activity...... 85 9.3.2 Mortgages...... 85 8. Labor market and labor laws. 9.4 Risk capital...... 87 8.1 Employment and unemployment...... 68 9.4.1 Venture capital...... 87 8.2 Labor costs...... 69 9.4.2 Business angels...... 88 8.2.1 Salaries...... 69 9.4.3 State support...... 88 8.2.2 Non-wage labor costs...... 70 9.5 Capital costs and interest...... 89 8.3 Labor contract and employee representation....71 9.6 Inflation...... 90 8.3.1 Individual employment contracts...... 72 8.3.2 Collective labor contracts...... 72 10. Overview of the Swiss tax system. 8.3.3 Employee participation and employee 10.1 Taxation of corporate taxpayers...... 91 representation...... 73 10.1.1 Corporate income tax – federal level...... 91 8.4 Working hours and leisure time...... 73 10.1.2 Corporate income tax – cantonal and 8.4.1 Normal working hours, maximum working communal level...... 92 hours and working time models...... 73 10.1.3 Capital tax...... 93 8.4.2 Overtime and excess hours...... 73 10.1.4 Tax incentives...... 93 8.4.3 Day work and evening work...... 74 10.2 Tax charge rate in international comparison...... 94

Handbook for Investors 2012 5 10.3 Taxation of individual taxpayers...... 95 12.3.1 Universities and technical colleges...... 117 10.3.1 Personal income tax...... 95 12.3.2 Universities of applied sciences...... 118 10.3.2 Wealth tax...... 96 12.3.3 Executive MBA program (EMBA)...... 119 10.3.3 Expatriates...... 96 12.4 International private schools and boarding 10.3.4 Cross-border commuters...... 96 schools...... 119 10.3.5 Lump-sum taxation...... 97 12.5 Research and development...... 120 10.3.6 Inheritance and gift tax...... 97 12.5.1 Swiss research industry...... 120 10.4 Withholding tax...... 98 12.5.2 International research and development 10.4.1 Domestic rates...... 98 cooperation...... 122 10.4.2 Treaty rates...... 98 10.4.3 Bilateral agreements with the EU...... 98 13. Living in Switzerland. 10.5 Value added tax...... 99 13.1 Safety and quality of life...... 123 10.5.1 Taxable persons...... 99 13.2 Relocation and integration...... 124 10.5.2 Taxable supplies...... 99 13.2.1 Relocation...... 124 10.5.3 Taxable amount...... 100 13.2.2 Language courses...... 125 10.5.4 Tax rates...... 100 13.3 Renting an appartment...... 125 10.5.5 Exemptions...... 100 13.3.1 Security deposit and lease agreement...... 125 10.5.6 Deduction of input taxes...... 100 13.3.2 House rules and maintenance...... 125 10.5.7 Exports...... 100 13.4 Telephone, Internet and TV...... 126 10.5.8 International business activity...... 101 13.5 Insurance...... 126 10.5.9 Non-resident enterprises...... 101 13.6 Public transport...... 127 10.6 Other taxes...... 102 13.7 Leisure activities...... 127 10.6.1 Stamp taxes...... 102 13.7.1 Leisure and cultural activities...... 127 10.6.2 Real estate taxes...... 102 13.7.2 Clubs and volunteer work...... 128 10.7 Double taxation treaty network...... 103 13.8 Income and cost of living...... 128 10.8 Transfer pricing rules...... 103 14. Promoting Switzerland. 11. Infrastructure. 14.1 Responsibilities...... 131 11.1 Transport...... 104 14.2 Promotional policy and tools...... 131 11.1.1 Road network...... 104 14.3 Switzerland Trade & Investment Promotion 11.1.2 Rail...... 105 services...... 131 11.1.3 Air...... 106 14.4 Cantonal promotion...... 132 11.2 Energy...... 108 14.5 Tax relief as part of regional policy...... 132 11.3 Water...... 109 14.6 Other organizations providing assistance...... 133 11.3.1 Drinking water...... 109 14.6.1 Commission for Technology and 11.3.2 Waste water disposal and water pollution Innovation CTI...... 133 control...... 109 14.6.2 Technology parks and business incubation 11.4 Communication...... 109 centers...... 134 11.5 Postal services...... 110 11.6 Healthcare...... 111 15. Appendix. 11.6.1 Medical care...... 111 15.1 Addresses...... 137 11.6.2 Health insurance...... 112 15.2 Table of figures...... 140

12. Education and research. Countries of Europe...... 141 12.1 Schooling and vocational training...... 113 Swiss map...... 142 12.1.1 Basic and further education...... 115 Language regions...... 143 12.1.2 Vocational training...... 116 12.2 Further education...... 116 12.3 Universities and colleges...... 117

6 Handbook for Investors 2012 Advantages offered by Switzerland.

1. Competitive political and 5. World-leading industry clusters. economic environment. • Leading neutral location for headquarters of European • Easy system for establishing a company, practice-based organizations corporate law • Globally unique concentration of companies specializing in • Efficient official procedures and favorable regulatory environment pharmaceuticals and life sciences • Comprehensive protection of intellectual property • Important financial center • No anti-dumping law • Market leader in the luxury watch industry • Globally important location for commodities trading despite scarcity of raw materials 2. Ideal strategic location.

• Three of the four largest European markets and economies are 6. Flexible labor market, high neighboring countries of Switzerland productivity. • Communications and transportation center between northern and southern Europe • Liberal labor law, employer-friendly regulations • Low unemployment, high labor force participation rate • Motivated, loyal and well educated workforce with good foreign 3. High degree of international language skills and above-average international experience integration, solid relationship between Switzerland and Europe. 7. Moderate tax burden.

• Strong business orientation towards exports; high level of • Tax rates which are able to compete with the rest of Europe direct investments abroad • Low duties, levies and other charges • European Union is Switzerland’s most important trading partner, • Attractive tax planning options relationships protected by broad-based, democratically legiti- mized bilateral agreements • English as language of communication along with four national 8. Efficient capital market, languages favorable conditions.

• Wide range of banking and insurance products 4. First-class infrastructure, high • Favorable interest terms quality of life. • High degree of price stability and low inflation over the long term

• Extensive network of road, rail and air connections • Reliable supply of energy, water and communications services • First-class healthcare system • Safe cities, undamaged environment

Handbook for Investors 2012 7 9. Excellent educational institutions, 10. Professional support during the leading center of innovation. location process.

• Practice-oriented basic education and training, universities and • Competent advisory services technical colleges that conduct world-renowned research, in- • Support in establishing contacts and finding business properties ternationally prestigious private schools and boarding schools • Tax relief and potential sources of financial assistance • Integration of research and business practice, participation in international research exchange • Support for putting innovation into practice

Fig. 1: Switzerland’s international rankings

• Competitiveness2) • Global innovation index3) • Capital costs1) • Quality of infrastructure2) • International experience of • Political stability1) employees1) • Deregulation of the labour • Attractiveness for highly-qualified market1) personnel from other countries1) • Employee motivation1) • Credit rating4) • Good relations between • Health infrastructure1) • Flexibility in hiring and employers and employees2) • Quality of the education releasing staff2) • Expenses for R&D1) system1) • Nobel prizes per million inhabitants1) 2 • Purchasing1 power5) 3 Sources: 1) IMD World Competitiveness Online, 2011 2) The Global Competitiveness Report 2011 – 2012 3) The Global Innovation Index 2011 4) Euromoney 2011 5) UBS, Prices and Earnings: A Comparison of Purchasing Power Around the Globe, August 2010

8 Handbook for Investors 2012 1. Switzerland – facts and figures.

Nestled between the Alps and the Jura mountains, Swit- the two largest of which are shared with its neighbors: for example zerland is a communications and transport center between Lake Geneva (Lac Leman) in the South-West with France, while northern and southern Europe where European cultures and Lake Constance in the North-East is shared with Germany and languages meet. No other country offers such great variety in Austria. so small an area. The Swiss economy’s high degree of development exists thanks to its liberal economic system, its political stability and its close integration with the economies of An overview of Switzerland other countries. The state creates the necessary framework and only intervenes when this serves the interests of society www.swissworld.org at large. Its high quality education system and outstanding Languages: German, English, French, Italian, Spanish, Russian, infrastructure form the basis for the competitiveness of the Chinese, Japanese Swiss economy.

1.1 Geography. Fig. 2: Map showing the location of Switzerland The total area of Switzerland is 41,285 km2. Characterized by mountain and hill ranges, rivers and lakes, Switzerland offers a wide variety of landscapes in a small area – 220 km from North to South, and 348 km from West to East. The Swiss Alps, the hilly Mittelland region, which stretches from Lake Constance to Lake Geneva, and the Swiss Jura, a long range of fold mountains, form the three main geographical areas of the country. Due to its central location, Switzerland is a place where different cultures intersect and, at the same time, a communications and transportation hub between northern and southern Europe.

Six percent of Europe’s fresh water supply is stored in the Swiss Alps, which is why Switzerland is also known as the «reservoir of Europe». Switzerland has numerous rivers and over 1,500 lakes,

Handbook for Investors 2012 9 1.2 Climate. The proximity of politics to the business community and citizens is achieved through the federal structure, in which many public Switzerland’s climate is strongly affected by the nearby Atlantic functions are executed at cantonal or municipal level. These in Ocean. The prevailing winds from the West bring damp, mild sea turn have a certain amount of autonomy and can thus implement air over to Switzerland. Cooling in the summer and warming in solutions which are designed to meet local requirements. the winter, they also bring sufficient precipitation all year round 1.3.2 Separation of powers at federal level in most areas. The Alps act as a clear climatic divider between northern and southern Switzerland; as its weather comes prima Online information of the federation, cantons and munici- rily from the direction of the Mediterranean, the South enjoys palities much milder winters than the North. Temperatures in Switzer- land depend primarily on height above sea level. In the northern www.ch.ch lowlands, the average temperature in January is around 1 °C, and Languages: German, English, French, Italian in July around 17 °C, whereas on the southern plateau the corresponding average temperatures are 2 °C – 3 °C higher. In accordance with the federal constitution, the Swiss people are the «sovereigns» of the country – in other words, the highest The weather and climate in Switzerland political body, responsible for electing parliament. Every citizen with voting rights also has the right to participate in the shaping www.meteoschweiz.ch of the constitution and the legal system by means of referendum Languages: German, English, French, Italian or initiative.

The Federal Assembly or parliament consists of two chambers: the National Council, representing the people with 200 members, 1.3 Political system. and the Council of States, representing the 26 cantons with a total of 46 members. The National Council is elected directly by 1.3.1 Federal structure the people every four years; each canton forms one constituency. Switzerland is a nation created by its own will and formed from Cantonal representation is based on population, although each several ethnic groups with different languages and religions. canton is entitled to at least one representative. The modern Swiss state was founded in 1848. Before this time, Switzerland consisted of a loose association of independent can- The federal government is known as the Federal Council, and it tons. The abbreviation CH for Switzerland, as found in Internet operates as a collegial body. Each of its seven members, who addresses, for example, dates back to the official Latin name are elected by the Federal Assembly comprising the members of «Confoederatio Helvetica». both chambers, heads one of the seven departments (ministries). The presidency of the government rotates between the Federal The state has a federal structure and is divided into three political Councilors on an annual basis. levels: municipal, cantonal and federal. The federal government is responsible for everything assigned to it under the constitu- The highest jurisdiction in Switzerland is enforced by the Federal tion, such as foreign and security policy, customs and excise, Supreme Court in Lausanne, the Federal Insurance Court in Lu- the monetary system, national legislation and defense. By global cerne, the Federal Criminal Court in Bellinzona and the Federal Ad- comparison, the 26 cantons have a high degree of control. ministrative Court in Berne (from the middle of 2012 in St. Gallen). Healthcare, education and culture are among the political areas in which they have a great deal of influence. As small and flexible political entities, the cantons also compete with each other in various areas.

10 Handbook for Investors 2012 Fig. 3: The political system in Switzerland

Legend Voters Instruments Swiss citizens from the age of 18 Elections

Higher Courts Parliament Federal Council Federal Court, Criminal Court and National Council (200 Members) and (Government) Administration Court Council of States (46 Members) 7 Members

Source: Swissworld.org/Präsenz Schweiz

1.3.3 Direct democracy and the concordance system 1.3.4 Political stability and social harmony There is hardly any other country where the electorate has such Studies on personal security and prosperity, social coherence and wide-ranging rights as it does in Switzerland. Citizens can request political stability have shown that Switzerland regularly leads all that a change or addition be made to the constitution by means of international comparisons in this regard. The Swiss attach great an initiative, or they may decide on parliamentary resolutions after importance to their independence. the event by means of a referendum. Switzerland’s long tradition of democracy, its relatively small size and population, high levels Despite the close proximity of different cultures and language of literacy and a wide variety of media are all factors which are key groups, domestic stability is considerable. There is a high degree to the functioning of this special form of government. As a rule, the of tolerance and personal freedom. The relationship between electorate is called upon to vote on federal bills four times a year. employers and employees, or their representatives is generally co- operative. Both sides are committed to resolving issues by means A unique feature of Swiss politics is the concordance system. For of negotiations. Thanks to this social harmony, the general level of decades, the most important political parties have put forward the prosperity in Switzerland has been rising for decades. seven Federal Councillors in a form of coalition. Equally, not only those who win the elections have a seat in parliament; all parties are represented proportionally by number of votes. Resolutions are reached with varying majorities, depending on respective interests. Thus, as many groups as possible have the opportunity to express their opinions on a topic and contribute to achieving a broad- based compromise. This striving for consensus on the basis of the principles of collegiality and concordance contributes significantly to Switzerland’s political stability.

Handbook for Investors 2012 11 Fig. 4: Political stability, 2011 1.4 Public finances. Political orientation stable = 10, unstable = 0 1 Norway 9.49 Switzerland lives up to its reputation as a stable country. The 2 Switzerland 9.49 rate of inflation lies well below that in the EU states and the most 3 Chile 9.48 important industrialized nations. This is also true for unemploy- 4 New Zealand 9.41 ment, with the unemployment rate regularly below four percent. 5 Finland 9.18 Interest rates in Switzerland are also traditionally low, while the 6 Germany 9.11 savings rate is high (national saving as a percentage of GDP in 10 Denmark 8.94 2009: 30.8 %). 11 Luxemburg 8.92 14 Singapore 8.50 The public spending ratio measures expenditure by public admin- 15 USA 8.47 istrations as a percentage of the gross domestic product (GDP). It 16 Netherlands 8.33 includes spending by public authorities and the mandatory social 17 Great Britain 8.25 insurances. In Switzerland, this ratio is at 34.6 % (2009). Most 18 Brazil 8.17 European countries have a ratio of well above 50 %. 19 France 8.09 20 Hong Kong SAR 7.57 The country is in a healthy financial situation. This applies to the 22 China 7.15 financial budget of the central state, the federal government as 29 India 6.71 well as the cantons and local authorities. The surplus ratio in 35 Ireland 6.33 2010 was 0.5 % at state level. 48 Russia 4.90 51 Italy 4.58 National debt is also below that of most countries in Europe. Total 54 Belgium 4.03 public sector debt amounts to 39 % of GDP (2010). Compared to 55 Japan 3.89 the average national debt ratio of EU countries (78.9 %), Swit- Source: IMD World Competitiveness Online 2011 zerland’s ratio is relatively low. Most European countries have much higher levels (2009: Italy 115.9 %, France 77.7 %, Germany 73.2 %). Swiss Federal Authorities

www.admin.ch Swiss Federal Finance Administration Languages: German, English, French, Italian www.efv.admin.ch Languages: German, French, Italian

12 Handbook for Investors 2012 1.5 Neutrality. There are four official national languages: German (64 %), French (20 %), Italian (7 %) and Romansh (1 %). In northern, eastern and In terms of foreign policy, Switzerland acts in accordance with the central Switzerland, the prevailing language is German, whereby principle of neutrality. However, this does not in any way mean the (Swiss) dialect is used in everyday conversation. French is that it is an outsider on the world stage: Switzerland has been a spoken in Romandie, in the western part of the country, as well member of the UN since 2002 and also plays an important role in as some parts of the Mittelland; Italian is spoken in the South the UN’s specialized organizations. Furthermore, Switzerland has (Ticino), and Romansh in certain parts of the canton of Grisons. always played and still plays an active part in important economic organizations, such as the European Free Trade Association 22 % of the population is of foreign nationality. Although in the (EFTA). past migration to Switzerland primarily occurred to preserve those who were less socially able, since the introduction of agree- For more than 500 years, Swiss politics have been dominated ments with the EU/EFTA enabling the free movement of persons, by the words of St Nicholas of Flüe (1417 – 1487): «Don’t get the country has increasingly been attracting foreign nationals involved in other people’s affairs.» Switzerland has been neutral from higher social classes, particularly highly-qualified staff from since 1515, which was also acknowledged by the great European Germany. powers after the Napoleonic Wars in 1815. No other country in Europe can look back on such a long tradition of neutrality. Since the end of the Cold War, Switzerland has relaxed its definition of Swiss Federal Statistical Office neutrality. As the role of NATO changed and it started to perform more peacekeeping missions, Switzerland signed up to the NATO www.statistik.admin.ch > Topics > Population Partnership for Peace in 1996. Thanks to its neutrality, Switzer- Languages: German, English, French, Italian land often acts as a mediator. In some cases, Swiss diplomats also represent the interests of countries which have no official contact with each other. Switzerland offers its neutral territory as a location for meetings and conferences of particular political 1.7 Cosmopolitan and international delicacy. outlook.

1.7.1 Languages and cultural heritage Federal Department of Foreign Affairs Most Swiss nationals speak at least one foreign language, which they learn in elementary school. English is also increasingly www.eda.admin.ch included in the curriculum at an early stage. Due to the coun- Languages: German, English, French, Italian try’s openness – including in terms of immigration – the range of languages actually spoken and used for communication is wide. In international business, English is very much in evidence alongside the respective national languages, and is used by many managers. 1.6 Population. The co-existence of various language groups and different reli- The permanent resident population of Switzerland is around gions, and the large proportion of foreign residents result in a high 8 million. The proportion of those aged between 20 and 39 is degree of openness and tolerance. This makes it easier for foreign 26.6 %, with 16.8 % aged 65 and over, and 21.0 % aged under companies to conduct business from Switzerland. 20. Life expectancy is one of the highest in the world: 79.4 years for men and 84.4 years for women. Residential areas remain rela- Although Europe is Switzerland’s most important business partner, tively decentralized and therefore not overly crowded: more than it also has very close relationships with other markets, particularly two-thirds of the population lives in the five largest cities (Zurich, the US and Asia. The financial centers of Zurich and Geneva in Geneva, Basel, Berne, Lausanne) and their greater metropolitan particular are melting pots of diverse cultures. In terms of culture, areas. too, Switzerland has a tradition of tolerance and openness. Its neu-

Handbook for Investors 2012 13 trality means it has access to all countries, and it also welcomes 1.7.2 Direct investments and Swiss corporations abroad reciprocal contact. This diversity has made it easy for both global Switzerland’s exposure to global markets is among the strongest companies and numerous international organizations to settle in of any country. In 2009, direct investments abroad totalled Switzerland. CHF 866 billion, or 164 % of GDP. In comparison, in the Nether- lands, direct investments abroad in the same year amounted to 107 % and in Ireland 85 %. Swiss companies with direct investments abroad employ around 4.2 million staff in their foreign subsidiaries and operating units, and they are also important employers in Switzerland.

Fig. 5: The most cosmopolitan economies Individual rankings Degree of infor- Degree of inter- Economic integration Overall ranking mation/access to national political of the economy information cooperation Belgium 1 6 4 3 Austria 2 n.a. 2 4 Netherlands 3 4 5 7 Switzerland 4 22 1 8 Sweden 5 n.a. n.a 5 Denmark 6 12 6 13 Ireland 11 2 23 30 France 13 34 10 1 Luxemburg 14 3 18 54 Singapore 17 n.a. 21 77 Germany 18 41 8 12 Italy 22 24 2 Great Britain 24 32 7 85 USA 27 57 25 14 Russia 42 92 39 42 Japan 45 102 46 29 China 63 97 82 38 Brazil 75 91 124 19 India 111 122 247 20

Source: KOF ETH Zurich: The Globalization Index 2010

14 Handbook for Investors 2012 1.7.3 International organizations as a platform for many organizations, including the UN with its Because of its political independence and conscious commit- headquarters in Geneva. Around 250 NGOs, who advise the UN ment, even for international understanding, Switzerland serves also have their headquarters in Switzerland.

Fig. 6: International organizations and important NGOs with their headquarters in Switzerland AITIC Agency for International Trade Information and Cooperation Geneva www.acici.org/ ACWL Advisory Centre on WTO Law Geneva www.acwl.ch International Bureau of Education/United Nation Educational, Scientific and IBE/UNESCO Geneva www.ibe.unesco.org Cultural Organization ITCB International Textiles and Clothing Bureau Geneva BIS Bank for International Settlements Basel www.bis.org CERN European Organization for Nuclear Research Geneva www.cern.ch Cour OSCE Court of Conciliation and Arbitration within the OSCE Geneva www.osce.org/cca EBU European Broadcasting Union Geneva www.ebu.ch EFTA European Free Trade Association Geneva www.efta.int FIFA World Football Association Zurich www.fifa.com FIS International Ski Federation Thun www.fis-ski.com GFATM The Global Fund to Fight AIDS, tuberculosis and malaria Geneva www.theglobalfund.org IFRC International Federation of Red Cross and Red Crescent Societies Geneva www.ifrc.org IIHF International Ice Hockey Federation Zurich www.iihf.com IKRK International Committee of the Red Cross Geneva www.icrc.org ILO International Labour Organization Geneva www.ilo.org IOC International Olympic Committee Lausanne www.olympic.org IOM International Organization for Migration Geneva www.iom.int IPU Inter-Parliamentary Union Geneva www.ipu.org IRU International Road Transport Union Geneva www.iru.org ISO International Organization for Standardization Geneva www.iso.org ISSI International Space Science Institute Berne www.issibern.ch ITU International Telecommunication Union Geneva www.itu.int OTIF Intergovernmental Organization for International Carriage by Rail Berne www.otif.org UCI International Cycling Union Aigle www.uci.ch UEFA European Football Association Nyon www.uefa.com UNHCR Office of the United Nations High Commissioner for Refugees Geneva www.unhcr.org UNOG The United Nations Office at Geneva Geneva www.onug.ch UPOV International Union for the Protection of New Varieties of Plants Geneva www.upov.int UPU Universal Postal Union Berne www.upu.int WADA World Anti-Doping Agency Lausanne www.wada-ama.org WHO World Health Organization Geneva www.who.int WIPO World Intellectual Property Organization Geneva www.wipo.int WMO World Meteorological Organization Geneva www.wmo.int WTO World Trade Organization Geneva www.wto.org WWF World Wide Fund for Nature Gland www.wwf.org

Source: Federal Department of Foreign Affairs (FDFA), own research

Handbook for Investors 2012 15 1.8 Switzerland in figures.

Fig. 7: Switzerland in figures General Age expectancy (years) Currency Swiss franc (CHF) Men 79.8 Time zone CET = UTC + 1 Women 84.4 International direct dialling code +41 Religion National day August 1st Roman Catholic 41.8 % Economy1 Evangelical Reformed 35.3 % GDP (nominal) in billion CHF 550.6 Other 22.9 % Per capita income in CHF 58,844 Languages GDP growth 2.7% German 63.7 % Rate of inflation 0.7% French 20.4 % Unemployment rate 3.9% Italian 6.5 %

Imports in billion CHF (goods and services) 232.4 Romansh 0.5 % Exports in billion CHF (goods and services) 294.9 Other 9.0 % Budget surplus/deficit in % of GDP + 0.5 Geography Debt ratio in % of GDP 39.0 Area in km2 41,285 Fiscal quota in % of GDP 29.7 Borders in km 1,881 Direct investment in million CHF Numbers of lakes 1,484 Direct investments abroad 866,517 Highest mountain (in m): Dufourspitze, Valais 4,634 Direct investments in Switzerland 512,789 Largest glacier: Aletsch, Valais 117 km2/24 km Capital exports abroad 36,182 Largest lake (in km2): Lake Geneva 582 Capital imports into Switzerland 29,341 Second largest lake (in km2): Lake Constance 539 Population1 Capital city Berne Permanent resident population in tsds. 7,785.8 Largest metropolitan areas, population in thousands Population density per km2 188.6 Zurich 1,170.2 Age groups as a percentage Geneva 521.4 0 – 19 21.0 Basel 498.0 20 – 39 26.6 Berne 350.8 40 – 64 35.5 Lausanne 330.9 65 – 79 12.0 Politics

80 and over 4.8 Form of government Parlamentary federal state since Percentage of foreign nationals 22.0 1848, direct democracy Average number of children per woman 1.5 Cantons 20 full cantons, 6 half cantons Municipalities 2,584

Sources: Swiss Federal Statistical Office; Swiss National Bank (SNB); Federal Finance Administration; www.myswitzerland.com 1 Figures about the economy and population are taken from 2010 (some from 2009)

16 Handbook for Investors 2012 2. Economic structure.

One of the most liberal and competitive economies in the Small and medium-sized enterprises (SMEs) dominate the Swiss world, Switzerland has always maintained close economic economic landscape. More than 99 % of companies have fewer ties with other countries. A secure legal system and long-term than 250 full-time employees. Staff are highly motivated, possess stable fundamentals for investors, relatively little regulation a keen sense of responsibility and are very loyal to their company. and the proximity to research institutions make it the loca- These typical Swiss characteristics are responsible for the quality tion of choice in Europe for businesses offering high quality and service ethos in both the industry and the service sector. products and services. Switzerland is also one of the world’s leading innovators.

Fig. 8: 2010 (nominal) per capita gross domestic product 2.1 Gross domestic product and in US dollars industry structure. 1 Luxemburg 103,158 2 Norway 85,258 Switzerland’s per capita gross domestic product is the fourth- 3 Qatar 74,665 largest in the world, or eighth-largest when adjusted for purchas- 4 Switzerland 66,600 ing power. At USD 66,600 the per capita gross domestic product 5 Denmark 56,081 was considerably higher than the EU average in 2010. Switzerland 8 USA 47,292 9 Netherlands 47,148 outranks the UK by 84 %, and Germany and France by 64 % and 10 Ireland 47,100 62 %, respectively. 12 Austria 44,832 The service sector generates some 72 % of the gross domestic 14 Singapore 43,866 product. Comprising 27 % of GDP, the industry sector is also an 15 Belgium 42,983 important mainstay of the economy, with the key sectors being 16 Japan 42,868 chemicals, capital goods and banking. The Swiss economy is 17 France 41,218 strongly geared towards exports – as a percentage of GDP, its 18 Germany 40,508 foreign trade is among the highest in the world. The EU plays a 20 Great Britain 36,145 key role here, accounting for 59.7 % of exports and 78.0 % of 22 Italy 34,159 imports. 23 Hong Kong SAR 31,836 40 Brazil 10,952 41 Russia 10,291 55 China 4,384 59 India 1,333

Source: IMD World Competitiveness Online 2011 Handbook for Investors 2012 17 Fig. 9: Industry structure and percentage of employees 2011 Fig.10: 2011 Competitiveness ranking Global Competitiveness Index (GCI) Sector Employees (fourth quarter 2011) 1 Switzerland 5.74 in 1,000s in % 2 Singapore 5.63 3 Sweden 5.61 Total (excluding agriculture and 4,085.2 100 4 Finland 5.47 forestry) 5 USA 5.43 7 Netherlands 5.41 Sector II total 1,035.7 25.00 8 Denmark 5.40 Construction industry 317.3 7.77 9 Japan 5.40 Electrical equipment, data processing 143.4 3.51 10 Great Britain 5.39 devices, watches 11 Hong Kong SAR 5.36 Metals industry 101.0 2.47 15 Belgium 5.20 Machinery industry 86.1 2.11 18 France 5.14 Wood, paper and print industry 76.8 1.85 23 Luxemburg 5.03 Chemical industry and plastics 75.4 1.85 26 China 4.90 Food, tobacco and beverages 66.8 1.64 29 Ireland 4.77 Other manufacturing industries and trade 59.4 1.45 43 Italy 4.43 Energy and water supply 40.6 0.99 53 Brazil 4.32 Pharmaceutical industry 37.6 0.92 56 India 4.30 Textiles, garments and shoes 15.7 0.38 66 Russia 4.21 Automotive industry 15.6 0.38 Source: World Economic Forum, The Global Competitiveness Report 2011 - 2012 Sector III total 3,049.5 75.00 Trade, repair of motor vehicles/used 631.9 15.47 goods Fig. 11: 2011 Global Innovation Index Healthcare and social services 510.0 12.48 1 Switzerland 63.80 Other services 301.8 7.39 2 Sweden 62.10 Education 275.7 6.75 3 Singapore 59.60 Transport and data communication 268.8 6.58 4 Hong Kong SAR 58.80 Finance and insurance services 232.7 5.70 5 Finland 57.50 Gastronomy 231.6 5.67 6 Denmark 57.00 Public administration 169.4 4.15 7 USA 56.60 Services for companies 148.2 3.63 9 Netherlands 56.30 Real estate 135.9 3.33 10 Great Britain 56.00 IT services 75.5 1.85 12 Germany 54.90 Art, entertainment and leisure 47.4 1.16 13 Ireland 54.10 17 Luxemburg 52.70 Research and development 20.6 0.50 20 Japan 50.30 Source: Swiss Federal Statistical Office FSO, Employee Statistics 22 France 49.30 (Beschäftigungsstatistik, BESTA) 24 Belgium 49.10 29 China 46.40 35 Italy 40.70 47 Brazil 37.80 56 Russia 35.90 62 India 34.50

Source: INSEAD, The Global Innovation Index 2011

18 Handbook for Investors 2012 2.2 International integration. 2.2.1 Goods and services trade Europe is Switzerland’s most important market by far. Four-fifths As the Swiss domestic market is small and the country is lacking of all imports and three-fifths of all exports are traded with the in natural resources (apart from water), Swiss companies have EU. Germany has traditionally been Switzerland’s most important been forced to seek and cultivate abroad what are often their key buyer and also supplier, while Italy and France are its second and markets since the advent of industrial production. Thanks to this third most important suppliers. The US is Switzerland’s second necessity to open the country to the outside, Switzerland is an largest customer, followed by Italy and France. Newly industrial- important player in world trade. Exports make up around 35 % of ized and developing nations account for nearly 20 % of exports, GDP. As a result, Switzerland has taken a leading role among the and approximately 10 % of imports. important exporters in world trade, both with regard to exported goods and services. The classic example of a successful export-oriented branch of industry is what is known as Switzerland’s «secret automobile Fig. 12: Trade balance as a percentage of GDP (2010) and aircraft industry»: a little known network of highly specialized 1 Singapore 22.21 manufacturing companies and problem-solvers providing compo- 2 Switzerland 14.58 nents for a range of areas, from precision and micro-mechanics 3 Qatar 13.96 to materials technology, plastics and textiles. As the leading part- 4 Norway 12.85 ners in technological innovations, these Swiss companies have 5 Malaysia 11.79 been able to position themselves as reliable suppliers of quality 7 Luxemburg 7.76 and precision products. 8 Netherlands 7.66 9 Hong Kong SAR 6.58 Switzerland is a co-signatory of the WTO Agreement, and has 12 Germany 5.66 continually championed market liberalization through its free 13 Denmark 5.54 trade agreements, as a member of the EFTA and through bilateral 14 China 5.21 agreements with the EU. As a result of its consistent market 15 Russia 4.77 liberalization policy, Switzerland has become an efficient trading 20 Japan 3.56 center and a market of economic significance – not only relative 29 Belgium 1.37 to its market size. 33 Ireland – 0.74 38 France – 2.05 Fig. 13: Imports and exports by economic block (2010) 40 Brazil – 2.27 in billion CHF 42 Great Britain – 2.49 142.4 44 India – 3.02 EU & EFTA 120.1 47 USA – 3.21

Source: IMD World Competitiveness Online, 2011 Non-European 14.9 industrialized countries 32.6

9.5 Transition countries 11.8

Newly industrialized 8.0 countries 22.5

8.6 Imports Developing countries 16.5 Exports

Source: www.zoll.admin.ch

Handbook for Investors 2012 19 2.2.2 Direct investments largest direct investor in the world. In the USA, Switzerland is the Switzerland is not just strongly linked internationally when it sixth biggest foreign investor, 19.2 % or CHF 165,930 million of comes to the trading of goods and services, but in its investment all Swiss direct investments are made in the USA. Switzerland is relationships it is also strongly committed to foreign countries also an attractive location for foreign investors, in particular from thanks to its location, lack of resources and limited domestic the EU (83.6 % or CHF 428,690 million) and the USA. The capital market. This is shown by the ratio between the level of Swiss stock of US-American investors in Switzerland is 14.4 % or CHF direct investment abroad and the nominal GDP, which was 164 % 73,679 million. at the end of 2009. In absolute terms, Switzerland is the sixth-

Fig. 14: Direct investments at end of 2009 Swiss direct investments Foreign direct investments in Capital stock at end of year (2009) abroad Switzerland in million CHF in % in million CHF in %

Total 865,517 100.0 512,789 100.0

EU 377,662 43.6 428,690 83.6 Great Britain 80,649 9.3 16,841 3.3 Germany 55,861 6.5 33,185 6.5 Netherlands 42,066 4.9 119,841 23.4 Luxemburg 66,060 7.6 108,028 21.1 France 33,005 3.8 38,968 7.6 Italy 21,847 2.5 5,829 1.1 Spain 15,658 1.8 3,553 0.7 Austria 8,404 1.0 74,736 14.6 Rest of Europe 53,903 6.2 10,812 2.1 Off-shore financial centers 37,727 4.4 0.0 Russian Federation 6,256 0.7 0.0 North America 199,978 23.1 73,762 14.4 USA 165,930 19.2 73,679 14.4 Canada 34,049 3.9 83 0.0 Central and South America 130,828 15.1 – 6,422 – 1.3 Brazil 12,780 1.5 n.a. n.a. Off-shore financial centers 102,973 11.9 16,089 3.1 Asia, Africa, Oceania 103,144 11.9 5,947 1.2 Japan 15,271 1.8 704 0.1 Singapore 12,507 1.4 n.a. n.a. China 7,547 0.9 n.a. n.a. Hong Kong SAR 4,489 0.5 n.a. n.a. Taiwan 1,267 0.1 n.a. n.a. India 3,324 0.4 n.a. n.a. Australia 14,941 1.7 n.a. n.a.

Source: SNB, Direct investments 2009

20 Handbook for Investors 2012 2.3 Key industry clusters. development companies and 63 biotech supplier companies with around 19,000 employees. Such a concentration of biotechnology From an economic perspective, clusters can be defined as companies is not to be found anywhere else in the world. Over networks of manufacturers, suppliers, research facilities (e.g. half of Swiss biotech firms are small companies with less than universities), service providers (e.g. designers and engineers) and 20 employees. They profit from the geographical proximity to related institutions (e.g. chambers of commerce) that have a cer- large companies both in Switzerland and its neighboring coun- tain regional proximity to one another and which are formed via tries. Some well-known global players headquartered in Switzer- a common relationship based on trade along a value chain (e.g. land and which are industry leaders in Europe are Actelion, automotive manufacturing). The members of these clusters are Amgen, Biogen Idec, Crucell and Merck Serono. connected through supplier or competitive relationships or common interests. These networks are referred to as clusters only if there is a critical mass of companies near to one another whose Biotechnology in Switzerland activities complement or are relative to another along one or more value chains. Only then can a growth pool be formed which also www.swissbiotech.org attracts suppliers and specialized service providers and creates Language: English competitive advantages for all companies involved.

Switzerland has several of these industry clusters, which are also Swiss business association for the chemical, pharma- important on an international scale. The key industry clusters in ceutical and biotech industries Switzerland will be briefly described over the next few pages. The figures provided are for reference purposes only, as the clusters www.sgci.ch sometimes overlap. Languages: German, English, French

2.3.1 Chemicals, pharmaceuticals and biotechnology Extremely successful global conglomerates such as Novartis, 2.3.2 Medical technology Roche, Syngenta and smaller companies form a unique indus- The concentration of medical technology companies in Switzer- trial cluster in north-western Switzerland, making the city of land is also unusually high. The medtech sector consists of ap- Basel and the surrounding region the national and international prox. 220 manufacturers, 520 suppliers and 600 distribution and location of choice for pharmaceutical and chemical companies. sales companies, which are mainly located in the Geneva area, The Swiss chemical-pharmaceutical industry is virtually exclu- the Berne and Basel area as well as the Zurich metropolitan area. sively active in specialty chemicals and is very internationally- 63 % of all products manufactured in Switzerland are then export- orientated. Approximately three-quarters of the product portfolio ed, which makes up 5 % of all Swiss exports. Net sales in 2009 covers so-called «Life science» products, i.e. products which amounted to around CHF 11.2 billion. Investment in research and intervene in the metabolic processes of living organisms, and development, growth rates and profitability are all above aver- 98 % of sales are generated abroad. With a 4 % share of world age. In total around 49,000 employees are employed in medical exports of chemical-pharmaceutical products, Switzerland is technology. At 1.4 % relative to the working population this is the seventh-largest export nation in the world. Companies in the more than any other country (Germany: 0.3 %, the UK/EU/USA: Swiss chemical-pharmaceutical industry have a leading world- 0.2 %). The largest employer is Synthes, ahead of the diagnostics wide position in many market sectors and employ around 67,000 division of Roche and J&J Medical. Other global Swiss compa- people. The share of the sector in GDP is 4 %. Only the metal and nies are Ypsomed, Sonova (hearing aids) and Straumann (dental machine industry is larger in Switzerland. implants). Some major foreign corporations worth mentioning are Zimmer, Medtronic B. Braun and Stryker. Owing to the ripple effect of pharmaceutical giants Novartis and Roche, biotech clusters have formed in four regions – namely Basel, Zurich, around Lake Geneva and to a lesser degree in Ticino. At the end of 2010, the industry counted 174 biotech

Handbook for Investors 2012 21 150 foreign banks in the country, and 54 % of the securities man- Export platform Medtech aged in Switzerland come from foreign customers.

www.medtech-switzerland.com The key factors for success and the basic conditions for the insur- Languages: English ance industry include: a generous per capita income and a strong need for security, a solidly structured old-age pension system, an open and internationally networked insurance center, a credible regulatory environment and international know-how in the reinsur- Medical technology network ance business.

www.medical-cluster.ch Languages: German, English Swiss Finance Institute

www.swissfinanceinstitute.ch Language: English Dachverband der Schweizerischen Handels- und Indus- trievereinigungen der Medizinaltechnik (umbrella organization of the Swiss trade and industry associations for 2.3.4 Machinery, electrical engineering and metals industry medical technology) The machinery, electrical engineering and metals industry (MEM) www.fasmed.ch represents the largest industrial sector and holds a key position in Languages: German, French the Swiss economy with 330,000 employees. The MEM industry contributed 19 % to GDP in 2010, while its share of added value amounted to 9 %. Countless companies of the Swiss MEM indus- 2.3.3 Financial services try have a leading international role in their sub-sectors. Around The Swiss financial center is an important element of the economy 80 % of products from the MEM industry are exported, and the as well as a world-class cluster. In Switzerland there are some 320 industry contributes 35 % to total Swiss exports. banks, 250 insurance companies and 2,340 pension funds. The majority of the financial institutions are located in Zurich, Geneva, Large metal and machinery sector companies with well-known Basel and Lugano. In 2009, the direct value added by banks and names such as Saurer, Rieter, Schindler and ABB are present in insurance companies came to about CHF 60 billion, with banks almost every canton. Particularly in the cantons of Zurich/Aargau contributing CHF 37 billion and insurance companies CHF 23 bil- and Ticino/Valais, in the Rhine Valley and in Central Switzerland, lion. This amounts to about 11 % of the entire Swiss GDP. Some growth is among the strongest in the world. Most companies 212,000 people are employed in the financial sector, which is focus on innovation and quality as well as maintaining and about 6 % of all employed persons in Switzerland. Of this number, expanding their global market position in order to compete with 125,000 work in banks, 49,000 at insurance companies and the cheaper locations. Today, this branch of industry is able to com- rest at other financial institutions. The importance of the financial pete on the international stage, thanks to well-advanced restruc- industry is also expressed in the courses offered by Universities of turing and the use of new technologies. Applied Sciences. With the Swiss Finance Institute – a collabora- tive effort between financial institutions and leading Swiss universi- The Swiss Mechanical and Electrical Engineering ties – education and financial research are ensured. Industries Association

From an international perspective, the Swiss banking center is www.swissmem.ch regarded very highly and is extremely competitive. Its core com- Languages: German, English, French, Italian petency is asset management for private clients. In addition to the two major globally active banks, UBS and Credit Suisse, there are numerous regional and specialized institutions. There are some

22 Handbook for Investors 2012 2.3.5 Watch industry 2.3.6 Information technology The Swiss watch industry is primarily located in the Jura region Switzerland is very well positioned with regard to the develop- stretching from Geneva to Schaffhausen (called the «watchmaker ment of infrastructure for the IT community. According to the belt»), with individual sites in Mittelland, Ticino and Valais. The OECD it is in third place worldwide after Holland and Denmark Swiss watch industry makes products whose high degree of with 35.7 % inhabitants having high-speed internet connection. mechanization makes a strongly demarcated division of labour 82.1 % of the population over the age of 14 use the internet. The possible. As a result, the sector generally comprises small and World Economic Forum «Networked Readiness Index 2010/11» medium-sized businesses, averaging almost 70 employees per placed Switzerland in fourth position behind Sweden, Singapore company. Around 600 companies employ nearly 48,500 people and Finland. According to official statistics, the ICT sector in (as of 2010). 92 % of all employees and businesses are located in Switzerland comprises just over 16,000 companies, which corre- the seven cantons of the Jura region, resulting in a watch industry sponds to five percent of the total number of all companies. Over cluster. Particularly in the luxury segment, the world market posi- 160,000 people are employed in the IT sector, which corresponds tion of Swiss watchmakers is excellent. 95 % of all watches are to four percent of all employees. exported; the total value of Swiss watch exports in 2008 was CHF 17.0 billion. In the Zurich-Lake Constance area, well-known companies from the IT sector, have settled around the Swiss Federal Institute of The geographical concentration of the watch industry has given Technology Zurich, its research facilities and the University of rise to a «precision cluster,» which extends along the Jura from Zurich, such as IBM, Google and Microsoft. Key factors in their the Basel area to northern Vaud and down to Geneva, while the decision were the proximity to these universities. Other IT centers cities of Geneva, Biel and La Chaux-de-Fonds themselves are have emerged in Berne and Lucerne. three watchmaking centers. Companies such as the Swatch Swiss IT companies such as Oerlikon and Kudelski are leaders Group, Rolex SA, Richemont SA and the LVMH Group are head- in their markets. Some of the largest employers in the sector are quartered here. foreign companies such as Siemens, EDS Corporation, Dell, HP, Reuters and Orange. One important criterion encouraging foreign The availability of highly qualified staff with professional know- IT firms to settle in Switzerland is the extremely well educated, how has resulted in the relocation to this area of more and more technically experienced and often multilingual workforce. companies outside the watchmaking industry which require similar technology for their production. This in particular comprises medical technology. A cluster strongly orientated to microme- Federal Office of Communications chanics and optics has also formed in East Switzerland and in the region of Berne. www.bakom.admin.ch Languages: German, English, French, Italian

Federation of the Swiss Watch Industry FH

Umbrella Organization for the IT and Telecommunications www.fhs.ch Sector Languages: English, French www.ictswitzerland.ch Languages: German, French

Handbook for Investors 2012 23 2.3.7 Cleantech 2.3.8 Commodities trading Cleantech comprises technologies, processes, goods and ser- Switzerland is one of the world’s most important commodities vices, which have the aim of reducing environmental pollution trading platforms. Around one-third of global trade in crude oil and allowing the sustainable use of natural resources and sys- products is transacted via Geneva. Regarding the trade in wheat, tems. It is applied in all sectors of the economy and affects the oilseeds and cotton, Geneva is the world number one, and in whole value-added chain. As a small country with limited land sugar trade the number one in Europe. Zug is a hub for trade in resources, Switzerland has looked at environmental protection mining products. At first glance, such a prominent position may from an early date. Waste collection, Minergie standards, connec- seem surprising because Switzerland is a landlocked country with tion to sewage treatment plants, the energy recovery of all waste, very few natural resources. But because of its central location, it etc., are a matter of course for the Swiss population. Legislation has been a major crossroads for various trade routes since the and regulations at a high level have forced industrial solutions and early days of international trade in coffee and cotton. Later, the lead to many years of valuable experience. This constantly yields Swiss financial center became a hub for international trade due new and innovative developments. Nowadays the work of an to its traditionally advantageous location. In addition to com- estimated 160,000 employees is associated with the Cleantech paratively low taxes, trading companies value its central location, sector, 4.5 % of all workplaces. The estimated gross value added good infrastructure and connections with foreign countries. is CHF 18 – 20 billion and corresponds to 3.5 % of GDP. 38 % of Swiss Cleantech companies exports products and services. The Also important for the Swiss economy are the numerous com- heterogeneous company landscape is characteristic for the sec- modities-related services based here, such as insurance, law tor, stretching from start-up/spin-off companies to large multina- firms, consulting companies, trust and fiduciary companies, tional groups. freight and security businesses. Major Swiss banks and cantonal banks as well as various foreign banks have specialized in financing commodities trading in the regional hubs. They finance the Official information about Cleantech purchase of raw materials, guarantee the seamless processing of transactions and offer protection against operational and credit www.cleantech.admin.ch risks. In total the trade amounts to 2.5 % of Switzerland’s GDP. Languages: German, English, French, Italian

Umbrella Organization for Swiss Trade

Cleantech Export Platform www.vsig.ch Languages: German, English, French www.cleantech-switzerland.com Languages: German, English, French

Geneva Trading & Shipping Association GTSA

Network for the Transfer of Science and Technology in the www.gtsa.ch Environment and Energy Sectors Language: English www.eco-net.ch Language: German

24 Handbook for Investors 2012 In recent years trade in commodities has continually risen in importance. On the list of the 1,000 largest Swiss companies there are 6 commodities companies in the top 20: Glencore in first place as well as Trafigura (3rd), Xstrata (7th) and Petroplus (13th) are located in Central Switzerland, while Mercuria Energy Trading and Cargill International in positions 8 and 11 reside in Western Switzerland (the canton of Geneva).

2.3.9 Headquarters functions Switzerland is a vital center for the global and regional headquarters of foreign companies. While European firms have their global headquarters in Switzerland, US companies tend to open their regional headquarters here. The number of companies that have moved their headquarters to Switzerland has risen in recent years. According to an analysis by the consultancy company Arthur D. Little, more than 300 headquarters have been relocated to Switzerland from 2003 to the middle of 2011. 53 % of these companies come from the USA, 31 % from Europe and 11 % from Asia. Prominent examples such as eBay, Bombadier, Yahoo, Google, IBM or Kraft show the attractiveness of Switzerland as a location for company headquarters.

Some key criteria in the choice of location include availability of qualified staff, favourable tax environment, high standard of living and advantageous geographical location. Neutrality in an economic sense is also important – all the major European markets are comfortable with a Swiss main office. On the worldwide list of the most attractive investment locations, Switzerland takes 4th position (Swiss Attractiveness Survey 2011). It also scores highly in stability, legal certainty as well as the safety of people and the environment. Other advantages include proximity to research facilities and clients and reliable double-taxation agreements. Switzerland is also perfectly suited as a test market because it offers the widest possible variety in a small area.

Handbook for Investors 2012 25 3. Economic framework.

Free competition and trade and the protection of intellectual Fig. 15: Economic freedom, 2008 property are the cornerstones of economic success and Global ranking Rating make Switzerland attractive to both domestic and foreign Hong Kong SAR 1 9.05 companies. Efficiently organized administrative processes Singapore 2 8.70 guarantee security for planning and day-to-day operations, New Zealand 3 8.27 while progressive environmental laws promote sustainability. Switzerland 4 8.08 Chile 5 8.03 Switzerland is an extremely attractive location for global compa- USA 6 7.96 nies. The main reason for this is its liberal economic environment Canada 7 7.95 and an economic policy based on the free market. Australia 8 7.90 Mauritius 9 7.82 Great Britain 10 7.81 Ireland 11 7.74 Denmark 14 7.69 Luxemburg 16 7.60 Netherlands 21 7.53 Germany 24 7.46 Japan 24 7.46 France 35 7.32 Belgium 43 7.22 Italy 66 6.90 China 82 6.65 Russia 84 6.62 India 87 6.51 Brazil 102 6.18

Source: Cato Institute, Economic Freedom of the World: 2010 Annual Report

26 Handbook for Investors 2012 3.1 International exchange of 3.1.2 Customs and excise goods and services. Although Switzerland has been a member of the Schengen Area since the end of 2008, it is not part of the European Customs The Swiss economy is characterized by a high degree of inter- Union and the common market. As a result, customs controls national integration, with half of the country’s GDP generated remain in place. The most important document for customs clear- abroad. This is only possible thanks to the highly effective cross- ance is the customs declaration, which must be accompanied by border movement of goods and people. the exporter’s invoice (indicating the weight) and confirmation of origin, where necessary. A certificate of origin is required if one 3.1.1 Free trade agreements, WTO and elimination of trade wishes to benefit from preferential duty rates within the scope of restrictions the free-trade agreement or the general system of preferences In addition to the EFTA Convention and the Free Trade Agreement (developing countries) or if the goods are to be re-exported and with the European Union (EU), Switzerland currently has a network the origin is to be passed on. of 25 free trade agreements with 34 partners outside the EU and is also a member of the WTO. It applies the most-favored-nation Unlike most other countries Switzerland uses a system of cus- clause in trade with all WTO member states and is generally com- toms clearance based on gross weight. This so-called specific mitted to eliminating trade restrictions worldwide. customs duty is therefore levied on products for which no exemption from duty is granted. Swiss customs duties are usually lower In joining the WTO Switzerland has also undertaken to convert than those of other countries. This system favors the import of most non-tariff trade barriers into customs duties. Apart from a few high-quality technical components, which weigh very little but are exceptions (primarily agricultural products), domestic products are extremely valuable. not protected against international competition. There is no actual anti-dumping law. There are essentially no volume restrictions on In line with other countries Switzerland levies taxes and duties at the importation of processed products. Imports and exports of its borders, such as the automobile tax, tobacco and beer tax, industrial goods basically enjoy full duty and quota exemption on mineral oil tax, the CO2 levy, the VOC steering tax as well as the the European markets thanks to the free trade agreements with mileage-related heavy vehicle toll (MRHVT). At a standard rate of the EU and the EFTA. 8 %, VAT is much lower than in neighboring countries (Germany: 19 %, France: 19.6 %, Austria: 20 %, Italy: 20 %). Duty and quota exemption does not mean that customs clearance is not necessary, but this is not an obstacle. Thanks to PCs and Goods that are only intended to be held temporarily in Swit- the Internet it is now a largely automated process conducted via zerland in intermediate storage can be stored without customs the IT applications e-dec and NCTS. clearance and duty unpaid in bonded warehouses. The goods are therefore in transit between the border and the bonded warehouse. The subsequent exportation of the goods is then Free-Trade Agreement, WTO subject to the customs tariff of the importing country. The goods so stored may not be processed, or they become liable www.seco.admin.ch > Foreign trade for normal customs clearance. Bonded warehouses are public Languages: German, English, French, Italian facilities. They are operated by private warehousing companies and are open to all interested parties. Open bonded warehouses, meanwhile, are used for storing goods that have not been cleared through customs on a company’s own premises. They are usually operated by shipping companies and are becoming increasingly important.

Handbook for Investors 2012 27 Used household effects of people moving to Switzerland that are intended for their continued personal use are exempt from cus- Origin guidelines toms duty. At the time of importation, the completed official form must be submitted to the Swiss customs office. Clearance of www.zoll.admin.ch > Information for companies > Assistance household effects must take place during customs office opening with customs clearance procedures hours (see chapter 13.2.1). Languages: German, French, Italian

Overview of tax questions 3.2 Protection of free competition. www.seco.admin.ch > Foreign Trade > Goods traffic Languages: German, English, French, Italian Switzerland’s economic system is based on the principles of the free market. Free and fair competition is strengthened by the Cartel Act, which has been largely harmonized with EU regulations since 1995, in which cartels are not illegal but abuses are Customs information prosecuted. The Internal Market Act ensures greater competition and the elimination of protectionist regulations at cantonal and www.zoll.admin.ch municipal levels. The Competition Commission can intervene if Languages: German, English, French, Italian there are grounds for suspecting unacceptable restrictions on competition. It also investigates whether mergers have nega- tive effects on free competition and supplies the authorities with recommendations on promoting effective competition. Worldwide customs tariffs

www.osec.ch > Topics > Export know-how 3.3 Protection of intellectual Languages: German, English, French, Italian property.

The protection of intellectual property rights is well developed 3.1.3 Rules of origin in Switzerland. A comprehensive system of patent, trademark, Raw materials and component parts that are imported from third design and copyright protection guarantees that the results of in- countries can acquire Swiss-origin status and consequently novation and creativity are protected at national and international be delivered tax-free to countries which have signed the free- levels. Patent applications, trademark or design registrations can trade agreement (e.g. the agreement with EU), if they have been be submitted to the Swiss Federal Institute of Intellectual Property sufficiently processed in Switzerland within the scope of the (Eidgenössisches Institut für Geistiges Eigentum, IGE) in Berne. corresponding free-trade agreement. In many situations this is the case if the added value created in Switzerland is between 60 % The IGE, the agency responsible for commercial protective rights and 80 % of the finished product’s selling price (depending on and copyrights, is a center of competence for all aspects of the product). This regulation is of interest because high-quality patents, trademarks, designs, topographies of semiconductor products often have a low weight but a high product value. They products, copyrights and other related protective rights. Initial can therefore be imported cheaply into Switzerland, be processed information about protective rights titles registered in Switzerland and then be exported to countries with customs-preference, with can be accessed via the IGE’s own electronic protective rights whom there is a free-trade agreement. If, for example, goods register. As a member of the WTO, Switzerland implements the are imported in this way from a country outside the EU/EFTA provisions of the WTO/TRIPS Agreement. area and transformed in Switzerland in such a manner that they acquire Swiss-origin status, no duty is normally payable when the goods are exported to a EU/EFTA country.

28 Handbook for Investors 2012 Fig. 16: An overview of trademark rights Trademark protection Patent protection Design protection Copyright2 What is protected? Registered symbols that Inventions, i.e. technical The form, the outer design Works of literature and are misused by third parties solutions in technology of an object art (including computer programs) How is the protection The trademark is entered Issuing of an invention Entering of the design into Automatically upon creation provided? into the trademark register patent the design register Minimum requirements • Older third party rights • Innovative • Innovative Intellectual creation of are not violated • Commercially applicable • The overall impression literature and art with indi- • Distinctive • Inventive must considerably differ vidual character • Non-descriptive • Declaration of the from the existing design • Does not violate law and invention • Does not violate law and order and good morals order and good morals No protection • Simple symbols • Animal breeds and plant • Exclusively technical • Contents (ideas, con- • Abbreviations types functions cepts) • Indications • Process for diagnosis, • Ideas and concepts • Laws, official ordinances • Coats of arms therapy or surgery on • Violates federal law (e.g. • Verdicts of authorities • And more human or animal bodies protection of coat of • Means of payment • The utilization violates arms) and state agree- • Patent specifications law and order or good ments morals • Certain bio-technical inventions Exceptions from Use which is not brand- Private use, research and Private use, quotes, back- protection suitable teaching up copies, reporting Scope of protection Defined by the symbol Defined by patent claims Defined by the design Defined by the specific and the list of goods and work services Duration of protection 10 years (can be extended Max. 20 years 5 years (can be extended 4 70 years after the death as many times as desired) times), max. 25 years of the author (50 years for computer programs) Popular symbols or • ® for registered trade- +pat+; pat. pend (invention Mod. Dep. © «Copyright» «All rights signs marks applied for patent) Facultative use, misuse is reserved» or similar com- • TM for trademarks Facultative use, misuse is liable for punishment ments Facultative use, misuse liable for punishment Facultative use is liable for punishment Registration fee (CH)1 CHF 550 CHF 200 (registration) CHF 200 (base fee), includ- None CHF 500 (optional research) ing the publication of a CHF 500 (investigation) design Extension (CH)1 CHF 550 (10 years) CHF 100 per year for the CHF 200 (5 years) None 5th and 6th year, CHF 200 for the 7th and 8th year and CHF 310 from the 9th year Special features Violation of older trade- Innovations and innova- • Publication can be post- Evaluation companies: marks is not checked in tive work is not checked in poned for 30 months SUISA, SUISSIMAGE, Switzerland (brand research Switzerland (brand research • Innovations are not ProLitteris, SSA, SWISS- recommended) recommended) checked in Switzerland PERFORM

1 Excluding all applicable costs with the use of a specialist. 2 The Copyright law also specifies the rights of the performing artist, of the producers of phonogramps and videograms and of the broadcasters. Update: August 2010. Subject to changes. The latest data is available at www.ige.ch. Source: Swiss Federal Institute of Intellectual Property (IGE)

Handbook for Investors 2012 29 The Swiss Federal Institute of Intellectual Property makes infor- 3.3.1 Patents mation from the trademark, patent and design register and on Inventions that solve a technical problem by technical means can protected topographies available free of charge on the Swissreg be protected with a patent. To be eligible for a patent, the invention database. Swissreg contains Swiss trademarks and applications must fulfill three basic criteria: for registration, but not international trademarks that could also • Commercial application: The invention must be commercially lead to protective consequences in Switzerland. These inter- usable, actually realizable and repeatable. national trademarks are registered with the World Intellectual • Novelty: An invention is considered novel when it is not already Property Organization (WIPO) in Geneva. state-of-the-art. • Non-obviousness: The invention must not be obviously (for an expert) related to the state of the art. Swiss Federal Institute of Intellectual Property (IGE) Ideas, lottery or accounting systems, therapeutic, surgical, di- www.ige.ch agnostic or surgical procedures on humans or animals and plant Languages: German, English, French, Italian species, among other things, cannot be patented. Furthermore, inventions which violate law and order or good morals (e.g. certain biotechnological inventions) cannot be patented.

Information platform especially for SMEs There are three ways to protect an invention with a patent application effective in Switzerland: kmu.ige.ch • Swiss patent: With national registration, the patent protection Languages: German, English, French, Italian extends to Switzerland and the Principality of Liechtenstein. National registrations can be submitted to the IGE in any language. A translation in German, French or Italian must, however, be submitted within a deadline, if the registration is not A Guide for Innovative and Creative Minds made in one of these three languages. • European patent: The European Patent Convention (EPC) www.ige.ch/leitfaden enables applicants to obtain protection in the member states of Languages: German, English, French, Italian the EPC, including Switzerland, through a standardized patent investigation and granting procedure. • International patent: The Patent Cooperation Treaty (PCT), which Switzerland has ratified, enables inventors to submit an Swiss Trademark Register international registration which then has the same effect as a national registration in all named member states. International www.swissreg.ch registrations can be submitted to the IGE in English. Languages: German, English, French, Italian It takes an average of three to five years between the filing of a national application and the granting of the patent. An acceler- ated process is possible upon request. Patents expire after a World Intellectual Property Organization WIPO maximum of 20 years. A patent costs CHF 200 for the application and CHF 500 for the patent investigation. Annual renewal fees are www.wipo.int payable starting five years after the date of filing. Languages: English, French, Spanish, Chinese, Russian As the IGE does not check the criteria regarding innovation and inventiveness, it is recommended to use a specialist (e.g. a patent lawyer) before applying for a patent. Both criteria can also be

30 Handbook for Investors 2012 checked after the patent application by optional research about The IGE investigates, within the scope of the application process, the state of technology. whether these requirements have been met. It does not check Switzerland is one of the most active countries in the OECD in whether other symbols, which it could be mistaken with, have terms of the number of patent applications per inhabitant. already been entered into the register, or whether any third-party rights exist, which could be violated by the brand application. It is therefore recommended to carry out research with the IGE or a The European Patent Office private provider before registering the brand. The registration with IGE only applies to Switzerland. The following options are avail- www.epo.org able for protecting the brand abroad: Languages: German, English, French 1) The national registration of the brand in the respective countries; 2) The registration of the brand as an (EU) community brand with protection in all the Member States of the EU or Patent lawyers 3) International registration according to the Madrid system: on the basis of a national brand, the brand owner can lodge its www.ige.ch/pat-anwalt brand in individual Member States of its choice, with a single Languages: German, English, French, Italian application to the World Intellectual Property Organization (WIPO) in Geneva, whereby the investigation of the protect- ability is carried out by the registration authorities in the respective countries. Free first consultancy in patent issues The brand application is possible in electronic form in Switzer- www.ige.ch/ip-netz land. The deposit fee is CHF 550 (plus any class fees). If the sym- Languages: German, English, French, Italian bol meets the protection requirements, it is normally registered within a period of max. six months. The ten year brand protection resulting from the registration can be extended by paying an extension fee as many times as desired every ten years. Patent research

www.ige.ch/recherchen Brand research Languages: German, English, French, Italian www.ip-search.ch Languages: German, English, French, Italian 3.3.2 Brands Brands are symbols which allow the products of one company to be differentiated on the market from those of other companies, thereby allowing consumers to find a product they appreciate Brand registration among the mass of products on offer. A symbol can be registered as brand if, www.e-trademark.ige.ch • It is recognized by the public as referring to a company and Languages: German, French, Italian its registration does not restrict competitors in their economic development to an unacceptable degree. • It does not pretend to the public that product has characteristics it does not. • It does not violate law and order, good morals, or the applicable legislation

Handbook for Investors 2012 31 Brand consultants 3.4 Product provisions and product liability. www.ige.ch/ma-berater Languages: German, English, French. Italian For reasons of health and safety, environmental and consumer protection and to comply with international and national standards, medicines, cosmetics, cleaning agents, electrical appli- 3.3.3 Designs ances, measuring and weighing equipment, heating systems, The design appeals to the senses, triggers feelings, creates pressure containers and motorcycles as well as other products identification, and creates distinction. As a result design has also are subject to certain regulations when imported into and sold in become a decisive market factor and forgeries are correspond- Switzerland. ingly regular. New commercially manufactured designs with two-dimensional or three-dimensional features of an aesthetic The law regulates which particular conformity assessment pro- nature can be protected by means of registration. The registra- cedures shall apply, depending on the product’s hazard poten- tion process for a design is simple, fast and cheap. A design can tial. The procedures range from self-imposed checks (e.g. for be protected for a maximum of 25 years (comprising five 5-year machines) to assessments by government-approved independent periods). Based on the Hague Agreement concerning the Interna- conformity assessment centers (e.g. for pressure containers) to tional Deposit of Industrial Designs, designs and models can also government licensing (e.g. for medicines). be registered internationally. Because Switzerland has ratified this agreement, the registrant acquires protection for Switzerland as These days most countries impose a raft of technical regulations well. and very few products escape the net. At the federal level in Swit- zerland, these regulations are contained in more than 30 laws and more than 160 ordinances. In addition, a few technical regulations Platform against forgeries and piracy still exist at the cantonal level.

www.stop-piracy.ch Mutual recognition agreements (MRAs) are a politically important Languages: German, English, French, Italian tool for removing technical trade barriers in the state-regulated sector and are recognized by the World Trade Organization. If the product regulations in two states are of a comparable standard, a 3.3.4 Copyright conformity assessment conducted under the exporting country’s Intellectual creations of literature and art with a unique character regulations is sufficient to allow the product to be distributed in can be protected by means of copyright. This includes literature, the other country. Switzerland’s MRA with the European Union is music, paintings, sculptures, films, operas, ballets and mimes, the most economically important example (CE marking [Conformité but also software. A work is protected by copyright as soon as Européene]). it is created. There is no requirement to apply for protection or lodge the work, and no register exists. In Switzerland, copyright The health and safety requirements are determined by laws and protection expires 70 years after the death of the creator, except regulations. Regarding product safety, Switzerland has largely for software, which is only protected for 50 years. assumed the regulations of the European Union (EU), so that no more market barriers exist in this area for exports and imports from/to the EU.

In addition, since July 1, 2010 the so-called Cassis de Dijon principle applies to the EU. According to this principle, many products from the EU/EEA, which previously had to be produced, repacked or relabeled solely for the Swiss market, can now be imported easier and without technical obstacles. The condition for this is that the products meet the regulations of the respec-

32 Handbook for Investors 2012 tive EU or EEA country and were circulated there lawfully. Chiefly, 3.4.1 Foodstuffs Swiss product liability regulations are comparable with those The Swiss Ordinance about the Identification and Pricing of in the European Union – the manufacturer is liable for damage Foodstuffs (LKV) contains very strict regulations on the informa- caused by defective goods, irrespective of whether the manu- tion that must be declared. All ingredients must be named and facturer himself is negligent. In Switzerland, liability applies to all listed on the packaging or labels of pre-packed foodstuffs in de- products put into circulation from 1994 onwards. scending order of quantity. Foodstuffs which are not transcribed in an Ordinance must be authorized by the Federal Office of Pub- The following sections give further details on the regulations relat- lic Health (FOPH). FOPH approval is mandatory for foodstuffs, ing to a number of important product categories. Due, however, additives and processing agents which are genetically modified to the large number of laws and ordinances in existence, it is es- organisms (GMO), contain such or have been obtained from such, sential that detailed information be sought in specific cases. and which are intended for offering to consumers. The presence of GMO is tolerated, if the share in an ingredient does not exceed 0.9 %. All other products require approval. It is forbidden to mar- Regulations about product safety ket foodstuffs as having a therapeutic effect. Nutritional values and health-related information must contain the legal conditions www.evd.admin.ch > Topics > Economy > Product Safety as per the Foodstuffs Identification Ordinance (LKV).Products Languages: German, French, Italian with a therapeutic effect are medicines and must be authorized by Swissmedic (see section 3.4.2).

For foodstuffs parliament has passed a special resolution about Technical trade obstacles the Cassis de Dijon principle: foreign foodstuffs which do not fully meet the technical regulations of Switzerland, have to be ap- www.seco.admin.ch > Topics > Foreign Trade proved by the Federal Office of Public Health FOPH. Languages: German, French, Italian

Information of the Federal Office of Public Health FOPH

Standards: switec –The Swiss information centre for www.bag.admin.ch > Topics > Foodstuffs and commodities technical regulations > Foodstuffs www.snv.ch > Services > Switec-Infocenter Languages: German, English, French, Italian Languages: German, English, French

Swiss Foodstuffs Book (SLMB) Accreditation: Swiss Accreditation Office SAS www.slmb.bag.admin.ch www.seco.admin.ch/sas Languages: German, French Languages: German, English, French, Italian

3.4.2 Pharmaceutical products The manufacture and sale of medicines is subject to mandatory licensing in Switzerland. It takes around ten months to license a new pharmaceutical product with Swissmedic (excluding company-internal processing time), the Swiss Agency for Therapeutic Products, making Switzerland’s registration process one of the quickest in the world. Normal evaluation of a license application

Handbook for Investors 2012 33 for a human medicine with a new active ingredient costs CHF 25,000 (CHF 60,000 under the fast-track procedure). Guidelines on the regulation of medical devices

The licensing requirements are largely comparable with those www.swissmedic.ch > Market surveillance > Medical devices in the EU, which makes it simple to apply for licensing in Swit- Languages: German, English, French zerland and the EU simultaneously. Swiss registration enjoys high-level international standing, thanks to the country’s exceptional scientific reputation, its strict criteria and the large number of renowned clinical-testing hospitals. The fast-track procedure 3.5 Land use planning and enables fast licensing decisions to be made (within 130 days, environmental protection. excluding company-internal processing time) for vital medicines (e.g. to treat AIDS or Alzheimer’s), despite rigorous testing. 3.5.1 Building and zoning Thanks to progressive legislation on land use planning and environmental protection, densely populated economic areas can Swiss Agency for Therapeutic Products exist in harmony with rural and agricultural land. Because of high population densities, building development and environmental www.swissmedic.ch awareness have always gone hand in hand. Service and industrial Languages: German, English, French, Italian buildings are erected in special zones. Building and zoning regulations are governed by cantonal law, and a building permit must be obtained. The duration and scope of this process depend on the 3.4.3 Medical devices type of investment being planned. In the interests of occupational In Switzerland the regulation of medical devices is mainly based on safety, industrial buildings, for example, require both planning the Federal Law on Medical Products and Medical Devices (the Or- consent and an operating license. dinance on Therapeutic Products), the Medical Product Ordinance and the Ordinance on Clinical Tests with Therapeutic Products. The The duration of the building permit process depends on the type same regulations for medical devices apply in Switzerland as in the and complexity of the project. For straightforward building proj- EU. Bilateral contracts thereby enable free trade in medical devices ects, such as commercial/industrial projects with no particular of Swiss manufacturers within the European Union, in EFTA mem- level of difficulty or requirement for supplementary investigations ber states and Turkey. A medical equipment supplier wishing to sell or special approvals, it usually takes two to three months. This their product in Switzerland must be able to prove to the authorities assumes that there are no grounds for appeal or protests. The that their product meets the fundamental requirements of the EU process may vary from canton to canton. Directive, and has undergone a suitable conformity assessment procedure in accordance with EU directives. The cantonal economic development agencies (see chapter 15.1) provide information on commercial land development and avail- Medical devices bearing CE marking from a recognized European able commercial buildings, as well as on the necessary adminis- test office are also deemed to comply with Swiss law, provided all trative steps. Their job also involves initiating and, where neces- the product information is provided in three languages (German, sary, coordinating this process. French, Italian). A manufacturer in Switzerland may use CE marking for their medical devices and sell them on the Swiss market or export them to the EU, EFTA or Turkey. Some of these states Federal Office for Spatial Development ARE also demand the registration of certain medical products and their manufacturers with national authorities, in addition to the CE www.are.admin.ch marking. Some non-EU states demand export certificates from the Languages: German, English, French, Italian country of origin for medical products. Swiss companies can order these certificates from Swissmedic.

34 Handbook for Investors 2012 3.5.2 Environment Swiss environmental legislation largely conforms to EU rules. Environmental law and the protective measures this gives rise to are based on the principle of cooperation. In cooperation with the business community, solutions are developed to meet both economic and environmental considerations. The measures initiated are seen as exemplary around the world. When erecting and operating industrial and commercial sites, there are a variety of federal and cantonal decrees to consider. The federal laws on the protection of the environment, controlling water pollution and nature and cultural heritage are especially important. The Environmental Protection Act sets forth regulations on air and soil contamination, noise, non-ionizing radiation, waste and environmentally harmful substances. Based on the principles of «precau- tion» and «polluter pays», this act requires environmental damage to be kept to a minimum and the costs of preventing damage to be borne by the polluter. Emissions are limited by means of regulations on standards, building, equipment, traffic and operations, although the technology to be employed is not prescribed. Com- panies are granted a specific period of time to undertake remedial action, thereby allowing them to determine how and when they make the necessary investments.

Environmental impact tests are conducted for projects involving the planning, erection or modification of installations that could have a serious impact on the environment. Although these tests are a tool for protecting the environment, they only apply to specific projects as part of the regular building and planning consent process. Projects that require an environmental impact test are listed in the relevant ordinances. Such projects include transport systems, power generating plants and high-polluting industrial plants.

Federal Office for the Environment (FOEN)

www.bafu.admin.ch Languages: German, English, French, Italian

Environmental Impact Assessment EIA

www.bafu.admin.ch/uvp Languages: German, French, Italian

Handbook for Investors 2012 35 4. Switzerland and Europe.

Culturally and geographically, Switzerland lies at the heart of Europe. Although it is not a member of the European Union, Eurostat Statistical Office of the European Union it shares close economic and political ties with its European neighbors. A solid foundation of bilateral agreements and a www.epp.eurostat.ec.europa.eu dynamic European policy form the basis for a deep-rooted Languages: German, English, French political partnership and a substantial amount of economic integration, which benefit both the Swiss economy and the financial center, as well as the EU. Professional mobility in Europe

4.1 Trade and direct investments. www.swissemigration.ch > Topics > European Employment Services Switzerland and Europe share close economic ties. As the desti- Languages: German, English, French, Italian. nation for 59 % percent of Swiss exports and with a share of 77 % of Swiss imports (as per 2010), the EU is by far Switzerland’s Source: www.europa.admin.ch most important trading partner. For its part, Switzerland was the EU’s second largest customer in 2009 (8.1 % of all exports) after the USA, and the fourth-largest supplier of goods (6.2 % of all 4.2 Political and economic imports). In 2010, 33.9 % of Swiss direct investments were made cooperation. in the EU. For numerous Swiss companies, including branches of foreign With the exception of agricultural and food products, there are firms, the European market is very important. Various agreements no restrictions on trade between Switzerland and the members to liberalize the market create almost equal access to the Euro- of the EU. Goods with a certificate of origin from one of the 31 pean common market under stable framework conditions. These member states of the EU and EFTA (Switzerland belongs to the agreements make it possible for companies from Switzerland to latter, along with Iceland, Liechtenstein and Norway) can circulate better tap and work a market of almost 500 million consumers. freely without quotas and customs barriers. In addition to the free With the extension of these bilateral agreements to the new EU exchange of goods with the EU, there is also a strongly liberalized member states, Switzerland gains access to the growth markets labor market (for example for specialists, researchers and manag- of Eastern Europe. ers), and a somewhat liberalized trade of services.

36 Handbook for Investors 2012 The bilateral agreements between Switzerland and the EU have The agreement specifies transition periods. During these peri- been broadly expanded. Various barriers to market access were ods the immigration restrictions, such as preference of national eliminated by the Free Trade Agreement of 1972 and the Bilateral residence and temporary control of the wage and employment Agreements I of 1999. Bilateral I includes agreements covering conditions, can be maintained and the number of residence per- technical barriers to trade, public procurement, the free move- mits can be limited (quotas). After the expiry of the quota regula- ment of persons, agriculture, research, and overland and air tion the agreement also allows, based on a safeguard clause, transport. Bilateral II, the second round of more extensive agree- the number of residence permits to be limited again for a period ments of 2004, includes additional economic advantages as well of time, if there is an undesirably large, above-average level of as cross-border cooperation in other political areas. The follow- immigration. The transition regulations guarantee a gradual and ing sections explain the most important agreements and their controlled opening of the labor markets, while in addition the ac- significance. companying measures to counter wage and social dumping also apply. • The quota regulations for the 15 «old» EU States (the EU 15) European website of the federal government and Malta and Cyprus, as well as for the eight Eastern Euro- pean countries (EU 8) who joined in 2004, were lifted on June www.europa.admin.ch 1, 2007 and May 1, 2011 respectively. There is still, however, a Languages: German, English, French safeguard clause in place until May 31, 2014. • For Bulgaria and Romania, who joined in 2007, the option of imposing immigration restrictions has been stipulated until May 4.2.1 Free movement of persons 31, 2016 at the latest. After the lifting of these restrictions a With the Swiss-EU Freedom of Movement Agreement (FZA), the safeguard clause also applies to both countries until May 31, basic rules for the freedom of movement of people, as they are 2019 at the latest. applied in the EU, are gradually introduced in Switzerland and the EU. Citizens of Switzerland and the EU States have the right to 4.2.2 Schengen Agreement choose their place of work and residence within the territory of The Schengen cooperation has made travel easier, by abolish- the contractual partners. The prerequisite is that they have a valid ing identity checks at the borders between Schengen countries employment contract, are self-employed or – if they are unable (internal borders). At the same time a range of measures have to work – can provide evidence that that have adequate finan- improved international cooperation between courts and the police cial resources and have comprehensive medical insurance. The in the fight against crime. This cooperation includes safety mea- agreement also liberalizes the performance of services by indi- sures such as strengthened controls on the Schengen external viduals for up to 90 days per calendar year. Service providers can borders, increased cross-border police cooperation, for example therefore perform their service in a guest country for a maximum through the European search system SIS, or more efficient co- of 90 working days. operation between judicial authorities. The Schengen visa is also This freedom of movement of people is reinforced by the mutual valid for Switzerland. Tourists from India, China, Russia or other recognition of vocational qualifications and the coordination of countries that require a visa no longer need an additional Swiss the national social insurance systems. Thanks to the agreement, visa for a short visit to Switzerland during their travel through Eu- the Swiss economy can recruit employees in the EU region, in rope, which increases Switzerland’s attractiveness as a vacation areas where the Swiss economy is lacking, and use the education destination. and training facilities there. The agreement boosts the efficiency of the labor market and promotes the availability of highly quali- 4.2.3 Elimination of technical barriers to trade fied personnel. The free movement of people also, of course, For most industrial products, conformity evaluations – such as works in the other direction: Swiss nationals can also work and tests, certificates and product approvals – are mutually recog- take up residence freely in the EU. At the moment around 430,000 nized. Re-certification upon export to the EU is no longer neces- Swiss people, which comprises around 60 % of all Swiss abroad, sary because product inspections by Swiss testing institutes live in the EU. recognized by the EU are sufficient. Accordingly, double inspection according to Swiss and EU requirements is eliminated. In

Handbook for Investors 2012 37 areas where EU and Swiss regulations differ and two conformity procurement by districts and communities, procurement by certificates are still required, both can be issued by the Swiss public and private clients in the sectors rail transport, gas and testing institute. This process simplifies administrative proce- water supply as well as procurement by private companies that dures, reduces costs and strengthens the competitive position of operate on the basis of a special or exclusive right, which they the export industry. have received from authorities operating in the sectors of drinking water and power supply, municipal transportation, airports as 4.2.4 Research well as river and maritime navigation. The agreement provides for Swiss research institutes, universities, the private sector and the option of removing procurement or commissioning in certain individuals can fully participate in all of EU’s Framework Research sectors, in which there is verifiable competition, from the scope Programs (FRP), providing the country with scientific, technologi- of application. Accordingly, the telecommunication sector was cal and economic benefits. The FRPs are the main instrument already removed in 2002. of the European Union to implement their common science and technology policy. The funds for the 7th FRP comprise around The rules for commissioning are based on three principles: EUR 54.6 billion for the seven-year term (2007 – 2013). The core • Equal treatment of all providers (non-discrimination) areas of research of the 7th FRP include information and commu- • Transparency of the process nication technology, health, energy, nanotechnology, the environ- • Right of recourse against decisions within the scope of the ment and basic research, areas in which Swiss research has high tender and awarding process (above certain threshold values). competencies in comparison with Europe. Private industry is able to participate as well, which means Swiss researchers can imple- The public sector and affected companies are obliged to issue ment and manage their own projects. Small and medium-sized and carry out tenders for procurement and orders, which exceed Swiss companies with experience in international cooperation will a certain threshold level, in accordance with WTO regulations. In have unhampered access to EU know-how, which they can utilize principle the most economic or best value offer has to be select- in the market. ed, as long as the offered goods or services are of a comparable level. The selection criteria can, however, also be the lead times, 4.2.5 Rail, road and air transport the quality of service or environmental friendliness. The client can The bilateral agreements with the EU have regulated the open- also define requirements for the observance of regional or sector- ing of passenger and freight transport by road and rail. Charges wide wage and working conditions. Public tenders by the federal based on the «polluter pays» principle were introduced at the government and cantons are posted on an electronic information same time. Network access in the EU is increasing the competi- system. With regard to the considerable expenses incurred by tiveness of the railways and opening up new market opportunities the public sector in the EU and Switzerland, this further opening for Swiss transport companies. Swiss airlines have access to of the procurement market creates opportunities for the export the liberalized European air transport market, subject to mutual industry (e.g. machine construction) and the services sector concessions, putting them on a more or less equal footing with (e.g. engineering and architecture companies). Furthermore, the their European counterparts. Duty-free sales at Swiss airports or increased competition among providers at reduced prices leads on flights to and from Switzerland are still available. to considerable savings for the states issuing the orders.

4.2.6 Public procurement Based on the comprehensive plurilateral agreements between Public procurement in Switzerland the 40 current member states on the public procurement of the World Trade Organization of April 15, 1994 (GPA), an international www.simap.ch request for a proposal for the procurement of goods and services Languages: German, English, French, Italian and construction projects by certain clients over a certain amount – termed the threshold value – must be made in order to promote transparency and competition within public procurement. Based on the agreement on public procurement, the scope of application of the WTO rules has been extended. This now comprises

38 Handbook for Investors 2012 4.2.7 Trade in agricultural products 4.3 The euro. The agreement on processed agricultural products governs trade in products from the foodstuffs industry (e.g. chocolate, cookies Even though the official currency of Switzerland is the Swiss franc, and pasta). The EU does not impose import or export duties on the euro is an accepted form of payment at practically all hotels and trade with Switzerland. In response, Switzerland has reduced its in many businesses. Swiss banks and exchanges offer euro ac- import and export duties accordingly. There is free trade of sugar counts, and cash withdrawals in euros are possible at most ATMs. and of products which do not contain any raw materials besides The Swiss financial center is set up to conduct all bank transactions sugar, which are relevant to agricultural policy. The simplification in euros. Due to its location in the heart of the European Monetary of technical regulations is still beneficial to consumers and will Union and the fact that the EU is its largest trading partner, the euro increase opportunities for exporting quality agricultural products. A is extremely important for Switzerland. This is particularly the case comprehensive agreement on the agricultural and foodstuffs sector in the tourism sector and for companies active in the import/export is still being negotiated, which should fully open the markets for business. agricultural products and foodstuffs for both sides. The agreement would lift both tariff barriers to trade (such as duties and quotas) as well as non-tariff barriers (such as various product regulations and import requirements). This lifting will confront the agriculture sector with considerable challenges. To ensure that the new market opportunities are seized and the affected sectors can be supported in the new market situation, free trade should be introduced gradually and supported by accompanying measures.

4.2.8 Taxation of savings income In order to tax the savings income of EU citizens living in Switzer- land, Swiss banks operate a system of tax retention on savings income of 35 %. Three quarters of the receipts from this tax are paid out to EU countries. This withholding tax guarantees banking secrecy. Related companies with their principal base in Switzer- land, as well as subsidiaries in EU member states, no longer pay withholding tax on payments of dividends, interest and license fees. This increases Switzerland’s appeal as a business location.

Handbook for Investors 2012 39 5. Establishing and managing a company.

Establishing a company can be done quickly and easily. Nu- The appropriate form of business entity for a foreign company merous official and private organizations assist entrepreneurs establishing a location in Switzerland depends on many factors, in selecting the appropriate legal form for their company and including the nature and time horizon of the business, general can provide advice and support. The federal government’s legal and tax conditions, and the strategic goals of manage- various websites offer a wide range of information on all ment (headquarters, production facility, sales office, financial or aspects of the company formation process – from business service company, etc.). Companies and private individuals from plan to official registration. foreign countries are allowed to determine the legal form that is right for their business. This requires careful evaluation, in which tax considerations play a crucial role. It is therefore advisable to 5.1 Corporate structures. engage an advisor or consultant familiar with the Swiss legal and tax system at an early stage in the process. Economic freedom, which is guaranteed under the Swiss Constitu- tion, allows anyone, including foreign nationals, to operate a busi- The following basic options are available for establishing a business in Switzerland, to form a company or to hold an interest in ness in Switzerland: one. No approval by the authorities, no membership of chambers • Forming an unincorporated or incorporated company of commerce or professional associations and no annual reporting • Setting up a branch office of operating figures are required to establish a business. Howev- • Acquiring an existing company in Switzerland (either unincor- er, foreign nationals must have both work and residence permits porated or incorporated) in order to conduct a business personally on a permanent basis. • Formation of a joint venture (unincorporated or incorporated company) Swiss law distinguishes between the following types of business • Forming a strategic alliance with or without an equity interest entities: partnership-type unincorporated companies (sole proprietorship, limited partnership or general partnership) and capital- The most common choices for a foreign company located in based incorporated companies (stock corporation or AG, limited Switzerland are subsidiaries (in the form of a stock corporation or liability company or GmbH). The «limited partnership for collective limited liability company, i.e. an AG or GmbH) and branch offices. investment» (KkK) corresponds to the «limited partnership» form The newly created limited partnership for collective investment is common in English-speaking countries. The legal form referred to also an attractive option for risk capital. as GmbH & Co. KG, which is common in Germany and Austria, does not exist in Switzerland.

40 Handbook for Investors 2012 The following criteria are crucial when selecting the right form of The AG’s supreme body is the board of directors. It consists of business entity: one or more members, who are not required to be sharehold- • Capital: organization or incorporation expenses, capital needed ers. There are no requirements regarding the nationality or legal and minimum capital required residence of the directors. At least one member (of the board • Risk/liability: the higher the entrepreneurial risk or financial of directors or the executive board) authorized to represent the investment, the more advisable it is to select a limited liability company must reside in Switzerland. The compensation paid to form of company the members of an AG’s board of directors varies widely depend- • Independence: freedom of action may be restricted depending ing on the industry, size of the company and sales revenue. The on the corporate structure average fee in Switzerland for a member of the board of directors • Taxes: the business income and assets of the company or in companies with up to 1,000 employees is about CHF 26,000 owner(s) are taxed either separately or together, depending on per annum. The most common forms of compensation are annual the corporate structure lump-sum payments and reimbursement of expenses. On average • Social security: certain social insurance plans are obligatory, the board of directors in Switzerland consists of 3.6 people. voluntary or non-existent, depending on the legal form 5.1.2 Limited liability company (GmbH) A limited liability company (GmbH) is a separate business entity Swiss government SME portal with its own legal personality. It can be formed by one or more individuals or commercial companies, and its stated capital www.kmu.admin.ch (nominal capital) is specified in advance. Each shareholder has an Languages: German, French, Italian interest in the nominal capital in the form of one or more nominal shares having a nominal value of at least CHF 100. The nominal capital must total at least CHF 20,000 and must be fully paid in. 5.1.1 Stock corporation (AG) A nominal share can be easily transferred in writing. The owner of The stock corporation – Aktiengesellschaft (AG) in German, So- the invested capital must, however, be entered in the commercial ciété anonyme (SA) in French and Società anonima (SA) in Italian register. Essentially all shareholders are entitled to joint manage- – is a joint stock company (corporation limited by shares) similar ment of the company, whereby at least one of them must have to a corporation in the United States or a public limited company their place of residence in Switzerland. in the UK. It is the most important and most common type of corporate structure in Switzerland. In addition, it is often chosen by The GmbH is an attractive alternative to the stock corporation, foreign companies as the legal form for their Swiss subsidiaries. in particular for small and medium-sized enterprises. Due to the The AG is a distinct legal entity (with its own legal personality), fact that a board of directors is not required, the structural costs and its liability is limited to company assets. The registered share of a GmbH can be kept comparatively low. On the other hand this capital is determined in advance and subdivided into shares. The means that the whole responsibility is concentrated on the Man- AG is an appropriate legal form not just for large companies but aging Director. Depending on the size, there is only one limited also for small and medium-sized businesses. It is the customary auditing obligation. In addition the GmbH has the advantage of legal form for holding companies and financial enterprises. less share capital compared to an AG, but the disadvantage of the lack of anonymity: each shareholder, even those who join the A stock corporation can be founded by one or more individuals company at a later date, is publicized. or legal entities, whereby at least one person has to be a shareholder. The share capital must be at least CHF 100,000. In order to found a stock corporation at least CHF 50,000 must have been paid in, while the increase in stock capital to at least CHF 100,000 has to be paid in fully at a later date.

Handbook for Investors 2010 41 Fig. 17: Overview of legal forms Sole proprietorship General partnership Joint stock company Limited liability Branch office (AG) company (GmbH) Formation Self-employment, Signing of articles of Public act of sign- Public act of signing Entry in the commercial requirements economic activity as a partnership (informal) ing when company is when company is found- register means of permanent If no commercial activity founded, adoption of ar- ed, adoption of articles gainful employment is pursued, the partner- ticles of incorporation or of incorporation or as- ship does not become association, appointment sociation, appointment of a legal entity until it is of a board of directors, a board of management entered in the commer- appointment of auditors and representatives, cial register (unless dispensed with appointment of auditors pursuant to CO 727a II) (unless dispensed with Entry in the commercial pursuant to CO 727a II) register Entry in the commercial register Purpose Small businesses, activi- Small, permanent busi- Suitable for almost all Small businesses cen Business operation ties carried out by single nesses centering on types of for-profit busi- tering on individuals that is legally part of a individuals (e.g. artists) specific individuals nesses main enterprise but has a degree of economic independence Name • Last name of the • Last name of at least • Freely chosen (per- • Freely chosen (per- • The same name as owner (with or without one partner with a sonal names, activity, sonal names, activity, main company first name) suffix indicating the invented names, etc.) invented names, etc.) • Special extra words • Additional words pos- relationship between • The legal form must • The legal form must permitted sible (activity, invented the partners be included in the be included in the • If the main company name, etc.) • Additional words pos- company name company name is foreign: the place sible (activity, invented where the main name, etc.) company is registered, place of the branch office • Specification of legal form Legal nature Sole property of the Partnership Legal entity Legal entity Legal entity firm's owner Entry in the Mandatory for busines Mandatory for busines Becomes a legal entity Becomes a legal entity Entry is mandatory commercial ses pursuing commercial ses pursuing commercial upon entry in the CR upon entry in the CR register aims (otherwise: optional) aims Founders One individual is the sole Two or more individuals At least one shareholder At least one shareholder Main company (head proprietor (individual or legal entity) (individual or legal entity) office) Executive None Partners • Annual general • General meeting of • Bodies of the main bodies meeting shareholders company • Board of directors (at • Management (a mini- • Management by own least 1 member) mum of 1 member) manager; authorized representative residing in Switzerland Auditors May be appointed May be appointed Yes, unless dispensed with as per CO 727a II, depending on size: attainment of two of the three following measures in two consecutive fiscal years: • Total assets of CHF 10 million; • Sales of CHF 20 million; • An average workforce of 50 or more over the year

42 Handbook for Investors 2012 Sole proprietorship General partnership Joint stock company Limited liability Branch office (AG) company (GmbH) Liability Unlimited liability of the Primary liability to the Liability limited ex- Liability limited exclu- Main company (head proprietor with personal level of company assets clusively to company sively to company's office) assets (capital); subsidiary joint assets; each shareholder assets: optional limited and several unlimited is solely obliged to pay liability to make further liability of each partner in his/her/its share of the contributions according with personal assets share capital (payment to articles of association; under subscription) liability only for further contributions linked to own share in equity Minimum No stipulations No stipulations Minimum: CHF 100,000, Minimum: CHF 20,000 No separate equity is re- capital minimum paid in: quired (capital resources CHF 50,000 of foreign head office are sufficient) Consulting CHF 700 – 1,200 CHF 2,400 – 4,400 From CHF 1,900 From CHF 1,800 From CHF 1,000 costs, forma- (electronic) (electronic) tion, From CHF 7,000 From CHF 6,000 registration, (traditional) (traditional) public (see chapter 5.4.3) (see chapter 5.4.3) notary Advantages • Simple and inexpensive formation procedure • Limited liability and risk capital • No separate equity • Few formal requirements • Company shares are easily transferable required • Shareholders can take on roles in the governing • Regulated representation rights • Simpler and less ex- bodies • Foreign nationals may hold all stocks or shares pensive to form than a • No double taxation (only the income of the (however: at least one person must be resident of corporation (no stamp shareholders is taxed, as the company is not a Switzerland, who can handle all legal matters) and withholding tax on legal entity) • Easier access to the capital market profit transfers) • Suitable for very small companies • Suitable for more capital-intensive businesses • The head office can • The company is a Swiss company exercise influence directly • Anonymity of share- • Low minimum capital • Low tax burden holders – no disclosure requirement • Profits of the Swiss obligation branch are exempt • Unlimited share capital from taxation in the • Limitation of the country of the head of- shareholders’ obliga- fice (parent company) tion to contribute addi- according to many tional capital double-taxation agree- • Simple inheritance ments arrangements • Publication of annual financial statements is only required if the AG has outstanding bonds or is listed on the stock exchange. Disadvan- • Partners have unlimited liability • Some double taxation (taxation of company profits • The foreign head office tages • Ownership shares are difficult to transfer and dividends) is jointly liable for the • No anonymity, the partners have to be named and • More complicated and more expensive formation branch office entered in the commercial register procedure; professional consultant recommended • Subsequent transfor- • Access to the capital market is more difficult • Amount of share • Shareholders have no mation to a subsidiary • The social insurance premiums must be paid capital anonymity poses fiscal problems • Not a Swiss legal entity

Source: Own diagram Generis AG, Schaffhausen

Handbook for Investors 2010 43 5.1.3 Branch office If the business is successful, it can be easily transformed into Instead of founding a subsidiary in Switzerland, a foreign compa- a corporation. If it fails, liquidation is easier than for other legal ny can also set up a branch office (which is the third most com- forms. The sole proprietorship does not need to be registered in mon corporate structure for foreign companies in Switzerland). the commercial register unless annual sales exceed CHF 100,000. These branch offices have a certain organizational and financial independence from the parent company. From a legal point of 5.1.6 General partnership view the branch office is a part of the foreign company, although If two or more individuals come together to operate a business it can conclude contracts on its own behalf, perform transactions under a joint name in accordance with standard commercial and also appear in court at its place of business as a plaintiff practice, this type of operation is called a general partnership. A and defendant. As soon as a branch office is formed, it must be general partnership is created by a partnership agreement between registered in the commercial register. As far as licensing, registra- the participants. Since it (like a sole proprietorship) is not a distinct tion, taxation and accounting records are concerned, a branch is legal entity, it is not required to pay taxes. Taxes are paid by the treated like any Swiss company. In order for a foreign company to individual partners. The partners have unlimited joint liability for any establish a branch office in Switzerland, it must have an autho- business debts or obligations of the partnership to the extent of rized representative whose legal residence is in Switzerland. their own assets. Entry in the commercial register is required.

5.1.4 Limited partnership for collective investments 5.1.7 Joint venture The limited partnership for collective investments (abbreviated The joint venture is becoming more and more important as a form as KkK in German or SCPC in French) corresponds to the limited of partnership. It is not regulated by law and is an appropriate liability partnership (LLP) common in English-speaking countries. form for a joint activity with a Swiss partner. A joint venture is As an instrument for risk capital investment, this form of company often operated as a joint investment in a newly formed corpora- is reserved exclusively for qualified investors. In contrast to the tion (a foreign supplier, for example, establishes a manufacturing provisions of the Swiss Code of Obligations regarding limited or sales company together with the Swiss seller). Joint ventures partnerships, according to which the partner with unlimited liabil- can also be operated as an ordinary partnership in the case of ity must be an individual (and not a corporate investor), the liable small projects (e.g. a research project for a limited time period). partner in a limited partnership for collective investments must be a corporation. 5.1.8 Ordinary partnership The ordinary partnership is a contractual association of several in- This legal form has existed in Switzerland since 2006. For inves- dividuals or legal entities for a business purpose that is not required tors and limited partners who want to establish a form of LLP it is to be entered in the commercial register. Anonymity is preserved an alternative to setting up their company in Luxemburg, Ireland but each partner is jointly and personally liable for the joint project. or the Channel Islands (specifically Jersey and Guernsey). This has strengthened Switzerland’s status as a financial center and created the conditions for an increase in professional services 5.2 Accounting. for specialized risk capital, private equity and even hedge fund managers in Switzerland. The general accounting regulations in Switzerland are brief and to the point. The accounts required for the type and scope of busi- 5.1.5 Sole proprietorship ness must be kept in an orderly manner and allow identification of The individually owned enterprise – sole proprietorship or single- business assets and of receivables and payables associated with owner company – is the most popular corporate structure for business operations as well as operating results (profit or loss) in small businesses. It exists legally whenever an individual con- each business year. The law requires that the income statement ducts commercial activities alone or, in other words, operates (profit and loss account) and the balance sheet be drawn up annu- a business or a company. The owner of the sole proprietorship ally according to generally accepted accounting principles and that bears the entrepreneurial risk and is liable for that risk with his they be complete, clear and easily understood. This means that the or her entire private and business assets. On the other hand, the accounting system can be based on any internationally accepted owner also has the sole power to determine business policy. standards (such as US-GAAP, IFRS, Swiss GAAP or FER).

44 Handbook for Investors 2012 Corporations (AGs) must meet detailed minimum requirements Swiss Institute of Certified Accountants and concerning the structure of the annual financial statements in or- Tax Consultants der to increase transparency. They must include, as a minimum, a balance sheet and an income statement with previous-year com- www.treuhand-kammer.ch parisons and explanatory notes. The annual financial statements Languages: German, French of subsidiaries, including in particular those of listed companies, must be consolidated in a single set of group financial statements if two of the following measures are reached in two successive fiscal years: 5.4 Establishing a business. • Total assets of CHF 10 million • Annual sales of CHF 20 million 5.4.1 Procedure • An average headcount over the year of 200 employees Parties who intend to establish a company in Switzerland can move more quickly from the planning stage to implementation if a clear and concrete business strategy has been worked out in 5.3 Auditing. advance. Once the decision to locate in Switzerland has been made, the economic development agency of the selected canton Annual financial statements are audited for correctness and ac- can help to coordinate the project locally until the start of opera- curacy by people and companies, which have the required state tions. Banks, consulting companies, fiduciary companies and at- license. Normally they are fiduciaries, fiduciary or auditing compa- torneys specializing in company law are also available to answer nies. The auditing obligation depends on the size and economic specific questions. importance of the corporation (AG) or limited liability company (GmbH). Regular audits apply to companies that are required to The formation of a company takes two to four weeks from the prepare consolidated financial statements and also to companies submission of required documents to the date when the company listed on the stock exchange, or if two of the three measures is considered legally established (when it has legal effect with below are reached in two successive fiscal years: respect to third parties). The time required can be less in simple • Total assets of CHF 10 million cases and depending on the location canton. • Annual sales of CHF 20 million • An average headcount over the year of 50 employees or more

If these conditions are not met, then the annual financial statements are only subject to a limited audit (questioning of management, appropriate detailed checks, analytical audit procedures, etc.). The audit may also be dispensed with entirely, subject to the approval of the shareholders, if the company has no more than an average of ten full-time positions over the year.

Swiss Fiduciary Association

www.stv-usf.ch Languages: German, English, French, Italian

Handbook for Investors 2010 45 Fig. 18: Procedure for establishing a company (AG, GmbH) Procedure Required time in weeks 1 2 3 4 5 6 Preliminary search, registration and approval of the company name Preparation of required formation documents: articles of agreement, articles of association, application for registration, etc. Payment of company capital at a prescribed depositary (bank). The depositor must show proof of identity. For foreign nationals, it may be useful to present letters of reference from Swiss partners. Formation of company and preparation of formation documents: articles of association or bylaws, acceptance by statutory auditors, confirmation by recognized depositary (bank) that the share capital has been paid in and is at the disposal of the company. In the event that the company after formation does not have its own offices: domicile acceptance statement. Publication in the respective canton's official gazette Entry of the responsible person(s) in the corresponding registers (commercial register and possibly land register) Registration as a taxable enterprise

Source: Documentation provided by cantonal economic development agencies

Since April 15, 2010 the State Secretariat for Economic Affairs has provided an online desk for founding companies in the form Online public notary for company foundation (AG/GmbH) of «StartBiz». With this eGovernment solution, sole proprietorships, limited liability companies, stock corporations, general www.kmu.admin.ch > Online services > Foundation desk partnerships and limited partnerships can register with OASI Languages: German, French, Italian offices, VAT authorities and accident insurance companies. It is also possible for sole proprietorships, general partnerships and limited partnerships to be entered into the commercial register, so that the complete foundation of these companies can be carried Private platform for founding companies out via “StartBiz”. Normally foreign companies in Switzerland are founded with the legal form of a company with limited liability www.start-ups.ch (GmbH and AG). Furthermore, the foundation of a stock corpora- Languages: German, English, French, Italian tion and a limited liability company (AG and GmbH) requires an entry into the commercial register, which has to be done by a public notary (this can also be done online). Official information for companies

Electronic registration for founding a company www.ch.ch/unternehmen Languages: German, English, French, Italian www.startbiz.ch Languages: German, French, Italian

46 Handbook for Investors 2012 5.4.2 Entry in the commercial register 5.4.3 Foundation costs The commercial register includes all commercial enterprises doing The costs for forming a stock corporation (for a limited liability business in Switzerland. It specifies each company’s extent of company the fees and consulting costs are slightly lower) com- liability and its authorized representatives. Its central focus is its prise various fees, whereby the costs vary depending on whether public disclosure role. Accordingly, the Central Business Names the foundation process is carried out traditionally or via an elec- Index, Zefix, which is maintained online by the Federal Commercial tronic platform of the SECO (see 5.4.1). Registry Office, is open to anyone for inspection and can also respond to inquiries as to whether a company name is available. Fig. 19: Foundation costs for stock corporations (AG), All entries in and deletions from the commercial register are pub- in Swiss francs lished in the Swiss Official Gazette of Commerce (SOGC). Foundation costs Traditional Electronic Share capital 100,000 100,000 As a rule, any trading, manufacturing or other form of commercial Consulting (articles of incorporation, taxes, commercial register, enterprise is required to be registered in the commercial register. 5,000 – 7,000 300 – 850 share certificates, foundation acts, Registration guarantees that the company name is protected. It is foundation meetings etc.) only after registration in the commercial register that legal entities Commercial register fee 1,000 1,000 receive their own legal personality and status. The company or Fees for public notaries 1,000 600 business name under which a commercial enterprise is operated Securities issue tax – – can be freely chosen, as long as it complies with legal regula- Total costs 7,000 – 9,000 1,900 – 2,450 tions. Stock corporations (AGs) and limited liability companies Source: State Secretariat for Economic Affairs SECO, 2011 (GmbHs) must specify the legal form as part of the company name. If the company name of a general partnership does not list all partners by name, it must contain the last name of at least Fig. 20: Foundation costs for companies with limited liability one partner along with wording that indicates the relationship be- (GmbH), in Swiss francs tween partners. The company name of a sole proprietorship must Foundation costs Traditional Electronic include the owner’s last name but may not contain any additional Share capital 20,000 20,000 wording indicating a relationship between partners or associates. Consulting (articles of incorpora- Application for registration in the commercial register can be done tion, taxes, commercial register, share certificates, foundation acts, 4,000 – 6,000 200 – 550 electronically via the company formation portal for all legal com- foundation meetings etc. -depend- pany forms, provided that the applicable requirements are met. ing on complexity) Commercial register fee 1,000 1,000 Fees for public notaries 1,000 600 Central Business Names Index Stamp duty – – Total costs 6,000 – 8,000 1,800 – 2,150 www.zefix.ch Source: State Secretariat for Economic Affairs SECO, 2011 Languages: German, English, French, Italian

The purpose of the securities issue tax is the non-gratuitous or free foundation and increasing of the nominal value of participation Swiss Official Gazette of Commerce rights. The tax is levied at 1 % of the amount accruing to the company as consideration for the participation rights but at least 1 % www.shab.ch of the nominal value, with an exemption for the first CHF 1 million. Languages: German, English, Italian This exemption applies generally to the formation of corporations and to capital increases up to CHF 1 million. Existing companies may therefore increase their nominal capital to CHF 1 million without owing any securities issue tax.

Handbook for Investors 2010 47 Excluding the securities issue tax, the fixed formation costs therefore total CHF 6,000 to 8,000 for traditional foundation and approx. CHF 2,000 for electronic foundation. For a small business that does not need to provide extensive documentation, the foundation costs are a maximum of CHF 3,000. The total costs for forming a company, including professional consulting fees, vary, depending on the nominal capital. Establishing a corporation is more time- consuming and generally costs more than forming a partnership.

Foundation costs per legal form

www.kmu.admin.ch > SME topics > Company foundation > Legal form > Stock corporation Languages: German, French, Italian

48 Handbook for Investors 2012 6. Visas, residence and work permits.

Switzerland’s prosperity is partly due to the immigration of office in charge has granted approval to do so. The type of visa foreign workers. Not only do they boost the economy, they and the documents required depend on the purpose of the stay. also enrich the culture. Thanks to the free movement of One of the visa requirements is that applicants must prove that persons between Switzerland and the EU, EU/EFTA citizens they have enough funds available or can legally obtain them to pay can now remain in Switzerland without a lot of red tape. In for living expenses during their trip through or stay in Switzerland. the labor market they have the same rights as Swiss workers. The Swiss consulate may require the submission of a letter of For people from other countries who wish to work and live in sponsorship before it issues the visa if the applicant does not have Switzerland, certain provisions apply. sufficient financial funds or if there is some doubt on this point. The relevant authorities will require that travel insurance be concluded regardless of whether a letter of sponsorship has been submitted. Federal Office for Migration BFM The minimum coverage for this insurance is EUR 30,000.

www.bfm.admin.ch Languages: German, English French, Italian Swiss consulates abroad

www.eda.admin.ch > Representations Languages: German, English, French, Italian 6.1 Entering the country and visas.

Generally a valid travel document recognized by Switzerland is sufficient to enter the country. Only citizens of certain countries Information on entering Switzerland require an entry visa for stays of up to three months. A visa is generally required for longer stays. The Federal Office for Migra- www.bfm.admin.ch > Topics/Entry tion publishes the latest requirements on its homepage. Languages: German, English, French, Italian

6.1.1 Visa regulations Foreigners who require a visa must obtain an entry visa from the Swiss consulate where they live before they enter Switzerland. The consulate can only issue the visa if the Swiss federal or cantonal

Handbook for Investors 2012 49 Fig. 21: Do I need a visa?

I would like to travel to Switzerland. Do I need a visa?

Are you a citizen of one of the following countries? EU-25, EFTA, Andorra, Brunei, No Yes Japan, Liechtenstein, Malaysia, New Zea- land, San Marino, Singapore, Vatican city

Are you a citizen of one of the You do not need a visa. following countries? Albania*, Yes Welcome to Switzerland! Antigua and Barbuda, Argentina, Australia, Bahamas, Barbados, Bosnia-Herzegovina*, Brazil, Chile, Costa Rica, El Salvador, Guate- No Will you be staying more than three months? Yes mala, Honduras, Israel, Canada, Croatia, Mauritius, Mexico, Montenegro*, Nicaragua, Panama, Paraguay, Serbia*, Seychelles, Do you plan to work? St. Kitts and Nevis, Uruguay, Venezuela, USA * Holders of biometric passports No Yes

No No For more than eight days per calendar year? Yes

In one of the following industries: construction and construction-related You do not need a visa. No sectors, gastronomy, commercial and residential Welcome to Switzerland! Yes cleaning services, surveillance and security services, erotic services?

You need a visa. Please contact the Swiss consulate in your area for more detailed information. www.eda.admin.ch Search under: Representations

* Information provided without a guarantee: please also consult the responsible Swiss consulate. Source: Own diagram Generis AG, Schaffhausen

Fig. 22: Visa regulations for certain countries Country Visa required for Visa required for Exceptions/comments a stay of up to a stay of over 3 months 3 months Brazil No (V1) Yes V1 Work visa requirement for: • Construction and construction-related sectors, gastronomy, commercial and residential cleaning services, surveillance and security services and erotic services • Work of another kind, if this lasts longer than eight days per calendar year. A work visa is waived in the following situations: • If the person holds a long-term residency permit issued by a Schengen member state in connection with the possession of a valid passport.

50 Handbook for Investors 2012 Country Visa required for Visa required for Exceptions/comments a stay of up to 3 a stay of over 3 months months China Yes (V) Yes V Third-country nationals with a valid long-term residence permit from a Schengen member state along with a recognized travel document do not require a visa. EU-25/EFTA No No India Yes (V) Yes V Third-country nationals with a valid long-term residence permit from a Schengen member state along with a recognized travel document do not require a visa. Japan No No Canada No (V1) Yes V1 Work visa requirement for: • Construction and construction-related sectors, gastronomy, commercial and residential cleaning services, surveillance and security services and erotic services • Work of another kind, if this lasts longer than eight days per calendar year. A work visa is waived in the following situations: • If the person holds a long-term residency permit issued by a Schengen member state in connection with the possession of a valid passport. Russia Yes (V) Yes V Citizens from third countries are exempt from the visa requirement (M: D) if they have a valid long-term residence permit from a Schengen member state in connection with a valid travel document. M: D Holders of diplomatic passports are exempt from the visa requirement for the following travel purposes: the official mission and other travel reasons, without performing work. Kazakhstan Yes (V) Yes V Third-country nationals with a valid long-term residence permit from a Schengen member state along with a recognized travel document do not require a visa. Hong Kong No (V1) Yes V1 Work visa requirement for: • Construction and construction-related sectors, gastronomy, commercial and residential cleaning services, surveillance and security services and erotic services • Work of another kind, if this lasts longer than eight days per calendar year. A work visa is waived in the following situations: • If the person holds a long-term residency permit issued by a Schengen member state in connection with the possession of a valid passport. The following documents are accepted for travel to Switzerland: • Hong Kong Special Administrative Region People’s Republic of China Passport (HKSAR-Pass); visa exemption (V1) • Hong Kong British National Overseas Passport (BNO passport); visa exemption (V1) • Hong Kong Certificate of Identity; vise requirement (V) • Document of Identity for visa purposes with the «Chinese» entered under «Nationality». In this case the document is classed as a Chinese passport (without entering the nationality of the holder it is not accepted for entry into Switzerland; visa requirement (V) (The «Hong Kong British Dependent Territories Citizens Passport» is no longer accepted.)

Handbook for Investors 2012 51 Country Visa required for Visa required for Exceptions/comments a stay of up to a stay of over 3 months 3 months USA No (V1) Yes V1 Work visa requirement for: • Construction and construction-related sectors, gastronomy, commercial and residential cleaning services, surveillance and security services and erotic services • Work of another kind, if this lasts longer than eight days per calendar year. A work visa is waived in the following situations: • If the person holds a long-term residency permit issued by a Schengen member state in connection with the possession of a valid passport. Taiwan No (V14) Yes V14 There is a visa requirement: • For owners of a passport, which does not contain a personal ID number (see V) • If work is performed (even if this lasts for less than eight days per calendar year) V Citizens of third countries with a valid residence permit from a Schengen member state in connection with a recognized travel document are exempt from the visa requirement. Ukraine Yes (V), Yes (F: D, S, SP) M: D, S Holders of diplomatic passports are exempt from the visa (M: D, S) requirement for the following travel purposes: the official mission and other travel reasons, without performing work. F: D, S, SP Holders of diplomatic, service and special passports are exempt from the visa requirement, who are travelling to take on a position in Switzerland.

Source: Federal Office for Migration BFM – Visa instructions. List 1: permit and visa regulations per citizenship

6.1.2 Application procedure 5. The results of this check are presented to the consulate with- 1. Persons requiring a visa must submit the visa application to out delay, after which the consulate decides whether to issue the Swiss consulate that is responsible for the area where they the visa. live. Travel documents and any other requested documents which explain the reason for the journey must be submitted If the visa is denied, the applicant can appeal to the Federal along with the application. The consulate homepage provides Administrative Court in Berne within 30 days after notification detailed information about the required documents and the by requesting the decision for a fee from the Federal Office for relevant application forms. All documents, letters or certifi- Migration. cates that are not in German, French, Italian or English must be submitted with a translation. 2. If the consulate requires a letter of sponsorship, the foreign visitor Visa application form must complete the relevant form and submit it to the sponsor. 3. The sponsor completes and signs the form and submits it www.bfm.admin.ch > Topics, Arrival along with the required documents to the cantonal or munici- Languages: German, English, French, Italian, Spanish, pal authorities in charge. Portuguese, Russian, Chinese 4. The letter of sponsorship is checked by the relevant cantonal or municipal authorities and is entered into the Central Migra- tion Information System.

52 Handbook for Investors 2012 6.2 Residing in Switzerland. Cantonal Migrations and Labour Market authorities Residence and permanent residence permits are issued by the cantonal and migration offices. Stays of up to three months do www.bfm.admin.ch > The BFM, Contact addresses not require a permit, while stays of over three months do. It may Languages: German, English, French, Italian be possible to work depending on the type of permit issued. Foreigners who reside in Switzerland receive a residence permit indicating which type of authorization has been granted. Foreign nationals in Switzerland

www.ch.ch > About Switzerland, Foreign nationals in Switzerland Languages: German, English, French, Italian

Fig. 23: Types of permits B permit For residents (foreigners who are in Switzerland for a specific purpose for a longer period of time (residence permit) with or without employment) C permit For permanent residents (foreigners who have received a permanent residence permit after (permanent residence permit) living in Switzerland for five or ten years. There is no limit on the amount of time they may stay in Switzerland.) Ci permit This permit is issued by the cantonal authorities to the employed spouses and children of members (residence permit with of foreign consulates or intergovernmental organizations permission to work) G permit For cross-border commuters (foreigners who reside near the Swiss border and work in (cross-border permit) Switzerland) L permit For a temporary position and other temporary stays (short-term residency permit) F permit For foreigners permitted to stay in Switzerland provisionally. This permit is issued by the cantonal (provisionally received foreigners) authorities based on approval by the Federal Office for Migration. N permit For asylum seekers. This permit is issued by the cantonal authorities based on approval by the (asylum seekers) Federal Office for Migration. S permit For people in need of protection. This permit is issued by the cantonal authorities based on (people requiring protection) approval by the Federal Office for Migration.

Source: Federal Office for Migration

Overview of residency

www.bfm.admin.ch > Topics > Residence Languages: German, English, French, Italian

Handbook for Investors 2012 53 6.2.1 Reunification of families 6.3 Residing in Switzerland without Citizens of Switzerland and EU/EFTA citizens with a residence gainful employment. permit or a short-term residence permit are allowed to have their families join them, regardless of their nationality. The following are 6.3.1. Stays of up to three months classed as family: Switzerland has been an associate member of the Schengen • Spouses and children who have not yet reached the age of 21, Agreement, and thus part of the Schengen Area, since December or who are entitled to maintenance, 12, 2008. The provisions of the Schengen Agreement govern • Parents and parents of the spouse, who are provided with entry and stays that do not require a visa for up to three months. maintenance. Generally, staying in Switzerland without employment (e.g. for a Students are only allowed to be joined by their spouses and chil- visit, tourism) for up to three months does not require a permit. dren who are entitled to maintenance. However, a visa is necessary for nationals of certain countries. Foreigners may stay in Switzerland for no more than three months People from third countries with permanent residence permits within a six-month period calculated from the first time of entry. (permit C) have the right to allow their children and husband/ Persons requiring a visa must comply with the amount of time wife to join them. People with residence permits (permit B) have they are permitted to stay as stipulated on their visa. no legal right to this. The cantonal migration authorities can, however, permit the move, if people from third countries can To enter the country, foreigners must have a valid travel docu- prove that they have a sufficient apartment, sufficient income and ment that is recognized by Switzerland. For persons requiring a an established residence (a residency which has not caused any visa, Switzerland issues Schengen visas, which are generally valid complaints). Husbands, wives and children of Swiss nationals and for the entire Schengen Area for stays of up to three months. people with permanent residence permits or residence permits can take up self-employed or employed work all over Switzerland. 6.3.2. Longer stays Stays of more than three months also require a permit for persons who are not gainfully employed (retirees, students, job seekers Reunification of families for EU/EFTA citizens and others). Permits are issued by the cantonal migration offices. A distinction is made between short stays (less than one year), www.bfm.admin.ch > Topics > Freedom of movement of temporary stays (of limited duration) and permanent stays (of people, Switzerland - EU/EFTA > FAQ unlimited duration). Languages: German, English, French, Italian Non-EU/EFTA nationals must submit the application for a residence permit (together with the visa application) to the relevant Swiss consulate before entering Switzerland. Depending on the Reunification of families for third countries purpose of the stay (schooling, retirement, medical purposes, etc.), different documents will be required. If the conditions for a www.ch.ch > Individuals > Your life > Residence permits > permit are fulfilled, then a short stay permit (L permit) for a stay of Immigrating to Switzerland less than one year will be issued, or a residence permit (B permit) Languages: German, English, French, Italian valid for one year will be issued if the applicant is to stay longer than one year. After entering the country, the permit holder must register with the relevant municipality.

EU/EFTA nationals who are not gainfully employed are granted the right to stay in Switzerland based on the free movement of persons agreement. After arrival, a residence permit must be applied for at the municipality and will be granted if the following requirements are met:

54 Handbook for Investors 2012 • The unemployed person must have sufficient financial funds to 6.4 Residing in Switzerland with prevent them from becoming dependent on state aid so they do gainful employment. not become a burden on their new country of residence. • They must have health insurance that covers all risks (even People working in Switzerland during their stay in the country or accidents). people staying for more than three months need a permit from the cantonal migration office. A distinction is made between short The EC/EFTA residence permit is valid throughout Switzerland for stays (less than one year), temporary stays (of limited duration) five years and is automatically extended by the relevant authorities and permanent stays (of unlimited duration). if the above-mentioned requirements continue to be met. Unem- ployed persons may bring their families with them, if they have The employer is responsible for obtaining a work permit from the sufficient financial funds to care for them cantonal migration office.

6.3.3 Special case: Students Since the bilateral agreements on the free movement of persons The procedure described in 6.3.2 also applies to students. The and the revised EFTA convention have entered into force, different following conditions also apply: conditions apply to nationals of the EU-25/EFTA than to people from other countries. EU/EFTA citizens are on equal footing with Students who are citizens of EU or EFTA states, the US, Canada, Swiss employees. Other countries, and until May 31, 2016 at the Australia or New Zealand must generally provide credible proof latest Romania and Bulgaria, are subject to immigration restric- that they will not become a welfare case during stays of more than tions and the rule of priority for Swiss nationals. Foreign asylum three months (at the relevant Swiss consulate or municipality upon seekers may stay in Switzerland in accordance with the provi- registration). Students must also prove that they are enrolled at a sions of asylum legislation. recognized school in Switzerland and will be attending general instruction classes or a program preparing them for a profession. The cantons are responsible for deciding on whether foreigners If these requirements are met, the student will receive a residence may stay and reside in the country. However, the federal govern- permit for the duration of their studies or for the period of one ment has the right of veto. The cantonal migration authorities are year if their studies last longer than one year. The permit will be responsible for alien control. Foreigners must register with the extended until the student has received a regular degree if the Residents Registration Office in the municipality in which they requirements for the permit continue to be met. reside within one week.

Students who are not citizens of EU or EFTA member states, the For anyone intending to relocate to Switzerland, it can be advan- US, Canada, Australia or New Zealand must also include the fol- tageous to bundle the permit applications and to discuss them lowing documents together with their personal entry application, beforehand. The cantonal economic development agencies pro- which they submit to the relevant Swiss consulate: vide advice on how to proceed and how long the process takes. • Letter of acceptance from the school • Proof of payment of tuition fees • Proof of sufficient financial funding for living expenses for the duration of the course of study • Diplomas/school certificates • Written agreement to leave Switzerland after completion of studies • Additional sheet documenting language proficiency. Language proficiency is judged based on a short interview at the consulate.

The Swiss consulate sends the entry application, including documentation and assessment of language proficiency, to the relevant cantonal migration authorities for their approval.

Handbook for Investors 2012 55 6.4.1 Recognition of professional qualification Regulated professions / Recognition of foreign Certain professions, particularly in the health, teaching and tech- qualifications nical sectors and in the administration of justice, are regulated. In these cases it is necessary to possess a qualification, certificate www.bbt.admin.ch/diploma or certificate of competence. Foreign qualifications have to be Languages: German, English, French, Italian recognized by the responsible authorities. Different authorities may be responsible for recognition, depending on the profes- www.crus.ch > Recognition / Swiss ENIC sion, whereby in normal cases the authorities which regulate > Regulated professions the education are also responsible for the recognition of foreign Languages: German, English, French qualifications.

Within the scope of the Agreement on the free movement of persons, Switzerland works closely with the EU and participates in the European qualification recognition system. People from third countries also have the opportunity to have their qualifications recognized in Switzerland.

Fig. 24: Work and residence permits: rules and procedures Regime for EU/EFTA citizens Regime for citizens of non-EU/EFTA EU-25 EU-2: Romania and Bulgaria countries Temporary residence permit Temporary residence permit Short-term residence permit (L permit for EC/EFTA) (L permit for EC/EFTA) (L permit) • Entitlement to permit, provided that em- • Entitlement to permit, provided that em- • For key positions (founding a company, ployment in Switzerland for three months ployment in Switzerland can be proved. training new staff, specialists from inter- to one year can be proved (employment national companies): 12 months, can be For extensions of up to one year in case of less than three months in one calendar renewed for 24 months year: registration only) of secured work, subject to the quota • Possibility to bring family • Possibility to bring family • Annual quota of 6,355 (2011/12) or 7,722 • Annual quota of 5,000 permits (2012/2013) permits • Trainees (interns): valid 12-18 months, • Priority to Swiss nationals, checks of no option of bringing family salary and working conditions • Possibility to bring family Cross-border commuter permit Cross-border commuter permit Cross-border commuter permit (G permit for EC/EFTA) (G permit for EC/EFTA) (G permit) • No travel restrictions • Travel within all Swiss border zones • Valid for 12 months for border zones of • Obligation to return home to main resi- • Priority to Swiss nationals, checks of the canton issuing the permit, must be dence in EU/EFTA country every week salary and employment conditions renewed every year • Self-employment possible • Rest same as for EU-25 • Resident at least six months with per- • Validity based on employment contract, manent residence permit in the border with maximum of five years, after which zone of a country neighbouring Switzer- renewable land • Weekly return to this residence • Possible to change place of work or profession with permit

56 Handbook for Investors 2012 Regime for EU/EFTA citizens Regime for citizens of non-EU/EFTA EU-25 EU-2: Romania and Bulgaria countries Residence permits Residence permits Residence permits (B permit for EC/EFTA) (B permit for EC/EFTA) (B permit) • Valid for five years, after submission of • Annually rising quota on permits: 684 • Full-year stay in Switzerland with em- confirmation of employment lasting a (2011/12) to 885 (2012/13) permits ployment and permanent home life and residence in Switzerland year or more or without time restriction • Switch from self-employment to employ- • Priority to Swiss nationals, checks of • Year-round purpose-related stay with ment at a company requires permit salary and employment conditions permanent home life and residence in • Priority to Swiss nationals, checks of sal- • Possibility to bring family Switzerland ary and employment conditions • Annual renewal of permit is a formality • Possibility to bring family • Possibility to bring family • Annual quota of 3,500 permits • Entitled to take up self-employment • Rest same as for EU-25 Permanent residence permit Permanent residence permit Permanent residence permit (C permit for EC/EFTA) (C permit for EC/EFTA) (C permit) • Basically issued after a stay of five • Same as EU-25 • Can generally be applied for after stay years in Switzerland based on residence of 10 consecutive years in Switzerland agreements or equivalent rights consid- (for US citizens: 5 consecutive years in erations Switzerland) • Basically equal to Swiss nationals on • The holder is generally no longer subject labour market to labour market restrictions, entitled to take up self-employment

Source: Own diagram Generis AG, Schaffhausen

6.4.2 Residence and employment of EU/EFTA citizens fields of construction, landscaping, cleaning and surveillance/se- EU/EFTA nationals are treated the same as Swiss nationals in the curity, who still require a license. labour market as a result of the free movement of persons agree- The introduction of the free movement of persons is being ac- ment. Job seekers may remain in Switzerland for three months companied by a series of measures designed to prevent wage without a permit. Citizens of the EU-25 member states already en- and social dumping, as well as by the mutual recognition of joy completely free movement – citizens of Romania and Bulgaria professional qualifications and the coordination of social insur- are still subject to restrictions until the permanent transition on ance issues. This simplifies recruiting employees from EU/EFTA May 31, 2016 (priority of Swiss nationals, controls, quotas). These countries and attending and using academic institutions in these permits can be extended if needed. By no later than June 1, 2016, countries, and it boosts the efficiency of the labor market and however, citizens of all 25 EU countries will enjoy unrestricted free increases the availability of highly qualified staff. movement.

Currently EU-25 nationals do not need a work permit, but they must still obtain a residence permit, which is issued by the can- Free Movement of Persons Switzerland – EU/EFTA tonal migration office upon confirmation of employment/submission of an employment contract. No permit is needed for stays of www.bfm.admin.ch > Topics less than 90 days, but these workers are still required to register. Languages: German, English, French, Italian

Self-employed service providers whose headquarters are based in the EU or EFTA region no longer require a license for activities in Switzerland lasting less than 90 days per calendar year. They simply need to register, which can be done via the Internet. Exceptions to this are Romanian and Bulgarian providers in the

Handbook for Investors 2012 57 • Asylum seekers: Work permit one month following submission Brochure «EU citizens in Switzerland» of application for asylum. Possible to change jobs with permit, not possible to change cantons. Source tax, 10 % of salary is www.europa.admin.ch > Services > Publications retained as security. Languages: German, English, French, Italian • Transfer of managerial staff: Essential management staff may reside in Switzerland for three years in accordance with the General Agreement on Trade in Services (GATS). The permit 6.4.3 Residence and employment of non-EU/EFTA citizens can be prolonged for one year. Citizens from countries outside the EU/EFTA require a work and a residence permit. They are still subject to the existing admissions The employer is responsible for checks and due diligence, as well regulations (priority for nationals, control of wages, quotas), but as for ensuring that a foreign employee has permission to as- they have been granted significantly more mobility in the interest sume the position. In order to obtain an entry visa, the employer of labor market flexibility. Holders of a long-term residence permit must prove that it was not possible to find a suitable candidate in are free to change jobs and place of employment, and to be self- Switzerland and that the training of a suitable employee within a employed anywhere in the country without requiring special au- reasonable period was not possible. thorization. In important cases, holders of a short-term residence permit may also work for an employer in another canton. Employment of non-EU/EFTA citizens Priority is given to highly qualified and specialized professionals, as well as to entrepreneurs and executives, recognized scien- www.bfm.admin.ch tists and key persons involved in cultural events, employees of Search under: Topics/Labour/Work permits internationally active corporations and people with international Languages: German, English, French, Italian business relations. This approach aims to promote economic, scientific and cultural exchanges and to support the transfer of decision-makers and specialists of international companies. 6.4.4 Trainees/interns Qualified scientists should, in particular, be given the opportunity Switzerland has negotiated agreements with numerous countries to continue working in Switzerland after completing their studies. on the exchange of trainees/interns. These trainee agreements It is ultimately in the interest of the Swiss economy that foreign- make it easier to obtain residence and work permits of limited du- ers temporarily working in Switzerland be permitted to bring their ration. Trainees from countries which have no special agreement family to Switzerland, and that partners and children of holders with Switzerland must follow the normal application procedure for of a long-term residence permit have the right to be employed or work and residence permits. self-employed in Switzerland. Trainees/interns are defined as people who can provide evidence Key regulations: of completing vocational training or a degree. The age limit is • B residence permit: generally valid for one year. Option to 35 years (exceptions: Australia, New Zealand, Poland, Russia change jobs and cantons with permission, source tax, quotas and Hungary: 30 years). The job must be in the profession (certain exceptions: e.g. spouses of Swiss citizens have the learned or in the area of study/training and may last no more than same rights as Swiss citizens). 18 months. Canadian students who would like to complete their • C residence permit: same rights as Swiss nationals in labor education with an internship are also admitted, while for Japa- market, no source tax. nese students only university graduates are permitted. There are • Cross-border commuter permit: possible to change jobs with special quotas for trainees, and national legislation giving priority permission, not possible to change cantons, source tax. to Swiss nationals does not apply. There is no provision for train- • L short stay residence permit: not possible to change jobs or ees to bring their families with them. cantons, source tax. • Intern permit: maximum of 18 months, only for training young professionals.

58 Handbook for Investors 2012 Fig. 25: Countries with which Switzerland has a trainee Foreign spouses of Swiss citizens (simplified naturalization after agreement five whole years of residence in Switzerland and after three years Argentina Monaco Romania Czech Rep. of marriage) and children of Swiss parents who are not yet Swiss Australia New Zealand Russia Ukraine citizens benefit from simplified naturalization. Bulgaria Philippines Slovakia Hungary Japan Poland South Africa USA Canada Swiss citizenship/naturalization

Source: Foreign trainees in Switzerland: a guide for foreign trainees and Swiss employers, www.swissemigration.ch. www.bfm.admin.ch > Topics Languages: German, English, French, Italian As a result of the free movement of persons between Switzerland and the EU, nationals of the 25 EU countries and EFTA states no longer need official work or trainee permits. Anyone residing in Switzerland for more than four months has to officially register Naturalization: information with the cantonal labor market office in order to work. www.ch.ch > For individuals > Your life www.swissemigration.ch provides a guide for foreign trainees and Languages: German, English, French, Italian potential employers, as well as addresses, a standard employment contract and application forms.

Guide for foreign trainees and Swiss employers

www.swissemigration.ch > Topics > Trainee programme Languages: German, English, French, Italian

6.5 Naturalization.

The naturalization process consists of three levels. It is possible to apply for Swiss citizenship in your municipality or canton, each of which has its own requirements for naturalization in addition to those imposed by the federal government (see below).

The following requirements must be met to become a naturalized Swiss: • Resident for 12 years in Switzerland (years of residency between ages 10 and 20 count double) • Integration into Swiss life • Familiarity with the Swiss lifestyle, customs and traditions • Observance of Swiss laws • No threat to the domestic or international security of Switzerland

Handbook for Investors 2012 59 7. Real estate.

Although Switzerland has many different types of real estate available for commercial purposes, there is a shortage of Swiss Real Estate Association SVIT residential real estate, especially in city centers, much like in other international cities. People looking for suitable proper- www.svit.ch ties to rent or buy will find the Internet and newspapers very Languages: German, English, French, Italian useful. Even individuals resident in foreign countries can purchase commercial real estate in Switzerland without prior authorization. When it comes to residential property, how- The cantonal economic development agencies support inves- ever, they are subject to certain restrictions. tors in all administrative matters and offer assistance in finding construction sites or other real estate.

7.1 Looking for the right property. Fig. 26: Online sources of information on real estate www.alle-immobilien.ch Search engine for real estate 7.1.1 Residential and commercial properties offers The Internet and newspapers are the most important sources of Languages: German, English, French, Italian information when you are searching for a suitable property. Local www.comparis.ch/immobilien Real estate website with price acquaintances can also be a big help. The range of real estate on comparison function. offer includes apartments, single-family and multi-family residenc- Languages: German, English, es, offices and commercial properties, and even parking lots and French, Italian garages – for renting or buying. immo.search.ch Real estate website with lots of additional information Languages: German, English, Another good source of information are the websites of real estate French, Italian fiduciary agencies. You can find them through real estate search www.swissinfo.ch List of real estate market links. portals or via the website of the SVIT Real Estate Association > Services > Swisslinks > Languages: German, English, (www.svit.ch), for example. Municipalities’ websites are also useful: Real Estate French, Italian, Portuguese, Russian, Chinese, Japanese Many of them now include information about future building proj- www.mieterverband.ch List of links with comments. ects, including both rental properties and properties for sale. > Residential search Languages: German www.homegate.ch Real estate portals. www.immoscout24.ch Languages: German, English, French, Italian

60 Handbook for Investors 2012 7.1.2 Temporary accommodation and furnished apartments The range of available hotels and vacation accommodation in Hotels and holiday homes every price category is very broad in Switzerland, due to the fact that Switzerland is a tourist destination. The best starting point www.myswitzerland.com for anyone searching for appropriate accommodation is again Languages: German, English, French, Italian, Spanish, Russian, the Internet. The Switzerland Tourism website «MySwitzerland. Chinese, Japanese com» gives you a good overview. Furnished homes or apartments and serviced apartments are fairly rare and can be expensive. However, there are real estate providers and firms specializing in Relocation agencies, providers of furnished apartments expatriate services that can offer assistance. There is no na- as well as serviced apartments tionwide overview of all providers, so it is a good idea to search online using keywords such as serviced apartments, furnished, www.xpatxchange.ch > Moving studio, apartments, temporary housing, or holiday or vacation Language: English apartments.

7.2 Commercial properties.

7.2.1 Rental

Fig. 27: Market prices for office space, as of 4th quarter 2011 Net rents in CHF per square meter area of usable floor space per year (median) Large cities: figures for city centre Schaffhausen Basel over 320 Frauenfeld St. Gallen 280 to 320 Liestal Zurich 250 to 280 Herisau Aarau Delémont 200 to 250 Appenzell 150 to 200 Zug under 150 Solothurn Lucerne Glarus Schwyz Neuchâtel Stans Berne Sarnen Altdorf Chur Fribourg

Lausanne

Geneva Sion Bellinzona

Source: Wüest & Partner AG, www.wuestundpartner.com

Handbook for Investors 2012 61 7.2.2 Purchase There are no restrictions on individuals residing outside Switzerland purchasing commercial real estate.

Fig. 28: Steps in a purchase transaction

Clarifications to be made • Planning/building law issues prior to purchasing: • Evaluation of statistics legal affairs falling under • Land survey registry plans of encumbered locations public and private law • Road-building projects • Business permits • Air-quality action plan • Noise pollution level • Taxes

• Checks on all land registry entries (rights-of-way, cautions, notices) • Land survey registry plan • Building insurance • Property valuation commissioned • Financing • Verification of seller’s identity • Lease and tenure situation

Sales negotiations • Purchase property precisely defined completed • Price finalized • Date of transfer of rights and obligations • Financing confirmed • Financial collateral

Official registration by a • Contract signed in the presence of a notary notary of that town/city • Any financial collateral paid

Land registry formalities • Exchange: the property is exchanged in return for the payment performed by the compe- • Land registry entry signed tent land register district

Source: Immobilien Kaufen und Verkaufen (Buying and Selling Real Estate). Bürgi Nägeli Attorneys. www.schweizerische-immobilien.ch

62 Handbook for Investors 2012 Fig. 29: Construction sites: market prices for commercial buildings, 4th quarter 2011 In CHF per square meter (average location, no buildings, with roads and services)

over 1,500 1,000 to 1,500 Schaffhausen 500 to 1,000 Basel 250 to 500 Frauenfeld St. Gallen 150 to 250 Liestal Zurich under 150 Herisau Aarau Delémont Appenzell Zug Solothurn Lucerne Glarus Schwyz Neuchâtel Stans Berne Sarnen Altdorf Chur Fribourg

Lausanne

Geneva Sion Bellinzona

Source: Wüest & Partner AG, www.wuestundpartner.com

7.3 Residential property. region. Prices also depend on the age of the apartment and the quality of the interior. 7.3.1 Rental Two out of three people in Switzerland live in rented accommoda- A number of factors can affect rents. The cantons with the high- tion. Demand is high and availability of space scarce, especially est rents are usually prime locations within reach of major urban in cities and large urban areas. Since 2003, the vacancy rate has centers. Another factor that explains high rents is a low tax been varying around the 1 % mark (2010: 0.94 %). It therefore burden. takes some patience and luck to find the right apartment. 7.3.2 Purchase Apartments in Switzerland are usually rented unfurnished. The acquisition of residential property by individuals resident Kitchens are fully equipped and generally include a dishwasher abroad («persons abroad») is subject to certain legal restrictions in addition to an oven and refrigerator. For a four-room apartment (see chapter 7.5). The home ownership rate in 2010 in Switzer- (three bedrooms, one living room, kitchen and bathroom) in big land was about 40 %. It is especially high among families with or medium-sized Swiss cities, the average rent is CHF 1,546 per children and older people and in the higher income brackets. month (as of first quarter 2011), although rents vary widely by

Handbook for Investors 2012 63 Fig. 30: Market prices for rental apartments, 4th quarter 2011 Net rents in CHF per square meter of net internal area per year (median)

over 220 200 to 220 Schaffhausen 180 to 200 Basel 160 to 180 Frauenfeld St. Gallen 140 to 160 Liestal Zurich under 140 Herisau Aarau Delémont Appenzell Zug Solothurn Lucerne Glarus Schwyz Neuchâtel Stans Berne Sarnen Altdorf Chur Fribourg

Lausanne

Geneva Sion Bellinzona

Source: Wüest & Partner AG, www.wuestundpartner.com

Once the right property has been found, the next step is to sign a the situation is much more complicated when it involves building contract of sale. This contract forms the basis for any real estate law or regulations applying to condominiums. In these cases, it acquisition and must be drawn up and notarized by a notary. It may be advisable to consult an expert. The notary who handles obliges the seller to transfer the property and the buyer to pay the the sale can also provide further information. The contract of sale, agreed purchase price. The contract also describes the property which must always be publicly notarized, represents the actual and stipulates the date on which the property will be handed over underlying transaction and is required for subsequent registration and the securing of any capital gains tax on the property. in the local land register. Ownership actually passes to the buyer when the land register entry is made. There is no centralized land Before signing the contract, it is advisable to check the land reg- register for all of Switzerland; each canton maintains its own register to see whether any rights and encumbrances are associated ister under the supervision of the Federal Office of Justice. with the land on which the property stands or will be built. By providing proof of interest, you can obtain detailed information in the form of an extract from the land register, for which there is a fee. The information recorded in the land register can be complex. Although a right-of-way is easy for the layperson to understand,

64 Handbook for Investors 2012 Fig. 31: Market prices for owner-occupied apartments, 4th quarter 2011 Net rents in CHF per square meter of usable floor space per year (median)

over 5,500 5,000 to 5,500 Schaffhausen 4,500 to 5,000 Basel 4,000 to 4,500 Frauenfeld St. Gallen 3,500 to 4,000 Liestal Zurich under 3,500 Herisau Aarau Delémont Appenzell Zug Solothurn Lucerne Glarus Schwyz Neuchâtel Stans Berne Sarnen Altdorf Chur Fribourg

Lausanne

Geneva Sion Bellinzona

Source: Wüest & Partner AG, www.wuestundpartner.com

Land register overview Extra costs for purchase of residential property

www.ch.ch > Individuals > Environment and construction www.hausinfo.ch > Finanzen und Steuern/Kauf und Verkauf > Land register (Finances & Taxes/Buying & Selling) Languages: German, English, French, Italian Languages: German, French

Verband Schweizerischer Grundbuchverwalter (Federation of Swiss Land Register Administrators)

www.grundbuchverwalter.ch Languages: German, French, Italian

Handbook for Investors 2012 65 7.4 Legal aspects: building The purchase of land for residential construction is subject to the permits. provisions described in chapter 7.5.

Buildings and installed systems may only be erected or altered with the consent of the appropriate authorities. The construction Planning applications and building permits project must first comply with the municipality’s zone use plan, and then must also meet other requirements based on planning www.ch.ch > Individuals > Environment and construction law and environmental regulations (water, air, waste and noise) or > Building permits requirements in the interests of public health and safety. Languages: German, English, French, Italian

The building permit process takes an average of three months. Submitting a planning application (application for a building permit) is basically a standardized process. In addition to the project 7.5 Legal aspects: purchase of real plans, a number of other forms and types of evidence must be estate by persons abroad. submitted, depending on the particular project. It is in the owner’s interest to obtain a legal building permit as quickly as possible Acquisition of real estate in Switzerland by «persons abroad» is since the owner must bear the financing costs during the planning restricted by law and may require a permit. However, the permit and building permit phases. The typical building permit process requirement basically applies only to the purchase of vacation has four stages: homes and residential property that will not be used directly by the 1. Notification of the authorities party in question. As such, foreign nationals actually resident in 2. Submission of planning application, preliminary examination, Switzerland may purchase residential or commercial properties. additional investigation (environmental impact assessments, historic preservation, etc.) 7.5.1 No permit required 3. Examination of the application, public notification (publishing The following groups of individuals and entities may purchase a notice and staking out the extent of the structure), issue of property without first obtaining a permit: the building permit (including conditions and deadlines) 4. Period in which objections to the project can be submitted; construction approval

Fig. 32: Permit requirement by group Group Property that can be acquired without authorization per … All persons Commercial real estate Nationals of member states of the European Union (EU) or of the European Free Trade All types of real estate Association (EFTA) residing in Switzerland (generally individuals with an EU/EFTA B residence permit or an EU/EFTA C settlement permit) Non-EU or non-EFTA nationals who have permanent residency status in Switzerland (individuals with a All types of real estate C settlement permit) Non-EU or non-EFTA nationals residing in Switzerland who do not yet have permanent residency status Main residence in Switzerland (usually with a B residence permit) Companies domiciled in Switzerland and controled by persons not subject to permit authorization All types of real estate EU and EFTA cross-border commuters (with an EU/EFTA G cross-border commuter permit) Second home in the area in which their workplace is located

Source: Own diagram Generis AG, Schaffhausen

66 Handbook for Investors 2012 No permit is required for real estate that is used for the pursuit of 7.5.3 Reasons for permit a business activity, i.e. a professional, commercial or industrial Permission for the acquisition of properties for which a permit is activity (with the exception of land for the construction, trade or required may be granted in the following cases on the grounds letting of housing). The concept of business activity is very broad. provided for by law: It applies not only to the classic forms of trade, industry and com- • Banks and insurance companies licensed in Switzerland for ac- merce but also to the financial and services sector. It therefore quiring real estate in compulsory enforcements and liquidation covers self-employed professionals such as IT specialists or hotel proceedings if the real estate is encumbered with a mortgage in owners, as well as the operation of a trade or service center and their favor; even industrial production. The acquisition of an interest in real es- • Insurance companies for actuarial reserves for domestic busi- tate companies engaged in the buying and selling of such proper- ness ties is also possible. Residential property can also be acquired • A permit may be issued if the real estate acquisition is used by under the «business establishment» heading if it is necessary for a Swiss company for the purposes of retirement plans for staff business purposes (such as accommodation for caretakers or working in Switzerland technicians whose permanent on-site presence is required) or if • A permit will be granted if the property will be used specifically separation from the business property would be impractical or for a charitable purpose unreasonable. • Heirs and legatees: a permit is granted with the stipulation that the property must be sold within two years (exception: close 7.5.2 Permit required relationship to the property worthy of protection) A permit is required for purchase of non-commercial property by • Hardship case: a permit may be granted for a vacation home or the following groups: a hotel condominium unit if the seller is in financial difficulty and • Foreign nationals resident outside Switzerland has offered the property without success to individuals who are • Non-EU/non-EFTA nationals resident in Switzerland who do not not required to obtain a permit have a settlement permit (i.e. permanent resident status) • Certain cantons only: the acquisition of a holiday residence by • Companies with their head office outside Switzerland (even if an individual abroad in a tourist resort the owner is a Swiss citizen) • Certain cantons only: A foreign national not resident in Swit- • Companies that have their legally registered and actual head zerland may receive a permit to purchase a second home in office in Switzerland but are controlled by non-Swiss nationals a town with which he/she has close economic, scientific/aca- resident outside Switzerland. This is the case if foreign nationals demic or cultural ties hold more than one-third of the company capital, have more • Certain cantons only: Persons abroad for the construction of than one-third of the voting rights or have provided significant subsidized housing loans. • Buyers who purchase a piece of property for the account of a 7.5.4 Execution person abroad (fiduciary transaction) Enforcement of the law is primarily the responsibility of the canton in which the real estate is located. The authority designated by The permit requirements apply not only to the transfer of real es- the canton decides whether or not a transaction requires a permit tate ownership requiring land register entries but also to any legal and whether or not a permit should be granted. Under certain transaction that gives a non-resident actual control over any real conditions, persons abroad can also be permitted to purchase a estate for which a permit is required. For this reason, these groups vacation home. However, ownership of real estate in Switzerland are not allowed to invest directly in the housing market or conduct does not entitle a foreign owner to a residence permit. real estate dealings involving residential properties.

Handbook for Investors 2012 67 8. Labor market and labor laws.

Switzerland has one of the most productive workforces of ence than average. In terms of worker motivation, the Swiss rank any national economy. Its labor market is characterized by second only to the Danish. Swiss employees are very loyal to liberal legislation, light-touch regulation and exceptional so- their companies, partly because most companies are small or cial stability. Labor conflicts are solved through the produc- medium-sized. tive relationship between labor and management. Strikes are rare. The social insurance system for workers is based on the Fig. 33: International comparison of worker motivation, 2011 principles of solidarity and personal responsibility. The high 1 = low, 10 = high wages attract qualified workers, and employers benefit from 1 Denmark 8.09 competitive unit labor costs thanks to low social security 2 Switzerland 7.92 deductions. 3 Austria 7.73 4 Taiwan 7.67 5 Norway 7.49 8.1 Employment and 8 Germany 7.24 10 Hong Kong SAR 7.18 unemployment. 11 Netherlands 7.14 14 Ireland 6.94 Switzerland has around 6 million employed people (as per first 15 Japan 6.88 quarter 2011, excluding cross-border commuters and short-term 18 Singapore 6.63 residents), around two million of whom are women. The labor 19 Brazil 6.59 force participation rate (people in or seeking as a percentage of 21 USA 6.47 the population aged 15 and over) is 68.2 %, one of the high- 23 Belgium 6.42 est in the whole of Europe. Foreigners account for 30 % of the 24 Luxemburg 6.39 employed population. 35 % of employed people work part-time. 26 India 6.17 58 % of women work part-time, compared to just 15 % of men. 29 China 5.96 Switzerland has consistently had low unemployment, which has 35 Great Britain 5.70 remained between 1 % and 4 % over the past ten years (2011: 48 Italy 4.77 51 France 4.42 3.1 %). 55 Russia 4.14

Swiss workers are highly qualified – around one-third have a Source: IMD World Competitiveness Online 2011 higher education degree. Switzerland is famous for its multilingual employees, and Swiss managers have more international experi-

68 Handbook for Investors 2012 Fig. 34: International experience (2011) 8.2 Labor costs. 1 = low, 10 = high 1 Switzerland 7.82 8.2.1 Salaries 2 Hong Kong SAR 7.80 Salaries are relatively high in Switzerland, reflecting the country’s 3 Luxemburg 7.38 high levels of prosperity and output. Generous salaries are a sym- 4 Sweden 7.18 bol of success and make the country attractive to qualified work- 5 Qatar 7.05 ers. Compared to other cities (in 2010), gross wages in Zurich and 6 Singapore 7.01 Geneva are just ahead of Copenhagen and Oslo. Due to the lower 7 Netherlands 6.98 deductions (taxes, social insurance) compared to other countries, 10 Germany 6.63 Switzerland also holds first place when it comes to net income. 11 Ireland 6.56 14 Belgium 6.32 19 Denmark 5.98 Regular official surveys of wage levels and structures show 21 Great Britain 5.91 considerable difference both within and between the individual 27 Brazil 5.72 sectors. 28 India 5.71 34 USA 5.50 41 Norway 4.83 44 France 4.71 52 Italy 4.17 53 Russia 4.08 54 Japan 4.04 56 China 3.92

Source: IMD World Competitiveness Online 2011

Fig. 35: Monthly gross salary (central value) per sector and region, 2008 Sector of the economy Switzer- Lake Central North- Zurich Eastern Central Ticino land Geneva Plateau western Switzer- Switzer- area Switzer- land land land TOTAL 5,786 5,952 5,610 6,084 6,236 5,414 5,651 4,929 SECTOR 2: PRODUCTION 5,935 6,106 5,742 6,557 6,309 5,659 5,829 5,041 Mining, quarrying of stone/soil 5,823 5,679 5,951 6,310 5,649 5,778 6,148 5,383 Manufacturing; industry 6,041 6,417 5,742 6,885 6,480 5,715 5,952 4,651 Energy and water supply 7,520 7,421 7,378 8,410 8,043 7,256 7,036 6,308 Construction 5,695 5,754 5,638 5,897 6,012 5,460 5,602 5,318 SECTOR 3 SERVICES 5,688 5,860 5,491 5,696 6,228 5,080 5,472 4,832 Trade, repair 5,344 5,574 4,979 5,344 5,792 4,954 5,333 4,504 Hospitality 4,000 3,902 3,931 4,098 4,236 3,895 4,036 3,660 Transport, communications 5,664 5,417 6,643 5,302 6,025 5,083 5,006 4,942 Banking and insurance 8,656 9,352 6,761 8,111 9,127 7,454 7,130 7,500 IT, R&D, corporate services 6,802 7,243 6,197 7,000 7,222 6,056 6,819 5,600 Education 7,137 6,666 7,259 7,901 7,579 7,653 7,150 5,857 Healthcare and social services 5,854 5,964 5,751 5,765 6,314 5,692 5,801 5,422 Other public and private services 5,742 5,953 5,532 5,465 7,034 4,667 5,033 4,754

Standardized monthly salary: full-time equivalents based on 4 1/3 weeks of 40 working hours per week Source: Swiss Federal Statistical Office, Swiss Earnings Structure Survey

Handbook for Investors 2012 69 Fig. 36: Gross annual earned income (median) in each occupa- 8.2.2 Non-wage labor costs tional group in CHF (first quarter 2011) The deciding factor for employers is not the salary that they Full time + part time pay but rather the unit labor cost. Although salaries are high in Women + Men Switzerland, the non-wage labor costs that employers must bear Self-Employed 62,500 in addition to gross salary (employer social security contributions) Managers 80,000 add up to just 15 %. Coupled with high productivity, modest taxes Academic professions 84,000 and low capital costs, this means that at the end of the day many Technicians and similar 66,300 employers pay less than in other European countries. Office staff, commercial occupations 36,000 Service and sales 41,400 Fig. 37: Industry labor costs: direct remuneration and non-wage Agricultural specialists 54,000 labor costs (2009)* Skilled craftsmen and similar 65,000 Labor costs in EUR/hour Equipment and machine operators 59,700 Norway 43.64 Unskilled workers 26,000 Belgium 38.59 Employees 66,200 Switzerland 37.14 Managers 108,600 Denmark 35.08 Academic professions 84,500 Germany 34.28 Technicians and similar 74,700 France 33.31 Office staff, commercial occupations 58,500 Luxemburg 33.09 Service and sales 43,200 Sweden 32.88 Agricultural specialists 56,600 Netherlands 32.75 Skilled craftsmen and similar 65,900 Ireland 29.62 Equipment and machine operators 65,000 Italy 27.40 Unskilled workers 26,000 USA 22.95 Source: Swiss Federal Statistical Office, Swiss Labor Force Survey Japan 22.86 Great Britain 22.21 Russia 3.61 China 2.25 UBS Prices and Earnings Survey * Not available: Brazil and India Source: Institute for the German Economy (Institut der deutschen Wirtschaft), www.ubs.com/research Cologne, Industry labor cost, international comparison, IW-Trends Languages: German, English, French 2009

Individual salary calculator Salary and wage level www.lohnrechner.bfs.admin.ch www.bfs.admin.ch > Topics > Employment and income Languages: German, French, Italian Languages: German, English, French, Italian

70 Handbook for Investors 2012 Fig. 38: Salary statement example: employer and employee contributions Example: employee with two children Employee in % in CHF in CHF Gross salary 10,000.00 Social security (OASI/DI/IC) 5.15 515.00 State-mandated unemployment insurance 1.10 110.00 Non-occupational accident insurance 1 2.00 200.00 State-mandated occupational pension fund 2 6.50 650.00 Daily sickness benefits insurance 3 0.62 62.00 Social deductions – 1’537.00 Child/family allowance 4 200.00 400 Net salary 8,863.00

Employer Gross salary 10,000.00 Social security (OASI/DI/IC) 5.15 515.00 Administrative costs 0.30 30.30 State-mandated unemployment insurance 1.10 110.00 Occupational accident insurance 1 0.50 50.00 State-mandated occupational pension fund 2 6.50 650.00 Daily sickness benefits insurance 3 0.62 62.00 Family allowance (two children) 4 2.00 200.00 Employer contributions –1,617.30

Total staff costs 11,617.30

1 Depends on sector and occupational risk Source: Own diagram Generis AG, Schaffhausen 2 Amount varies according to the age of the insured person (and insurance) 3 Voluntary insurance 4 Amount varies depending on the family compensation fund/canton

8.3 Labor contract and employee compulsory law. If, on the other hand, the legal provisions are not representation. mandatory, the agreements made between the parties have precedence. Some labor law regulations can be amended by the col- The Swiss labor law comprises the rights and obligations of the lective agreement, but they cannot be amended by an individual employees and employers. It contains considerably less provi- employment contract. sions than the legislations in the EU states and is set out in several laws – the Swiss Code of Obligations (individual employment Salaries are either negotiated directly between the employer and contracts, collective bargaining agreements, normal employment employee, or within the scope of collective bargaining agree- contracts), the Labor Act (general health and safety, working and ments. Here the legislator also refrains from strict regulations in rest times, young people, pregnant women and new mothers) as accordance with the liberal economic system. It allows a certain well as the Accident Prevention Law (safety at work). amount of room for direct agreements between the social partners. The mandatory law of the federal government and the cantons has precedence over the provisions of the collective bargaining agreement, although different provisions can be specified to the benefit of the employee, provided nothing else is stated in the

Handbook for Investors 2012 71 Fig. 39: Labor market deregulation, 2011 Companies may include in the employment contract a non- Entrepreneurship is 1 = severely impaired, competition clause for the duration of the employment with the 10 = not impaired at all company and beyond. Through a non-competition clause, the 1 Denmark 8.35 employer prevents employees who leave the company from using 2 Switzerland 7.96 special knowledge that they gained while working there in a way 3 Iceland 7.91 that provides competition for their former employer. In prac- 4 Hong Kong SAR 7.10 tice, demanding requirements are imposed on the wording and 5 Singapore 7.05 enforcement of such clauses. There is no mandatory provision for 8 USA 6.48 compensating employees for agreeing to such non-competition 11 China 6.34 clauses. Non-competition clauses must: 19 Ireland 5.56 • be in written form 22 Russia 5.46 • clarify the definition (location, area, client group); a general 26 Japan 5.14 restriction is not sufficient 31 Germany 4.95 • specify the duration; in general not longer than three years 33 India 4.90 42 Netherlands 4.38 8.3.2 Collective labor contracts 44 Great Britain 4.28 Collective bargaining agreements are concluded between em- 46 Luxemburg 4.23 ployer and employee associations. By doing so, these parties 48 France 3.74 define the minimum conditions (e.g. minimum salaries, holiday 49 Italy 3.70 entitlement, working hours, periods of notice or pension age) that 51 Belgium 3.44 individual employment contracts cannot go below. A collective 56 Brazil 2.28 bargaining agreement is normally agreed with a set term. During Source: IMD World Competitiveness Online 2011 the term both sides have an obligation not to engage in industrial action. 8.3.1 Individual employment contracts Employers are required to provide employees with the key points With the declarations of general applicability the scope of a of the employment contract in writing by no later than one month collective bargaining agreement is extended to all employees after the employee starts work. and employers in a particular sector. Minimum wages which have been negotiated within the scope of a collective bargain- In larger companies, it is recommended to have an employee ing agreement of this kind, have to be observed by all employ- handbook containing the most important employment provisions, ers. The approx. 1,500 collective bargaining agreements that are as the employment contract itself only contains provisions on non-binding only have to be observed if the contractual parties wages, notice period and special terms (e.g. non-competition are members of the respective associations. In Switzerland there clause). Employment contracts and employee handbooks must are 36 collective bargaining agreements that are generally binding conform to the mandatory provisions of the Swiss Code of Obli- and have been issued by the federal government and 47 by the gations and the provisions of any applicable collective bargaining cantons (October 2011). agreements, where applicable. Employee handbooks should not be confused with agreements between the employer and the If there are differences of opinion between an employer and the works council, as practiced in EU countries (and which do not workforce, an amicable solution is sought internally. This funda- exist in this form in Switzerland). However, industrial companies mental approach dates back to the «peace agreement» between are required to establish «work rules» containing rules on occupa- Swiss employers and employee organizations of 1937. In ac- tional health protection and accident prevention. The employees cordance with the mutual agreement to maintain peace, workers or their representatives must be consulted before the rules are and management seek to resolve conflicts through discussions. put into force. Solution-oriented labor market partnerships are still the norm today.

72 Handbook for Investors 2012 Fig. 40: Employer-employee understanding, 2011 • in all matters relating to work safety and worker protection 1 = total confrontation, 7 = total cooperation • on the transfer of operations Average: 4.4 • in the event of mass redundancies 1 Switzerland 6.1 • when linking with a professional pension scheme 2 Singapore 6.1 3 Denmark 5.9 In addition the employer must inform the employees at least once 4 Norway 5.8 a year about the effects of the course of business on employment 5 Netherlands 5.7 and the staff. 6 Japan 5.7 9 Austria 5.6 Works councils in the EU have far greater powers than employee 10 Luxemburg 5.5 representation committees under Swiss law. The major difference 12 Hong Kong SAR 5.4 is that, in contrast to works councils, Swiss employee represen- 22 Germany 5.1 tative committees are not able to push through their own views 25 Great Britain 5.0 or to force a decision. Their rights are limited to being informed, 29 Ireland 4.9 36 USA 4.8 having their views heard and providing decision-making input. 46 India 4.6 51 China 4.5 57 Belgium 4.4 8.4 Working hours and leisure time. 79 Brazil 4.2 118 Italy 3.8 8.4.1 Normal working hours, maximum working hours and 125 Russia 3.6 working time models 133 France 3.4 Employment contracts or collective bargaining agreements Source: World Economic Forum, The Global Competitiveness Report generally stipulate that normal working hours for employees in 2011 – 2012 Switzerland are 40 to 44 hours per week. The legal maximum working time in Switzerland has remained stable over many decades. The maximum number of working hours per week is Declaration of general applicability of collective bargaining 45 hours for industrial companies (also applies to office staff and agreements technical employees and sales personnel in large retail stores). www.seco.admin.ch > Topics > Labour > Labour Law For commercial operations, the maximum is 50 hours per week. Languages: German, French, Italian This differentiation between normal and maximum working hours is important for the definition of overtime.

8.3.3 Employee participation and employee representation In practice, there are many ways of adapting working hours to The Co-Determination Act governs the participation of employees the needs of a business, for example, flex-time, the range model, in a company and applies to all private companies with employ- two/multiple-shift operation or continuous operation (7 x 24 hours ees in Switzerland, regardless of their size. Participation consists x 365 days) are all possibilities. In particular, in the case of the need mainly of providing information to and listening to employees. In for continuous operation, the daily and weekly maximum hours can the areas listed below, the employer must inform employees of be extended and break times can be distributed differently. all significant circumstances, new developments and/or changes. Employees have the right to take their questions and/or com- 8.4.2 Overtime and excess hours ments to their employer and make suggestions. The act also The difference between normal and maximum working hours is governs the elections of employee representation committees. referred to as overtime. Employees are obliged to perform such In areas with at least 50 employees, the right to set-up employee overtime to the extent that they are able to do so and which representation exists. Employers need only inform or consult the they may be reasonably expected to perform. By law, overtime employee representative or the affected employees in the follow- must be paid at a premium of 25 %. It is possible, however, for ing instances: the premium to be waived in writing. Instead of overtime pay, the

Handbook for Investors 2012 73 employee may be compensated through time in lieu of at least 8.4.4 Night work, working on Sundays and public holidays the same duration, provided the employer and employee mutually Approval from the authorities is generally required if night work is agree to this. For employees in managerial positions it is possible needed (apart from companies where special conditions apply). to compensate overtime generally through normal salary. For temporary night work, a premium of 25 % must be paid. For permanent or regularly recurring night work, employees are en- If the weekly maximum working hours are exceeded, this is re- titled to paid leave of 10 % of the time worked during night hours. ferred to as overtime. Under the Labor Act, excess hours may not This leave must be granted within one year. There is no entitle- exceed two hours per day for an individual employee. In total, the ment for compensation in the form of paid leave if the average excess hours may not exceed 170 hours per year for employees shift time, including breaks, does not exceed seven hours, or if with a weekly maximum working time of 45 hours, or 140 hours the person working at night is employed for only four nights per for employees with a weekly maximum working time of 50 hours. week. Unless compensated by time in lieu within a reasonable time, excess hours must be paid at a premium of 25 %. Sunday is defined as the time between 11 p.m. on Saturday and 11 p.m. on Sunday. Except where special regulations apply to In contrast to many European countries, the consent of the em- certain sectors, approval from the relevant authority is also need- ployee representative committee is not necessary in Switzerland ed for work on such days. Only one holiday – August 1st, Swiss for overtime or excess hours. Neither is it necessary to obtain National Day – is treated as equivalent to a Sunday throughout official approval, provided the above limits are not exceeded. the whole country. The cantons may declare up to eight additional holidays as equiv- 8.4.3 Day work and evening work alent to a Sunday. They must be differentiated from the legally Working hours from 6:00 a.m. to 8:00 p.m. are considered day recognized public holidays: Although the same rules generally work; the hours from 8:00 p.m. to 11:00 p.m. constitute evening apply to these days as to holidays treated as Sundays, the legal work. Day and evening work do not require approval. However, basis for this is defined by the canton or municipality and so may evening work may be introduced only after consultation with differ in detail from the provisions regarding Sundays. the employee representative committee, or if there is none, after consultation with the affected employees. This rule allows the 8.4.5 Holidays and public holidays introduction of a two-shift operation without government approval. All employees in Switzerland are entitled to at least four weeks’ The working time of an individual employee, including breaks and paid leave per year (young people under the age of 20 are en- excess hours, must be within a period of 14 hours. titled to five weeks), two of which must be taken consecutively. Part-time employees are also entitled to paid leave in proportion Fig. 41: Day, evening and night periods to the percentage of standard hours they work. Leave must be 6 a.m. 8 p.m. 11 p.m. taken; it may not be compensated through payment. There are no further statutory leave entitlements. However, longer entitle- N Day Evening N ments are customary in collective bargaining agreements, and 25 days per year are usually granted to employees over the age of 50. During time off, salaries are paid in exactly the same man- Max. 14 hours ner as during regular working time. Additional vacation pay, as frequently encountered in tariff agreements in the EU, is unknown B 17 hours requires no approval B in Switzerland.

N = night period B = requires approval Source: State Secretariat for Economic Affairs SECO

74 Handbook for Investors 2012 In addition employees normally have time-off on nine legally stipu- 8.5.1 Notice periods and protection against dismissal lated public holidays. As cantons may stipulate their own public In general, the notice period is defined in the employment contract, holidays, some cantons may have more public holidays. Only in the standard employment contract, by the relevant profession August 1st, New Year’s Day, Ascension Day (celebrated 40 days or in the collective bargaining agreement. If there is no contract or after Easter and marking the ascension of Jesus Christ to heaven) regulation, then the provisions of the Swiss Code of Obligations and Christmas Day are holidays throughout the country; all other apply: public holidays vary from canton to canton. Employees also receive • during the probationary period (max. three months): seven days time-off for marriage, funerals, moving, dental appointments, etc. • during the first year of service: one month The law does not stipulate how much time may be taken off. • from the second to the ninth year of service: two months • from the tenth year of service onwards: three months

Holiday calendar The notice period can be changed in writing but may not be shorter than one month (except under a collective bargaining www.feiertagskalender.ch agreement during the first year of service). For employees in Languages: German, English, French, Italian managerial positions, notice periods of up to six months are often fixed from the very outset of employment. After the probationary period, notice of termination may only be given at the end of the month. In order for the termination notice to be legally valid, the 8.5 Notice of termination and person to be dismissed must receive it before the notice period short-time working. begins. Even in the case of summary dismissal, the employee’s salary will continue to be paid out until the end of the notice An employment contract can be terminated in writing or verbally period. at any time by either party and without valid reason. Under Swiss law, the employee representative committee does not have a say An employment contract can be terminated summarily only in in this type of termination. Only in the case of mass redundancies serious exceptional circumstances, such as fraud, refusal to work does the employee representative committee have the right to be or competition with the employer. In practice, summary dismiss- consulted by the employees. They must have the chance to sub- als are very difficult to carry out, as the reason for termination is mit proposals about how the redundancies can be avoided or the often open to interpretation. number of redundancies can be limited and how the effects can be alleviated. Essentially the recipient of the notice of termination It is improper to dismiss an employee, for example, on the has the right to demand that the reason for termination be stated grounds of age, color, religion, political affiliation or membership in writing. There is no investigation of whether or not the termina- of a trade union. Improper dismissals can be appealed against tion is socially unjustified, i.e. whether the reasons are related and may give rise to claims for compensation. to the performance or other characteristics of the employee or whether difficult business considerations made the redundancy There are certain times when it is not possible to dismiss an em- necessary. An employment contract can be ended through: ployee, such as when the employee is sick, has suffered an acci- • Termination dent, is pregnant or is serving in the military, civil defense, civilian • Termination due to change of contract (employee new contract service or aid campaigns abroad. Dismissals in these situations with altered conditions is signed) are not valid and are known as termination during barred periods. • Agreement to terminate employment (mutual cancellation of employment contract) • Termination on a specific date (for fixed-term contracts) • Retirement • Death of employee

Handbook for Investors 2012 75 8.5.2 Short-time working and mass redundancies Fig. 42: Appointments and dismissals, 2011 A company may be forced to take measures to lower staff costs 1 = hampered by regulation, 7 = employers have in the event of a deterioration in the order situation or for other flexibility in decision-making reasons. Overcapacity may be alleviated through a temporary re- 1 Denmark 6.1 duction in or complete halt to production. In order to maintain jobs, 2 Singapore 5.8 the employer receives 80 % of the lost income of the employees 3 Switzerland 5.8 for a specific period from unemployment insurance by applying 4 Hong Kong SAR 5.7 for short-time working. This is done to prevent dismissal as a 5 Azerbaijan 5.3 result of a temporary and unavoidable lack of work. 8 USA 5.1 However, employees have the right to reject the short-term work 36 Great Britain 4.4 compensation and to continue to receive the full salary. By do- 44 China 4.3 ing so, however, they take the risk of being dismissed. This is 66 India 4.0 because dismissals are the last means that a company can resort 84 Ireland 3.7 to when utilization levels fluctuate. In the event of mass redun- 85 Russia 3.7 dancies, Sections 335d – 335g of the Swiss Code of Obligations 108 Luxemburg 3.4 stipulate that the employer 121 Netherlands 3.1 • must consult the employees, and 126 Italy 3.0 • must inform the cantonal labor office in writing. 128 Brazil 2.9 131 Belgium 2.9 Compared with other countries, Switzerland has highly investor 132 Germany 2.8 friendly labor market provisions. It is relatively easy for companies 133 Japan 2.8 to appoint and dismiss employees. 136 France 2.7

Source: World Economic Forum, The Global Competitiveness Report 2011 – 2012

Short term work: brochures, forms, addresses

www.treffpunkt-arbeit.ch > For employers > Insurance services Languages: German, English, French, Italian

8.6 Social insurance.

The Swiss social insurance system is based on three coordinated pillars: state-sponsored, employer-sponsored and personal plans. Personal responsibility is a key factor in this system. As a result, the overall tax and contribution burden remains modest by international standards.

The three pillars of Swiss social security: • Pillar 1: This first level meets the basic needs of the insured or beneficiary through the government-sponsored old age and survivors’ pension (OASI), as well as long-term disability insur-

76 Handbook for Investors 2012 ance or incapacity benefit (DI). Both are compulsory and are These three basic pillars of social insurance are supplemented by funded jointly through contributions (percentage of salary) by unemployment insurance, the compensation system for loss of the employer, the employee and taxes. income due to military service or civil protection, maternity bene • Pillar 2: The occupational pension plan (BVG), which supple- fits and family allowances, which are governed by cantonal law. ments the first pillar, makes it possible for retired persons to maintain their accustomed standard of living after retirement. All persons working in Switzerland must be insured. The plans Federal Social Insurance Office FSIO are funded through contributions (percentage of salary) by the employer and the employee. www.bsv.admin.ch • Pillar 3: Personal voluntary retirement plans of employees or Languages: German, English, French, Italian self-employed individuals cover additional personal needs, mainly through bank and insurance savings. Contributions to individual retirement plans enjoy preferential treatment under tax laws to some extent.

Fig. 43: Overview of compulsory contributions Insurance Employee Employer Self-employed Not gainfully employed Old age and survivors’ 4.2 % of earned income 4.2 % of earned income max. 7.8 % insurance (OASI) Minimum contribution: Disability insurance (DI) 0.7 % of earned income 0.7 % of earned income max. 1.4 % CHF 475 per annum Compensation for loss 0.25 % of earned income 0.25 % of earned income max. 0.5 % Minimum contribution: of income and maternity CHF 10,300 per annum benefits Occupational accidents none as a ‰ of insured earn- Incurred by obligatory ings (varies from com- health insurance pany to company) Non-occupational as a ‰ of insured none Incurred by obligatory Incurred by obligatory accidents earnings (varies from health insurance health insurance company to company) Health insurance per capita none (voluntary, if at all) per capita per capita Unemployment insurance 1.1 % for income shares 1.1 % for income shares (not insurable) of up to CHF 126,000; of up to CHF 126,000; 0.5 % for salary shares of 0.5 % for salary shares of over CHF 126,000, up to over CHF 126,000, up to a limit of CHF 315,000; a limit of CHF 315,000; no contributions for sal- no contributions for salary components of over ary components of over CHF 315,000 CHF 315,000 Occupational pension max. 50 % of premiums. At least 50 % of the Voluntary fund Amount depends on bonus. The amount de- insurance provisions pends on the insurance regulations. Family allowances Only in the canton of 0.1 % – 4.0 % of the sal- In the cantons of Berne, Valais (0.3 % of the ary (depending on the Lucerne, Schwyz, Ni- salary) family compensation) dwalden, Glarus, Basel- City, Basel-Country, Schaffhausen, Appenzell AR, St. Gallen, Vaud, Valais and Geneva

Source: Own diagram Generis AG, Schaffhausen

Handbook for Investors 2012 77 deducted from the employee’s salary. The amount is based on the Advice for SMEs on social insurance employee’s insured salary. The maximum insured salary is CHF 126,000 per year. www.bag.admin.ch > Insurance practices > SMEs/companies Languages: German, French, Italian Information of the Federal Office of Public Health (FOPH) on accident insurance

www.bag.admin.ch > Topics > Accident and military insurance Social insurance for SMEs Languages: German, English, French, Italian

www.kmu.admin.ch > SME topics > Personnel Languages: German, French, Italian 8.6.4 Health insurance and daily sickness benefits Mandatory health insurance offers cover for illness, pregnancy and accidents, where there is no accident insurance for this. 8.6.1 Old age and survivors’ insurance (OASI) Employees are free to choose their policy. Everyone has the right OASI provides old-age benefits (retirement pension) or benefits to basic insurance regardless of their health or age. In addition, to dependents (widows’ and orphans’ pensions). The benefits voluntary supplementary policies can be taken out (generally depend on the amount of previous income and the amount of time requiring a health check). Premiums are charged per person, for which contributions were made. OASI insurance is manda- not based on income. The amount of the premium depends, tory for everyone who lives or works in Switzerland. All men and amongst other things, on the amount of the division of costs women who work in Switzerland are required to contribute, with (CHF 0 – 2,500) of the selected model and the municipality. Em- the employer paying half of the contribution and the employee the ployers do not generally make health insurance contributions. other half. The non-active population such as students, disabled people, pensioners or housewives, who live in Switzerland, also In Switzerland there is no legal obligation for employers to con- pay a contribution. The insurance is based on the pay as you go clude daily sickness insurance for their employees. The costs process: the current economically-active generation finances depend on the scope of cover (illness, maternity, accident). If today’s pensioners. group insurance is not arranged for employees, employers are obliged to pay employees their full salary for a certain period 8.6.2 Disability insurance (DI) (depending on years of service) if they are unable to work through The aim of disability insurance is to help integrate or return persons no fault of their own. That is why many employers take out daily who are disabled due to birth defects, illness or accidents (in)to the sickness benefits for their employees. Maternity benefits as per workforce. A pension is paid out only when the person is unable the Compensation for Loss of Earnings Act have precedence over to take up employment or return to his/her job. Contributions are daily sickness benefits, provided there is no over-compensation. mandatory and are levied together with OASI contributions. If a pregnant woman cannot attend work for health reasons, she 8.6.3 Accident insurance (AI) is entitled to her full salary for a certain period of time. Accident insurance covers all persons employed in Switzerland against accidents in the workplace, occupational illnesses and against non-occupational accidents. Healthcare and ancillary needs (treatment, required medical aid, travel and transport costs) and payments (daily benefits allowance, disability pensions, lump- sum compensation and perpetual care benefits and survivors’ benefits) are all covered. The employer funds the premiums for occupational accidents and illness, while the employee pays the premiums for non-occupational accidents. The employer must finance the entire premium amount, but part of this amount is

78 Handbook for Investors 2012 is not possible for self-employed persons to insure themselves Information of the Federal Office of Public Health on against unemployment, even voluntarily. In order to receive health insurance unemployment benefits, employees must be able to demonstrate www.bag.admin.ch > Topics > Health insurance payment of at least 12 monthly contributions within the last two Languages: German, English, French, Italian years, to show that they have worked. For EU/EFTA citizens the contributions made in their home country are also allowed for if employment requiring contributions to be made was carried out in Switzerland after arrival. Another requirement is that the person Federal Office of Public Health comparison of health must be in a position to take up work, which means that he/she insurance premiums is ready, able and permitted to take on appropriate work and to www.priminfo.ch participate in integration measures. Regular contributions are Languages: German, French, Italian mandatory. Compensation generally amounts to 70 % of the salary subject to OASI (average of the last six contribution months, or if more advantageous the last twelve, prior to unemployment), 8.6.5 Compensation for loss of income and maternity benefits or 80 % for children requiring support, in case of disability or for The Ordinance on Compensation for Loss of Income compensates those with an income of less than CHF 3,797. The maximum people who have lost part of their income due to military service insured salary is CHF 10,500 a month. As a rule, a maximum of or civil defense. The ordinance also covers loss of income during 520 days’ allowances may be drawn within a two-year period. pregnancy (maternity benefits). The insurance is mandatory, and everyone who makes OASI contributions must pay it (half is paid by the employer and half by the employee). Information for the unemployed

Employed pregnant women receive 80 % of their average salary www.treffpunkt-arbeit.ch > Unemployed – what should you do? before delivery, up to a maximum of CHF 196 per day, for fourteen Languages: German, English, French, Italian weeks. The requirement for this is that they had mandatory OASI -insurance for the nine months immediately before birth, worked at least five months during pregnancy and were still deemed able 8.6.7 Occupational pension scheme to work at the time of delivery. It is not possible to dismiss women Occupational pension funds serve to ensure that the employee’s while they are pregnant or for 16 weeks after delivery. Mothers may accustomed standard of living can be maintained. They are based not work for up to eight weeks after delivery. on the Federal Act on Occupational Pensions, which since 1985 has provided mandatory insurance for all employed persons from the age of 18 (against risks) and from the age of 25 (savings Information from the FSIO about compensation for plan). A person must currently earn a minimum of CHF 20,880 loss of earnings to participate. The maximum mandatorily insured salary is CHF www.bsv.admin.ch > Topics > Compensation for Loss of 83,520. The employer contributes at least as high a premium as Earnings Act/Maternity benefits the employee. Some employers choose to pay more. Premiums Languages: German, English, French, Italian can vary between 7 % and 18 % of income, based on age and sex (the older the person, the higher the premium). The payment of the pension is based on a legally-determined conversion rate, 8.6.6 Unemployment insurance (UI) which must not drop below (for men: 6.95 % and women: 6.90 %; Unemployment insurance continues to pay partial salary upon conversion rate as per 2011). Pension funds are foundations, unemployment for a limited amount of time and promotes the cooperatives or public law institutions that are monitored by re-entry of the unemployed person into the job market. It is cantonal and federal supervisory authorities. Smaller companies mandatory for employees. All workers who are not self-employed often join a collective pension foundation or association. must make contributions. Unemployment insurance is financed equally by the employer and the employees (each pays 1.1 %). It

Handbook for Investors 2012 79 8.7 Recruitment. Information of the Federal Social Insurance Office FSIO on occupational benefits There are many options for recruiting external candidates: www.bsv.admin.ch > Topics/Occupational Benefit Plan • Ads in newspapers or specialist journals Languages: German, English, French, Italian • Online ads • Contact with universities (internet platforms/trade fairs) • External advisors 8.6.8 Family allowances • Head-hunters Family allowances go some way towards meeting the costs of • Regional employment centers bringing up children. The support, which to date has been limited • Third parties, etc. to just employees, is to be expanded to cover self-employed people all over Switzerland (at the earliest at the start of 2013). There Each employer’s choice depends on its needs and budget. are already some cantons (Berne, Lucerne, Schwyz, Nidwalden, Glarus, Basel-City, Basel-Country, Schaffhausen, Appenzell AR, 8.7.1 Public employment service St. Gallen, Vaud, Valais and Geneva), which recognize claims of The regional employment centers (RAV) are public service provid- self-employed people and in some cases this is linked to a certain ers that specialize in advising and placing jobseekers. Around income limit. Normally, people who are not gainfully employed 130 RAV personally advise employers in their recruitment through only have a claim if their annual income does not exceed CHF a personnel consultant. There are many well qualified job seekers 41,760. Special regulations apply to agriculture. registered with RAV who are immediately available for permanent or temporary positions. On request, RAV can screen applicants Family allowances include child and education allowances, as according to the employer’s criteria, thus making the selection well as birth and adoption allowances mandated by the individual process easier. RAV can also advertise open positions in the cantons. All cantons require as a minimum the following allow- internal job market on its website and/or on teletext. Its website ances per child per month: is the largest job market in Switzerland, and the key advantage is • A child allowance of CHF 200 for children up to the age of 16 that all RAV services are free. • An education allowance of CHF 250 for children between the ages of 16 and 25 Regional employment centre RAV Family allowances are financed almost exclusively by the employer, except in Valais (where they are part-financed by the www.treffpunkt-arbeit.ch > For employers employee). Languages: German, English, French, Italian

Calculating family allowance by canton 8.7.2 Employment agencies It may be worth using an employment agency to find a highly www.kinderzulagen-rechner.ch qualified specialist or manager. These agencies do most of the Languages: German, French legwork: creating recruitment ads, choosing the media and selecting candidates. It also makes sense to work with an employment agency if the name of the company is to be kept confidential due to industry or internal reasons. However, this method is expensive, as it may cost one or more months’ salary for the position to be filled.

80 Handbook for Investors 2012 8.7.3 Head-hunters Head-hunters, or executive search consultants, act as a bridge between a company’s need for highly qualified specialists and managers and the desire of such individuals to find challenging and attractive positions. They specialize in recruiting through direct contacts and work on a mandate basis. They range from companies specialized in certain industries to large international firms with household names and boutique companies especially suited to generalist tasks, complex jobs or unconventional solutions. Hiring a head-hunter is always beneficial if the usual paths of internal recruitment or ads on websites and in newspapers fail to produce results.

8.7.4 Staffing / Temporary employment agencies The hiring of staff for a limited amount of time through temporary employment agencies is useful if there is a temporary surge of orders or staff must be replaced at short notice. An hourly wage is agreed between the agency and the client, which is usually 1.4 to 2 times the normal hourly rate. However, only the hours worked must be paid, and all ancillary costs are included. The agency remunerates temporary staff as their employer and is responsible for all social deductions and insurance. The same labor law pro- tections apply as with «traditional» forms of employment.

Temporary employment agencies require a cantonal license in order to operate. They are also required to set aside a significant deposit to cover the claims of their employees. A federal license and a higher deposit are also required to operate abroad.

HR Swiss – Swiss Association for Human Resources Management

www.sgp.ch Languages: German, English, French, Italian

Association of Personnel Service Providers

www.swissstaffing.ch Languages: German, French

Handbook for Investors 2012 81 9. Financial center and capital market.

Accounting for 11 % of GDP and employing around 210,000 9.1 Banks. people (6 % of the employed population in Switzerland), the Swiss financial sector is of key economic importance. The 9.1.1 Structure and general conditions main areas of expertise are private banking, asset manage- In Switzerland there are some 330 banks, 250 insurance compa- ment and insurance. Switzerland’s long tradition of economic nies and 2,300 pension funds. Apart from the two major global and financial stability is reflected in low inflation, low inter- banks, UBS and Credit Suisse Group, which together hold over est rates and the significant international role that the Swiss 50 % of total assets, the cantonal, regional and savings banks franc plays, particularly in asset management and issue also play an important role. underwriting business. In addition, there are many smaller financial institutions and private banks, some of which offer highly specialized services such Fig. 44: Global financial centers, 2010 as commodity trade finance. The group of 24 cantonal banks, Ranking Financial Center which are either entirely or partially under state ownership and 1 London which offer a government guarantee, have a domestic market 2 New York share of about a third. Their share of total assets for all banks do- 3 Hong Kong SAR miciled in Switzerland was approximately 15 % in 2010. Another 4 Singapore 122 foreign-owned banks with a share of around 12 % of the total 5 Shenzhen assets can be added to this number. Switzerland is a center for 6 Zurich professional asset management for private clients and institu- 7 Tokyo tional investors. With a market share of 27 % in 2009, it is the 8 Chicago world leader in cross-border asset management business. Overall 9 Geneva Swiss banks managed assets totaling CHF 5,600 billion in 2009. 10 Shanghai

Source: The Global Financial Centres Index 6, City of London Switzerland’s success as a financial center is thanks to the combined effect of many different factors. Its political and macroeco- nomic stability are the basic foundation upon which the trust of clients is built – trust which is so important in financial business. The Swiss franc, with its status as an important international reserve and diversification currency, also contributes to this. Strong global integration and an efficient financial infrastructure

82 Handbook for Investors 2012 allow market participants to achieve profitable management and international diversification of their assets and risks. Switzerland Swiss Financial Market Supervisory Authority FINMA enjoys a good reputation abroad as a financial center, and it is an attractive location for businesses and an international clientele. www.finma.ch Languages: German, English, French, Italian In comparison with other countries, the regulatory obstacles and burdens in the Swiss banking system are relatively low. A permit is required to open a bank, trade professionally in securities, man- 9.1.3 Services age a fund and in some cases to operate as an asset manager. Banks in Switzerland offer a vast range of financial products and The Swiss Financial Market Supervisory Authority FINMA, cur- services for both private and corporate clients. As the Swiss rently supervising over 400 financial institutions, can provide banking system is based on the universal bank principle, all detailed information about specific requirements. The umbrella banks can offer all banking services, such as: organization for the banking industry is the Swiss Bankers As- • Credit or lending business sociation. • Asset management and investment advice • Payment transactions • Deposit business (savings accounts, etc.) Swiss Bankers Association SBA • Securities business (stock market trading) • Issue underwriting business (bond underwriting) www.swissbanking.org • Financial analysis Languages: German, English, French, Italian Despite this, very different groups of banks and areas of specialization have developed. 9.1.2 Supervision As an independent supervisory authority, FINMA will protect Generally speaking, any adult may open a bank account in Swit- financial market clients, namely creditors, investors and insured zerland. However, the banks reserve the right to refuse to accept persons, thus strengthening public trust in Switzerland as a func- a client. For example, a bank may refuse to enter into a business tioning, reliable and competitive financial center. In addition, self- relationship with «politically exposed persons,» as such clients regulation has proved itself as an alternative form of regulation for could represent a reputational risk for the bank. The same applies the Swiss financial market. FINMA is required by the legislature in principle to companies, irrespective of whether they are domi- to support self-regulation and to provide it with the necessary ciled in Switzerland. Most Swiss banks do not require a minimum space. Corresponding regulations are proposed, for example, deposit for normal savings or current accounts. Many banks offer by the Swiss Bankers Association and are approved and imple- accounts in euros, US dollars or other currencies, as well as in mented by FINMA. Swiss francs.

All banks operating in Switzerland require a license. The supervi- If clients have a specific complaint against a bank that is domi- sory standards applied in Switzerland not only govern the capital ciled in Switzerland, they may approach the Swiss Banking resources and adequacy of the banks but also include the whole Ombudsman, who provides neutral, free information and media- range of prudential rules and codes of conduct. As an additional tion. safety cushion, Swiss law specifies higher capital requirements than does the Basel Capital Accord.

Handbook for Investors 2012 83 Swiss Banks’ and Securities Dealers’ Depositor Protection Cantonal banks Association

www.kantonalbank.ch www.einlagensicherung.ch Languages: German, English, French, Italian Languages: German, English, French, Italian

9.1.5 Taxation of savings income Association of Foreign Banks in Switzerland Switzerland supports the EU system of taxing cross-border interest payments to individuals under the Savings Tax Agreement. www.foreignbanks.ch Swiss banks operate a system of tax retention (similar to Swiss Languages: German, English, French, Italian withholding tax) on interest income earned in Switzerland by persons subject to EU taxation of 35 %. This system of tax retention ensures that the EU interest taxation system cannot be evaded by switching to Switzerland, while at the same time ensuring that Association of Swiss Private Bankers SPBA Swiss laws and banking secrecy are upheld.

www.swissprivatebankers.com Languages: German, English, French Taxation of savings income

www.europa.admin.ch > Topics > Bilateral agreements Switzerland-EU Banking Ombudsman Languages: German, English, French, Italian

www.bankingombudsman.ch Languages: German, English, French, Italian 9.2 Swiss stock market: SIX Swiss Exchange. 9.1.4 Protection of deposits Deposits with Swiss financial institutions are protected up to SIX Swiss Exchange is one of the leading regulated stock ex- CHF 100,000 per depositor. If the Swiss Financial Market Super- changes in Europe in the life science area. As a key pillar of the visory Authority (FINMA) initiates protective measures or forced Swiss financial center infrastructure it provides the best possible liquidation proceedings against a bank or securities dealer in trading conditions and combines investors, issuers and partici- Switzerland, the members of the Swiss Banks’ and Securities pants from all over the world. Dealers’ Depositor Protection Association provide funds so that the deposits deemed preferential under the Banking Act can be The strength of the Swiss financial center, its position as a world paid out as quickly as possible to depositors. All banks and secu- leader in cross-border private asset management and the associ- rities dealers with a branch in Switzerland and which receive privi- ated high level of financing and placement power enjoyed by its leged investments are members of the association. However, the banks, plus the general attractiveness of Switzerland as a loca- maximum amount that members may be required to contribute is tion make the SIX Swiss Exchange extremely appealing for both capped at CHF 6 billion. By guaranteeing preferential deposits, domestic and foreign companies. the association plays an important role in protecting creditors and makes a key contribution to the reputation and stability of Public placement and listing on the SIX Swiss Exchange give a Switzerland as a financial center. company access to an experienced, financially powerful group of international investors.

84 Handbook for Investors 2012 Every company on the SIX Swiss Exchange benefits from a 9.3 Business lending and high level of visibility and attention from investors, analysts and real estate financing. journalists. At the same time, investors in Switzerland have many years of experience of international sector-oriented investment Establishing a business is generally a medium to long-term objec- strategies. Given Switzerland’s economic structure, the banking tive. As a rule, significant up-front investments and project financ- and insurance sectors, the food sector, pharmaceuticals, biotech, ing are needed. Banks place great emphasis on thorough market medtech and cleantech, as well as the micro and nanotechnology analysis and professional management. sectors are particularly popular with investors. 9.3.1 Financing of current business activity In addition, the regulatory provisions of the SIX Swiss Exchange To finance current business activities, banks grant various types reflect market realities and thus simplify the capital increase of short-term loans. These can take the form of unsecured loans process. Under Swiss legislation, the SIX Swiss Exchange has or loans secured by collateral. The amount of the loan granted powers of self-regulation and is thus ideally equipped to combine depends on the trustworthiness and the future prospects of the high levels of investor protection with a regulatory environment company. Aside from the usual forms of bank lending, lease that is reasonable from a company perspective. financing and forfeiting are also gaining importance. For rapidly growing young enterprises and start-ups deciding on a location, With SMI®, the extensive index offer comprises the most impor- it is important to know what financing possibilities exist for the tant share indices in Switzerland and in addition to further bench- start-up phase and the second step. The sheer range and quality marks such as SLI® and SPI® also includes bond, segment, sec- of financial service providers in Switzerland means that a variety tor and customer indices. The stock exchange provides its raw of attractive solutions are available, such as sureties, convertible data in real time to financial information providers via SIX Exfeed. loans and equity capital financing by business angels, venture With investments in Scoach Schweiz, STOXX, Swiss Fund Data capital and private equity investors. and Indexium, SIX Swiss Exchange runs successful joint ventures to the benefit of all financial market actors. When a new business is established in Switzerland, financing in Swiss francs should be preferred because of currency consid- The SIX Swiss Exchange is a company of the SIX Group which erations. As a rule, it is also more economical than financing in offers first-class services in securities trading and processing as foreign currencies. well as financial information and payment transactions. In addition to its broad product range, the fully integrated and com- 9.3.2 Mortgages pletely automated trading, the clearing and settlement system, If the acquisition of real estate or the building of a production the «Swiss Value Chain» is especially impressive. facility accompanies the foundation or establishment of a business, mortgages can be an important credit instrument. There are three main types of mortgage in Switzerland: fixed-rate, variable- Swiss Stock Exchange rate and money-market mortgages. While the interest rate for a variable-rate mortgage is continually adjusted to the prevailing www.six-swiss-exchange.com capital market rate, the interest rate on a fixed-rate mortgage Languages: German, English, French is typically fixed for three to five years. The interest rate on a money-market mortgage is based on the Libor rate for the euro money market. Providers add a margin on top of this rate, which depends on the credit quality of the borrower. Up to 80 % of the property’s market value may be borrowed; up to 65 % of this is taken as a first mortgage, which does not need to be amortized as is usual in other countries. Over and above this, a second mortgage must be taken out which does have to be amortized.

Handbook for Investors 2012 85 The bank checks the quality of the property and the creditworthi- For office and service buildings, the loan-to-value ratio is normally ness of the borrower in accordance with its own guidelines. Gen- around 70 %, but it also depends on the (property-specific) risks. erally speaking, a minimum requirement is that purchasers should Interest rates and terms generally applied to business invest- provide at least 20 % of the purchase price from their own assets. ments today depend on the creditworthiness of the company and Secondly, the annual cost of the purchase (interest, repayments the rating it is given by the lending bank. Recognition of the risk and maintenance) should not total more than one-third of the and future prospects therefore play a key role. purchaser’s gross income. Interest rates are negotiable, so it is worthwhile requesting offers from a number of lenders. Owners of residential property must pay federal and cantonal taxes on their property as notional income. The rule of thumb for For commercial property, the collateral value depends increas- federal tax is an imputed rental value of at least 70 % of average ingly on the earning-power value. For industrial projects, normally market rental, and for cantonal and communal taxes an imputed 50 % of the total plant value – market value or construction cost, rental value of at least 60 %. In return, homeowners may deduct including machinery and equipment – can be financed against mortgage interest and maintenance costs. This is the reason why real estate pledges at very attractive rates. the first mortgage is rarely amortized.

Fig. 45: Mortgage interest rates, 1985 – 2011 12.0

11.0

10.0 Variable-rate mortgages

9.0 Money-market mortgages (also called LIBOR)

8.0 5-year fixed-rate mortgages

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: VZ Vermögenszentrum, www.vermoegenszentrum.ch

86 Handbook for Investors 2012 Financial aspects of residential property Companies and funds for risk capital

www.hausinfo.ch > Finanzen & Steuern (Finances & Taxes) www.swissbanking.org > KMU (SMEs) > Risikokapital Languages: German, French (Risk capital) Languages: German, French, Italian

Calculation of financial viability Swiss Private Equity & Corporate Finance Association SECA www.kantonalbank.ch > Berechnungstools (calculation tools) Languages: German, English, French, Italian www.seca.ch Languages: German, English, French

9.4 Risk capital. 9.4.1 Venture capital Some financial companies specialize in providing risk capital or Since 1999 venture capital companies have invested almost venture capital. Venture capital companies contribute to the share CHF 6 billion in innovative new companies and thereby generated capital of a company, with the aim of making large profits if it 10 to 20 workplaces per company. Alongside the state develop- flourishes or goes public. They provide financial resources with- ment programs and loans from business banks, venture capital out requiring the traditional forms of security. Only fast-growing (VC) is an important pillar of innovation in Switzerland with be- young companies which are likely to generate significant revenue tween 80 to 150 transactions per annum. The federal authorities in a short period of time and have sales potential and a capital re- also support the creation of venture capital through the Federal quirement of several million Swiss francs are normally considered Act on Venture Capital Companies (RKG), which provides two tax for this kind of financing. Venture capitalists consider themselves incentives: to be guides during the development phase of the financing • Recognized venture capital companies are exempt from project. After their job is done, they withdraw and sell their invest- securities issue tax on their capital at the time the company is ment on to the company founder or other investors. founded, or for any subsequent capital increase. With respect to direct federal tax, they also have a lower threshold value for claiming the equity participation deduction. Venture capital • Private persons who assist in the foundation and development of new companies as business angels are entitled to relief from www.kmu.admin.ch > KMU-Themen (SME topics) > Finanzen direct federal tax if they grant subordinated loans for the forma- Eigenkapital (Finances, equity) tion of start-up companies from their private assets. Languages: German, French, Italian

The availability of venture capital and similar financing may fluctuate and therefore lacks transparency. Universities, consultants and the business community jointly provide a number of plat- Information platform, network for entrepreneurs forms, some of them online, to bring entrepreneurs and investors together. www.swiss-venture-club.ch Languages: German, French, Italian

Handbook for Investors 2012 87 9.4.2 Business angels During their start-up phase, many promising young companies Business angels in Switzerland need seed financing of less than CHF 2 million. Although risk capital is increasingly available these days, the minimum size of www.businessangels.ch a financing transactions has risen correspondingly for both risk Languages: German, French capital providers and investment companies. Very few professional risk capital providers consider financing deals of less than CHF 2 million. More and more often it is so-called «business an- 9.4.3 State support gels» – individual investors – who finance start-ups. Typical busi- Although there is relatively little direct financial assistance available ness angels have experience and connections in addition to capi- in Switzerland, where the state mainly restricts itself to creating tal, which ideally they have acquired as an entrepreneur, which favorable operating conditions, the country does offer a wide is why they are often also consultants and mentors to young variety of tools to support companies, ranging from administrative entrepreneurs. As a result business angels usually invest two-fold assistance and tax relief to guarantees. or even three-fold in the company: namely capital, experience and time, which is why the young companies are said to receive The cantonal economic development agencies also tend not to so-called «smart money». Essentially business angels also follow take direct stakes in companies, although they can offer assis- clear return prospects just like venture capital investors. The aim tance in finding affordable construction sites or can provide tax is to start, develop and establish new companies and to make relief during the start-up phase or during a planned expansion. them attractive for later investors. Consequently young entrepreneurs are usually closely supported by business angels, who also One rare exception is the Swiss Federal Foundation for the Promo- demand corresponding access to the business plans. tion of the Swiss Economy (Eidgenössische Stiftung zur Förderung schweizerischer Volkswirtschaft), which grants interest-free loans and, in exceptional cases, may even provide a share of the risk capital subject to a personal financial commitment on the part of the company founder.

Fig. 46: State incentives Incentive Beneficiaries Regions Measures New regional policy Industry, manufac- Economic regeneration • Tax relief on direct federal tax NRP turing-related service area companies Commercial guarantees SMEs, business Whole of Switzerland • Guarantees for bank loans (max. CHF 500,000) Guarantees for moun- SMEs, business Mountain regions • Guarantees for bank loans (max. CHF 500,000) tain regions • Interest cost subsidies Hotel lending Hotel industry Tourism and mountain • Subordinate direct loan regions • Guarantees • Interest cost subsidies (partial) Measures to encourage Unemployed Whole of Switzerland • Daily benefits (max. 90 days for planning phase) self-employment • Guarantees for bank loans (max. CHF 500,000) Commission for Tech- Joint research projects Whole of Switzerland • Payment of researchers’ salaries nology and Innovation bringing universities and CTI companies together

Source: Own diagram Generis AG, Schaffhausen

88 Handbook for Investors 2012 Fig. 48: Capital costs, 2011 State support for financing 1 = hinders economic growth, 10 = promotes economic growth www.kmu.admin.ch > KMU-Theman (SME topics) > Finanzen 1 Switzerland 7.53 Eigenkapital (Finances: equity) 2 Hong Kong SAR 7.24 Languages: German, French, Italian 3 Finland 7.04 4 Taiwan 6.81 5 USA 6.75 10 Germany 6.44 Cantonal Economic Development Offices 14 Japan 6.21 Addresses: page 138 – 139 16 Luxemburg 6.00 17 Netherlands 5.95 18 Denmark 5.88 9.5 Capital costs and interest. 21 Singapore 5.59 22 India 5.46 Switzerland is one of the most economically and politically stable 31 France 4.88 countries in the world and is known as a «safe haven». The coun- 37 Ireland 4.73 try is in a healthy financial situation. This applies to the finances 40 Italy 4.66 of the central state – at the federal level – as well as the cantons 44 China 4.42 and municipalities. The budget deficit in 2010 of 1.32 % of GDP 46 Great Britain 4.14 is significantly below the average of EU and OECD member 55 Russia 2.81 states. Total public sector debt (federal, cantonal and municipal) 57 Brazil 2.64 amounts to 39 % of GDP (2010). Source: IMD World Competitiveness Yearbook Online 2011

Fig. 47: Credit rating: the ten safest countries Rank Country Points (maximum = 100) 1 Norway 93,44 Swiss consumer price index 2 Luxemburg 91,03 3 Switzerland 89,59 www.lik.bfs.admin.ch 4 Denmark 89,21 Languages: German, French, Italian 5 Sweden 88,74 6 Singapore 87,48 7 Finland 86,96 8 Netherlands 86,67 Federal Finance Administration FFA 9 Canada 86,17 10 Australia 85,36 www.efv.admin.ch Source: Euromoney, March 2011 Languages: German, English, French, Italian

High credit quality, together with the high savings rate and large inflows of foreign money, lead to low interest rates – meaning that financing conditions for business and investment are comparatively favorable. In recent years, the average spread in the money- market and capital-market interest rates in Swiss francs and euros has ranged between 1 % and 2 %. Interest rates and terms may vary widely depending on the creditworthiness of the client.

Handbook for Investors 2012 89 9.6 Inflation.

Switzerland has always lived up to its reputation as a stable country. The rate of inflation, as measured using the Swiss consumer price index, has consistently remained well below those of the EU, the major industrialized nations and the ASEAN-5 countries in recent years.

Fig. 49: Inflation, 2011 35 %

30 %

25 %

20 %

15 %

10 %

5 %

0 % 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

World Key industrial nations (G7) European Union ASEAN-5 Switzerland

Source: IMF WEO Report, April 2011

90 Handbook for Investors 2012 10. Overview of the Swiss tax system.

The Swiss tax system mirrors Switzerland’s federal structure, 10.1 Taxation of corporate which consists of 26 sovereign cantons with approximately taxpayers. 2,551 independent municipalities (as at 01/01/2011). Based on the constitution, all cantons have the full right of taxation 10.1.1 Corporate income tax – federal level except for those taxes that are exclusively reserved for the The Swiss Federation levies corporate income tax at a flat rate federal government. As a consequence, Switzerland has two of 8.5 % on profit after tax of corporations and cooperatives. levels of taxation – the federal and the cantonal/communal For associations, foundations and other legal entities as well as level. investment trusts a flat rate of 4.25 % applies. On the federal level no capital tax is levied. The accomplished reform of the income tax system in recent years provided for harmonization of the formal aspects of Taxable persons the various cantonal tax laws – for example, determination of Taxable persons include Swiss resident legal entities, i.e., Swiss taxable income, deductions, tax periods, assessment proce- corporations, limited liability companies and corporations with dures, etc. The cantons and municipalities have, however, still unlimited partners, cooperatives, foundations and investment significant autonomy for the quantitative aspects of taxa- trusts with direct ownership of immovable property. As partner- tion, particularly with respect to determining the applicable ships are transparent for tax purposes, the partners are taxed tax rates. Therefore, the tax burden still considerably differs individually. Companies which have their registered office or place between cantons/communes. of effective management in Switzerland are considered resident.

Taxable income Resident companies are subject to corporate income tax on their worldwide income with the exception of income attributable to foreign permanent establishments or foreign immovable property. Such income is excluded from the Swiss tax base and is only taken into account for rate progression purposes in cantons that still apply progressive tax rates.

Handbook for Investors 2012 91 Non-resident companies are subject to tax only on Swiss source Group consolidation income, i.e., income and capital gains derived from Swiss busi- Separate entity taxation applies in Switzerland for income tax ness, permanent establishments or immovable property, whereas purposes. Group consolidation is not anticipated to be introduced income from immovable property includes income from trading in in the near future. immovable property. Group reorganizations As a matter of principle, the statutory accounts of a Swiss Group reorganizations are governed by the Swiss merger law company and – in the case of a foreign company – the branch which also comprises tax standards alongside the legal standards accounts form the basis for determining taxable income. Apart as a supplement to the applicable tax laws. from the participation exemption for dividend and capital gains income, various adjustments required by tax law and the use of Provided certain prerequisites are met, reorganizations are existing loss carryforwards (the loss carryforward period is seven possible on a tax-neutral basis, as long as the applicable tax ac- years), there are very few differences between statutory profit counting values of assets and liabilities remain unaltered and the and taxable profit. The most common deductions allowed are asset values remain in Switzerland. depreciation, tax expense, interest expense and management and service fees/royalties. The last two are deductible to the extent 10.1.2 Corporate income tax – cantonal and communal level that they are in accordance with the arm’s-length principle. Given the tax harmonization at cantonal/communal level, most tax rules are identical or very similar to the rules on the federal Thin capitalization level set forth above (e.g. participation exemption, loss carryfor- The Swiss Federal Tax Administration has issued safe harbor ward rules and in most cases thin capitalization rules). rules for thin capitalization purposes that apply to related party debt. Third-party financing is not affected by those rules. Specifi- Special tax regimes cally speaking, a unique asset-based test is used to determine In contrast to the Swiss federal tax law, all cantonal tax laws whether a company is adequately financed. The thin capitalization provide special tax regimes, which may be obtained provided that rules require that each asset class (in general, fair market value, the conditions according to the tax harmonization law are met. but often the lower book values suffice) has to be underpinned by The following tax regimes are typically prevalent in Switzerland a certain equity portion. and relevant internationally:

Related-party debt exceeding the allowable debt as calculated A) Holding company according to the percentages provided from the Administration The holding company tax status is available to Swiss companies is reclassified as equity and added back to the taxable capital for (or permanent establishments of a foreign company), whose purposes of the cantonal/communal annual capital tax, unless it primary purpose is according to the by-laws to hold and manage can be proven that in this particular case the debt terms applied long-term equity investments in affiliated companies. Further- are more appropriate. more, the company must pass an alternative asset or income test, whereby either two-thirds of the company’s assets must consist Moreover, the allowable interest deductibility on debt can be of substantial shareholdings or participations or two-thirds of determined by multiplying the allowable debt by the safe harbor total income of the company must consist of participation income interest rates. If interest payments to related parties exceed the (dividend income or capital gains) from such shareholdings and amount which can be paid based on the allowable debt, they participations. are added back to taxable profit. Furthermore, such interest is considered to be a hidden dividend distribution (subject to withholding tax of 35 %).

92 Handbook for Investors 2012 A holding company which meets one of these requirements is 10.1.3 Capital tax exempt from all cantonal/communal income taxes, with the ex- An annual capital tax can only be levied at cantonal/communal ception of income from Swiss real estate. As a matter of principle, level. The basis for the calculation of capital tax is in principle the effective tax rate of a holding is 7.83 % (i.e., federal income the company’s net equity (i.e. share capital, paid-in surplus, legal tax rate) prior to participation relief for qualifying dividends and reserves, other reserves, retained earnings). The taxable base of capital gains. A reduced capital tax on cantonal/communal tax companies also includes any provisions disallowed as deductions level applies. for tax purposes, any other undisclosed reserves, as well as debt that economically has the character of equity under the Swiss B) Mixed trading company thin capitalization rules. Some cantons even provide for crediting It has been given different names by the cantons. However, in the the cantonal corporate income tax against capital tax. international context the tax status is most often referred to as the «mixed trading company» tax status. The tax rates vary from canton to canton and depend on the tax status of the company. In 2011, the range was between 0.0010 % A mixed company may be engaged in limited commercial busi- to 0.525 % for companies subject to ordinary taxation, and be- ness activity in Switzerland. As a general rule, at least 80 % of the tween 0.0010 % to 0.4010 % for companies eligible for a special income from commercial activities must derive from non-Swiss tax regime. sources (i.e., a maximum of 20 % of income may be linked to Swiss sources). Many cantons additionally require that at least 10.1.4 Tax incentives 80 % of costs must be related to activities undertaken abroad. Tax incentives can be granted at cantonal and communal level and in explicitly defined regions at federal level for qualified new If a company meets the above criteria, it may apply for tax treat- investments for 10 years. ment in accordance with the following rules: • Qualifying income from participations (including dividends, Federal level capital gains and revaluation gains) is exempt. The federal government has defined less centralized and/or eco- • Other income from Swiss sources is taxed at the normal rate. nomically less strong regions which are entitled to grant business • A portion of foreign source income is subject to cantonal/ incentives including partial or full corporate income tax breaks for municipal income taxes depending on the degree of business up to 10 years (see chapter 14.5). activity carried out in Switzerland. • Expenditure that is justified for business purposes and is re- Tax breaks are available for investment projects that fulfil certain lated economically to certain income and revenues is deduct- conditions, for example, creation of new production related jobs, ible. In particular, losses from participations can only be offset non-competition with existing businesses, etc. against taxable income from participations (i.e., income that is not obtained tax-free). Cantonal and communal level • Reduced capital tax rates are applicable. Most cantons offer partial or full tax breaks for cantonal/communal tax purposes for up to 10 years on a case-by-case basis. In particular, incentives may be obtained for creating a new presence or for an expansion project, which has particular economic relevance for the canton. Most importantly, however, business incentives are generally granted in connection with the creation of new jobs locally, i.e. requirement of at least 10 to 20 jobs in most cantons.

Handbook for Investors 2012 93 10.2 Tax charge rate in international Fig. 50: Total tax rate (TTR) Luxemburg 21.1 comparison. 20.8 The international comparison of the total tax rate (TTR) shows Ireland 26.5 26.3 that Switzerland has a tax system which is constantly very competitive compared to other highly developed industrial countries. Switzerland 30.1 30.1 The total tax rate (TTR) measures the amount of all taxes and Great Britain 37.3 mandatory contributions borne by the business and is expressed 37.3 as a percentage of commercial profits. The 2011 and 2012 busi- Netherlands 40.5 ness reports reflect the TTR for the fiscal years 2009 and 2010 40.5 1 (January 1 to December 31, 2009 and 2010) . The total amount of Finland 44.6 taxes borne is the sum of all the different taxes and contributions 39.0 payable after accounting for deductions and exemptions. Russia 46.5 46.9 The taxes and contributions included can be divided into the USA 46.8 following categories: a) profit or corporate income tax; b) social 46.7 contributions and labor taxes paid by the employer (for which all Germany 48.2 mandatory contributions are included, even if paid to a private 46.7 entity such as a pension fund); c) property taxes; d) sales taxes Japan 48.6 49.1 (and cascading sales taxes as well as other consumption taxes Czech Republic 48.8 such as irrecoverable VAT); and e) other taxes (such as 49.1 municipal fees and vehicle and fuel taxes). Hungary 53.3 52.4 It should further be noted that the Swiss tax system is not only Sweden 54.6 attractive for corporate taxpayers but also for individual taxpayers 52.8 as it provides for a modest tax burden in international comparison Austria 55.5 as well. 53.1 Spain 56.5 38.7 Belgium 57.0 57.3 India 63.3 61.8 China 63.5 63.5 France 65.8 65.7 Italy 68.6 68.5 Brazil 69.0 67.1

TTR (% profit) 2009 TTR (% profit) 2010

1 Source: Paying taxes can be found at: http://www.doingbusiness.org

94 Handbook for Investors 2012 10.3 Taxation of individual Certain types of income such as inheritance, gift and matrimonial taxpayers. property rights, subsidies paid from private or public sources, etc. are by law excluded from taxation. Moreover, the individual 10.3.1 Personal income tax may deduct earning costs including, for example, travel costs Taxable persons between home and place of work, social security contributions Individuals are subject to taxation on federal and cantonal/com- and contributions to approved savings plans from gross income. munal level if they have their permanent or temporary residence in Additional deductions may be claimed for dependent children Switzerland. Temporary residence is given provided the individual, and insurance premiums as well as for married and double regardless of any temporary interruptions, stays in Switzerland income couples. However, the extent of deductions allowed may for a) at least 30 days carrying out a professional activity or vary strongly from canton to canton. Further interest payments b) for 90 days or more without pursuing any professional activity. on loans, mortgage loans, etc. are fully deductible for business According to the Swiss tax system, partnerships are transparent; purposes. The deductibility of interest for private purposes related hence each partner is taxed individually. to private assets is, however, limited to an aggregate income from movable and immovable assets plus CHF 50,000. Furthermore, The income of married couples is aggregated and taxed ac- the value-preserving property expenses can be deducted, or an cording to the principle of family taxation. The same applies to all-inclusive deduction can be applied instead. Draft legislation any registered civil partnerships. Any income of a minor child providing for the abolition of taxation on own rental value for all is added to the income of the adults with the exception of the homeowners is currently being debated. This would also limit the child’s earned income derived from gainful employment which is existing scope for deduction of personal interest on debt to the assessed separately. taxable yield on assets.

The federal as well as cantonal/communal income taxes are Individual tax rates are typically progressive, whereas a maximum levied and collected by the cantonal tax authorities and are as- tax rate of 11.5 % applies on federal level. The cantons may set sessed for a period of one year (calendar year) on the basis of their own tax rates. The maximum applicable cantonal tax burden a tax return to be filed by the taxpayer. varies significantly from canton to canton (principal town of the canton about 12 % to 30 %). A special family tariff was introduced Individuals who do not set up a place of residency in Switzerland, for the 2011 fiscal year at federal level. This is based on the tariff are only obliged to pay tax on their income in Switzerland. for married couples, but provides for an additional tax deduction per child. Taxable income Resident individuals are subject to tax on their worldwide income. Capital gains However, revenues derived from business carried on abroad, from Depending on whether a capital gain is realized on personal or permanent establishments and from immovable property situated business property or on movable or immovable property, such abroad are exempt and are taken into account only for the deter- gain is taxed differently. Gains on movable personal property are mination of the applicable tax rate (exemption with progression). exempt from taxation whereas gains realized on movable busi- The total income includes income from dependent or indepen- ness property are attributed to ordinary income. For taxation of dent personal activities, income from compensatory or subsidiary immovable property, please also see chapter 10.6.2. payments, and income from movable and immovable property. Taxable income also includes the notional rent value of property Losses that the resident lives in. Contrary to personal losses, business losses are tax deductible and may be carried forward for seven years.

Handbook for Investors 2012 95 Distribution of capital contributions 10.3.3 Expatriates Since January 1, 2011 the distribution of qualified capital con- Qualifying expatriates are foreign managers and certain special- tributions is tax free. They are subject to neither withholding tax ists (e.g. IT specialists) seconded to Switzerland on a tempo- (chapter 10.4) nor income tax for the receiving individual. While rary basis for a period of up to five years, i.e. the (assignment) this already applied to the repayment of share capital prior to contract has to be limited in time for a maximum of five years. January 1, 2011, it now also applies to repayments on invest- Expatriates may claim tax relief on expenses incurred due to their ments, premiums and assignments of joint stock companies stay in Switzerland. made after December 31, 1996, as tax-free distributions. The following expenses incurred by expatriates are deductible: Tax at source i) Relocation costs including travel costs to and from Switzerland, Foreign employees who do not possess a residence permit are ii) reasonable accommodation costs in Switzerland if the resi- taxed for their earned income by a tax deduction at source. If dence abroad is still maintained, iii) costs for children of school- the source-taxed income exceeds CHF 120,000 (CHF 500,000 going age attending a private school if local state-funded schools in Geneva) per annum, a tax declaration has to be submitted. In cannot offer adequate educational provisions. Instead of iden- other cases the tax at source is definitive. The employee can, tifying the actual costs for relocation and accommodation, the however, assert a special deduction in a separate process. taxpayer may claim a monthly lump-sum deduction which may vary from canton to canton. Any reimbursement of work-related Employees who have retained their residence abroad are taxed costs of the expatriate by the employer must be declared in the on their earned income at the source, regardless of their national- employee’s salary slip. ity, and in general cannot submit a tax declaration. The entitlement to benefit from the expatriates’ status for tax 10.3.2 Wealth tax purposes ceases once temporary employment is replaced or Net wealth tax is only levied at cantonal/communal level ac- superseded by a permanent position. cording to the respective cantonal tax laws and rates. The tax is based on the balance of the gross assets including but not 10.3.4 Cross-border commuters limited to immovable property, movable assets such as securi- Cross-border commuters are those people who live abroad (e.g. ties and bank deposits, cash redemption value of life insurance, Austria, France, Germany, Italy, and Liechtenstein) and work in cars, shares of non-distributed inheritances, etc. Taxes are also Switzerland and who commute from home to work and back each levied on assets not yielding any income. Shareholdings in foreign day. businesses and plants are not subject to wealth tax, as well as properties abroad. These assets are, however, taken into account The Swiss taxation of such individuals differs, depending on their for the calculation of the applicable asset tax rate, if it is a pro- place of work and domicile (home or foreign country). The double gressive rate (tax exemption with progression). tax treaty with Germany, for example, provides for an apportion- ment of the taxation right between the two countries. The country Individuals can deduct debts from the gross assets, as well as of work is limited to a fat rate withholding tax of 4.5 % of the tax exempt amounts which vary from canton to canton, and ac- gross salary of the cross-border commuter. Such partial taxa- cording to marital status and whether the person in question has tion of cross-border commuters in the country of work does not children. relieve the commuter from taxation of the earned income at the place of residence (e.g. taxation with credit). The cross-border The wealth tax is progressive in most cantons, whereby the commuter status is abandoned if the employee cannot return to cantons can set their own tax rates. The tax burden therefore his/her domicile abroad for more than 60 working days per year varies considerably and ranges from 0.0010 % to 1 %. The federal for business reasons. government does not charge wealth tax.

96 Handbook for Investors 2012 10.3.5 Lump-sum taxation In 2009, a poll in the canton of Zurich demanded the abolishment Both federal and most cantonal tax regulations provide for the of the lump-sum taxation on cantonal/communal level. As the possibility to make use of a special tax arrangement often referred population of the canton of Zurich accepted the draft, the special to as lump-sum taxation, whereby qualifying Swiss resident tax- tax arrangement will no longer be available in Zurich after Janu- payers are taxed on the basis of expenditure and cost of living in ary 1, 2010. In the meantime the canton of Schaffhausen has also Switzerland instead of the usual worldwide income and assets. abolished lump-sum taxation. Other cantons may follow.

Qualifying taxpayers who may apply for lump-sum taxation are 10.3.6 Inheritance and gift tax individuals who take up temporary or permanent residence in Swit- Inheritance and gift taxes are not harmonized. Consequently, the zerland for the first time or after an absence of at least ten years cantons are free to levy such tax and the various cantonal laws and who do not carry out any gainful occupation in Switzerland. differ considerably in almost every respect. With the exception While Swiss nationals may only apply for this arrangement in the of the canton of Schwyz all cantons levy inheritance and/or gift tax period of taking up residency, foreigners are allowed to apply taxes for certain asset transfers, if the deceased or donor had for an indefinite period, provided that the conditions are fulfilled. been resident of the respective canton or if real estate located in The lump-sum taxation provisions are tailored to financially inde- the canton is transferred. pendent persons who are not seeking to work in Switzerland. Inheritance and gift tax rates are mostly progressive and are usu- In case of spouses moving to Switzerland, the provisions for ally based on the degree of relationship between the deceased benefitting from the lump-sum taxation must be fulfilled by both or donor and the beneficiary and/or the amount received by the spouses. As a rule, it is not possible for one spouse to be taxed beneficiary. In all cantons, spouses are exempt from inheritance under the lump-sum taxation while the other spouse is ordinarily and gift taxes; most cantons also exempt direct descendants. taxed. At the moment a popular initiative is pending, which intends for The basis of taxation is calculated annually on expense incurred the introduction of an inheritance-related gift tax at the federal by the taxpayer in Switzerland and abroad. The calculation does level, instead of the cantonal inheritance and gift taxes. As- not only consider the expense of the taxpayer but also those of the set transfers between married couples and registered partners spouse and dependent children as long as they live in Switzerland. should continue to remain tax-free. For all other asset transfers Expenses usually taken into account are food, clothing and ac- a tax rate of 20 % is intended, whereby a tax exempt amount of commodation, education, leisure activities and all other expenses CHF 2 million and various exceptions are planned. It is expected linked with the standard of living. The exact calculation is deter- that this legislation will – if at all – be implemented in 2015 at the mined together with the relevant tax authorities of the canton in earliest, although it 2016 is more likely. If the popular initiative is which the person wishes to become a resident. In any case, the accepted, however, gifts given/received after January 1, 2012 will minimum base must correspond either with a) at least five times be assigned to the taxable estate retrospectively, regardless of the rent paid on rental property or five times the imputed income the time the new constitution article comes into effect. attributable to homeowners or b) two times the annual costs of lodging if the taxpayer lives in a hotel or similar accommodation. In case the taxpayer owns or rents more than one property, the most expensive will be taken into account.

Generally, individuals who apply for the lump-sum taxation are considered as Swiss residents and may also apply for treaty relief on their foreign-source income. Some treaties, however, allow only for treaty benefits, if all income from the source country is subject to ordinary taxation in Switzerland.

Handbook for Investors 2012 97 10.4 Withholding tax. 10.4.1 Domestic rates The tax rate applied on dividend distributions including deemed A federal withholding tax is levied at the source on the gross profit distributions and interest payments relating to bonds and amount of dividend distributions by Swiss companies, on income bond-like loans as well as on interest payments made by banks from bonds and similar indebtedness by Swiss issuers, as well as or bank-like institutions to non-banks is 35 %. There is no with- on certain distributions of income by Swiss investment funds and holding tax on interest payments relating to qualifying ordinary interest payments on deposits with Swiss banking establishments. company loan agreements. Provided that royalties, licenses, ser- Lottery gains and insurance benefits are subject to withholding vice and similar fees payable by Swiss individuals or corporations tax as well. are at arm’s length, no withholding tax is levied.

Since the capital contribution principle came into effect on Janu- 10.4.2 Treaty rates ary 1, 2011, the repayment of capital contributions, which were Most treaties provide for a reduction of the normal 35 % rate on made by the shareholder after December 31, 1996 and have been dividends. The reduced rate is usually 15 % for portfolio investors declared and accounted for correctly, are now treated the same and 0 %, 5 % or 10 % for substantial corporate owners. Some as repayments of nominal capital. With regard to withholding treaties require the taxation of Swiss-source income in the recipi- tax, these repayments are in general tax-free. The repayment of ent’s country of residence. Otherwise no relief will be granted. capital contributions for individuals (if shares are held as private With regard to interests, most treaties allow for a reduction as assets) now no longer represents taxable income (see chapter well, typically up to 10 %. In some treaties a full refund is granted. 10.3.1.). However, any reduction is only possible if the person applying for Lottery winnings and insurance benefits are also subject to with- treaty benefits is actually entitled to claim the treaty. holding tax (i.e. money won over CHF 50). 10.4.3 Bilateral agreements with the EU Generally, the debtor is liable for the tax and is required to with- In May 2004, Switzerland and the European Union (EU) agreed hold the amount due, irrespective of whether the recipient is en- on eight bilateral agreements («Bilateral Agreements II») in addi- titled to a full or partial refund. A refund is only possible provided tion to the seven existing bilateral agreements («Bilateral Agree- that the respective earnings are properly declared for the pur- ments I», in force since June 1, 2002). poses of income taxation. The aim is to prevent tax evasion. For Swiss resident corporate taxpayers withholding tax is reimbursed One of the agreements is the Savings Tax Agreement providing by way of a refund, whereas for individuals the tax is credited for measures equivalent to those laid down in the EU Savings against total tax liability through the regular taxation procedure. Tax Directive. To entice Switzerland to enter into the Savings Tax Agreement, the same agreement also incorporated language For non-resident taxpayers, the withholding tax generally repre- which was practically identical to the version of the EU Parent/ sents a final tax burden. However, a partial or total refund may be Subsidiary Directive and the EU Interest/Royalty Directive in effect granted based on an international double tax treaty or a bilateral at that time. Switzerland has therefore had de facto access to agreement concluded by Switzerland with the country in which the respective EU directives since July 1, 2005, whereas future the recipient of the earnings is residing. changes to the EU directives will not automatically apply to Swit- zerland. It should further be noted that a notification procedure may be applied for certain qualifying dividend distributions, replacing the Accordingly, dividends, royalty and interest payments between withholding and refund procedure. Switzerland and the member states of the EU will not be subject to withholding tax, provided various conditions such as minimum shareholding and holding period are fulfilled.

98 Handbook for Investors 2012 In general, the bilateral agreements, including the Savings Tax If the revenues of a taxpayer (turnover from taxable supplies of Agreement, will also apply to new EU member states joining the goods and services) are less than CHF 100,000 per year (or less EU after July 1, 2005 (e.g. Bulgaria, Romania). However, with than CHF 150,000 for sports clubs and non-profit institutions), some countries transitional arrangements must be considered. then the entity is exempt from tax liability. However, any such entity may also waive exemption from tax liability. Upon registra- The application of the above-mentioned benefits from the Sav- tion with the Federal Tax Administration, the tax-payer currently ings Tax Agreement can be denied in cases of abuse or fraud. still receives one VAT number: a six-figure VAT reference number This is because of the explicit reservation made in the Savings which can be used as a VAT number until December 31, 2013, Tax Agreement as to the use of domestic or agreement-based and one VAT number which is essentially based on the company provisions for the prevention of fraud or abuse, both by Switzer- identification number. Here the VAT number is added to the com- land by the individual EU member states. pany identification number (e.g. CHE-123.456.789 MWST). After December 31, 2013 only the VAT number which is based on the Double tax treaties between Switzerland and EU member states company identification number will be valid. with more favorable tax treatment of dividend, interest and royalty payments remain unaffected. A special regulation exists for holding companies. In general the acquisition, holding and selling of shareholdings is a commercial action within the meaning the Swiss VAT law. Shares of capital 10.5 Value added tax. in companies over 10% are classed as shareholdings, which are held with the intention of long-term investment and have a Although Switzerland is not an EU member state, its value added considerable influence. The qualification of the holding activity tax (VAT) system was structured in accordance with the sixth EU as a commercial action means that the holding company can be VAT Directive («Sixth Council Directive on the harmonization of voluntarily registered due to the waiving of the exemption from the laws of the Member States relating to turnover taxes») as a tax. The advantage of the registration is that pre-tax which is non-cumulative, multi-stage tax that provides for deduction of due within the scope of the holding activities can be claimed, input tax. As a result, Swiss VAT is levied as an indirect tax on although the sale of shareholdings essentially represents income most goods and services at the federal level only and applies to exempt from tax (normally, however, a pre-tax correction is nec- each stage of the production and distribution chain. It is designed essary due to interest income). as a tax owed by the supplier of goods or services (i.e., the tax liability is based on the payment by the recipient of the goods or 10.5.2 Taxable supplies services). VAT is levied on the following types of services: 1) delivery of goods in Switzerland (including Liechtenstein); 2) supply of servic- 10.5.1 Taxable persons es in Switzerland (including Liechtenstein); 3) purchase of services Any legal entity, establishment, partnership or association without (and certain goods deliveries in Switzerland) from enterprises with legal capacity, institution, etc. that operates an enterprise (obtains their registered office in another country if the value of goods or revenues through business or professional activity for a long period services exceeds CHF 10,000 per year; and 4) import of goods. of time, regardless of whether there is an intention to make money) is liable for tax. There is a registration obligation if the taxable Certain services provided to foreign recipients (as well as the turnover in Switzerland exceeds CHF 100,000 per year. All perma- export of goods and the delivery of goods abroad) are not taxed nent domestic establishments of a Swiss parent company form or are zero-rated with full input tax recovery. The delivery of one taxable entity together with the parent company. All domestic goods for the purposes of VAT is not limited to goods deliveries establishments of a foreign parent company are also classed as as defined by Swiss commercial law. The VAT law provides for a taxable entity. On the other hand the domestic establishments a number of business transactions (such as the maintenance of and the foreign parent company are each considered a separate machinery, rental or lease of goods, trade in electricity, etc.) that taxable entity. are deemed to be supplies of goods for VAT purposes.

Handbook for Investors 2012 99 10.5.3 Taxable amount In contrast to activities excluded from VAT, exempt activities allow The basis for the calculation of the taxable amount for the supply for an input VAT deduction for all taxes paid in generating the of goods and services is the agreed upon or the collected gross turnover in question (true exemption). An example of an activity remuneration (in cash or in kind). Input tax, i.e., the tax paid on exempt from tax is the export of goods (see also chapter 10.5.7). purchases of goods and services, can be deducted. Consequent- ly, only the value added is taxed (net all-phase principle). Business activities abroad are not subject to Swiss VAT. These types of turnover are generally the result of international business 10.5.4 Tax rates models. A typical example is a Swiss trading company that buys The standard rate is 8 % since January 1, 2011 on all taxable sup- products from a foreign manufacturing company and sells them plies of goods or services. A reduced rate of 3.8 % is applicable to customers in a third country, shipping the products directly for accommodation. A reduced rate of 2.5 % applies on certain to those customers. Activities involving the supply of goods or categories of goods and services for certain basic needs such as services abroad only entitle the taxpayer to deduct input tax, if water supply, food and non-alcoholic beverages, cattle, poultry, the turnover does not qualify as VAT exempt. fish, cereals and grain, books and newspapers, services of non- commercial radio and TV broadcasts, etc. 10.5.6 Deduction of input taxes An enterprise registered for VAT is liable for VAT on all supplies The Federal Tax Administration offers further simplified VAT (output tax) and will incur VAT on purchases for the business accounting for small businesses with turnover of below (input tax). In most cases, input taxes may be deducted from the CHF 5.02 million (incl VAT) and a tax liability of CHF 109,000 amount of output taxes due and so do not generally represent (calculated according to the applicable net tax rate) or less per an additional burden for a business. VAT is a genuine expense year. These small businesses may opt to submit VAT based on only for the end-consumer or for a business involved in transac- balanced tax rate, which is lower than the standard rate of 8 %, tions for which no input tax can be recovered (businesses with if they, in return, waive the standard procedure for input VAT excluded income such as banks and insurance companies). accounting, which would otherwise be deducted from the VAT levied on turnover (input VAT deduction). This simplified taxation 10.5.7 Exports method must be maintained for at least one year, and VAT returns In addition to exported goods, certain services – if rendered to need to be filed twice a year only (in contrast to the normal quar- a recipient domiciled abroad – are also VAT exempt (with credit). terly calculations). However, the Swiss VAT law includes a list of services that are either taxable where the service provider is domiciled or are subject 10.5.5 Exemptions to special provisions according to the list (e.g., services in con- The law differentiates between VAT-exempt and VAT-excluded nection with real estate, hotel and restaurant services; services in turnover from VAT. No VAT is levied in either case, but a distinc- relation to culture, sport and the arts; passenger transport; etc.). tion is made regarding the input VAT deduction. Services not included in this list that are provided to a foreign recipient are not subject to Swiss VAT (a catch-all provision – the In cases of exclusions, there is no input tax deduction possible «place of supply is where the recipient is established» is applied). for the taxes paid in generating the turnover excluded from VAT. Excluded activities are the healthcare sector, education, culture, However, the VAT exempt nature of such services has to be sport, social care, most banking and insurance activities, rental proven by the underlying documents such as invoices, agree- and sale of real estate, as well as gambling and lotteries. For ments, etc. Under all circumstances, it is very important that the most of these categories, however, the taxpayer may opt for documentation be issued in compliance with the requirements taxation voluntarily, except in the case of banking and insur- according to the Swiss VAT law. The same applies to export ance turnover, as well as the renting of real estate exclusively for shipments, where a customs export certificate is required for tax private use. exemption.

100 Handbook for Investors 2012 10.5.8 International business activity 10.5.9 Non-resident enterprises The basic VAT rules described above have the following effect in Foreign businesses supplying goods or certain services to or the case of a Swiss trading company that buys products from a within Switzerland wishing to waive the exemption from tax liability foreign manufacturing company and sells them to customers in or with corresponding sales revenues in excess of the threshold a third country, shipping the products directly to those customers: stated in chapter 10.5.1 are generally required to appoint an authorized VAT representative based in Switzerland. Such entrepre- Fig. 51: International business activity neurs may claim input VAT directly. Non-resident entrepreneurs without taxable activities in Switzerland are entitled to a refund of DE * CH * IT Swiss VAT if their foreign activities would qualify as taxable turnover under Swiss VAT law and if the country of residence grants reciprocal treatment to Swiss entrepreneurs (VAT refund).

Freight forwarder

Invoice Goods delivery

* Foreign sales not subject to Swiss VAT

Handbook for Investors 2012 101 10.6 Other taxes. Swiss securities dealers are defined as any persons professionally engaged in buying or selling securities for their own account 10.6.1 Stamp taxes or for another person, including Swiss banks and other Swiss Generally, the tax liability arises on special legal transactions such bank-like institutions. Furthermore, companies holding taxable as the issuance of shares (issuance stamp tax also known as securities whose book values exceed CHF 10 million and remote capital duty) or the trading of securities (securities transfer stamp members of a Swiss stock exchange with regard to Swiss titles tax). which are quoted on the Swiss stock exchange are considered Swiss securities dealers. The tax on the issuance and the increase of equity of Swiss corporations is 1 % on the fair market value of the amount con- 10.6.2 Real estate taxes tributed, with an exemption on the first CHF 1 million of capital Capital gains on Swiss immovable property are either subject to paid in, whether it is made in an initial or subsequent contribu- a special cantonal real estate gains tax or to ordinary corporate tion. Issuance stamp tax is further levied in respect of some debt income tax depending on the system that is applied in the canton instruments such as bonds and money market papers at a rate where the immovable property is located. The right to tax such of 0.06 % or 0.12 % on the nominal value of such instruments for gains is reserved to the cantons and communes. each year or part thereof up to maturity of such instrument. Spe- cial rules apply for instruments that run for less than a year. Furthermore, in most cantons the transfer of real estate is subject to a conveyance tax, whereas on the federal level no taxes of The transfer of Swiss and foreign securities in which a Swiss such kind are levied. As a general rule, conveyance tax is as- securities dealer participates as a contracting party or as an sessed on the purchase price or the taxable value of the real intermediary is subject to Swiss securities transfer stamp tax estate and is typically paid by the purchaser of the real estate. (often called «securities turnover tax»). Depending on the issuer’s Depending on the canton, the applicable tax rate varies between residence (Switzerland or foreign country), the tax rate is 0.15 % 1 % and 3 %. or 0.3 % and is calculated on the consideration of the securities traded. Moreover, about half of the cantons levy a special wealth tax on real estate. This tax is due every year in addition to the general wealth tax. The tax is levied at the place where the property is situated and is assessed on the market or taxable value of the real estate without allowing for deduction of debts. The tax rates applied range between 0.03 % and 0.3 %.

102 Handbook for Investors 2012 10.7 Double taxation treaty 10.8 Transfer pricing rules. network. According to Swiss tax law, transactions between group compa- To minimize the effect of double taxation in Switzerland and nies must be at arm’s length. Switzerland does not have sepa- abroad, Switzerland has concluded tax treaties covering direct in- rate transfer pricing legislation and does not plan to enact such come taxes with all important industrial countries and many other legislation in the near future. Instead, the Swiss tax authorities countries. Most of these treaties are patterned on the principles of follow the transfer pricing guidelines of the OECD to determine the OECD model convention, which defines where the income or if a transaction between related parties is at arm’s length. In the assets are to be taxed and also describes the method for the Switzerland, no specific documentation requirements for transfer elimination of double taxation. Switzerland adopted the tax ex- pricing purposes must be observed. A company doing business emption method, exempting income allocable to a foreign country in Switzerland should however have the appropriate documenta- from taxation in Switzerland. Such income and net worth is only tion on file verifying the arm’s-length nature of transactions with considered for calculating the applicable tax rate (progression). related parties. On certain income streams (dividend, interest and license fees) both states, the state in which the income is earned and the state of the recipient’s residence, are entitled to tax them. However, the Federal Department of Finance FDF double tax treaty limits the right of taxation of the source state, and the source tax can be credited against the tax levied in the www.efd.admin.ch recipient’s state of residence. To date, more than 70 tax treaties Languages: German, English, French, Italian are in effect, plus also the EU bilateral agreements as of July 1, 2005. As Swiss tax treaties are treated as international conven- tions, they generally supersede federal as well as cantonal/municipal tax rules.

Swiss double tax treaties apply to persons (individuals or companies) who are resident in one or both of the contracting states. As already mentioned in chapter 10.3.5, Swiss residents applying for lump-sum taxation generally qualify for treaty relief as well. However, some treaties provide for special conditions to be met in order to benefit from the treaty applied.

Apart from the tax treaties covering direct income taxes, Switzer- land also concluded a few tax treaties in the area of inheritance and estate tax. Switzerland has not negotiated any double tax treaties concerning gift taxes so far. Furthermore, there are some special treaties relating to cross-border commuters, taxation of international air and transport, and the tax situation of international organizations and their staff.

Handbook for Investors 2012 103 11. Infrastructure.

Switzerland is closely integrated into the European trans- Federal Department of the Environment, Transport, Energy portation infrastructure thanks to a dense network of road, and Communications DETEC rail and air connections. Frequent and reliable connections guarantee the smooth and efficient transport of passengers www.uvek.admin.ch and goods. The supply of energy, water, communications Languages: German, English, French, Italian services and postal services is guaranteed at all times. A well-developed healthcare system ensures that the population has access to medical care without having to travel long distances. 11.1 Transport.

Fig. 52: Quality of the infrastructure, 2011 The Swiss economy is supported by an excellent distribution infra- 1 = underdeveloped, 7 = comprehensive and efficient structure for supplying goods and services. With 1.7 km of roads 1 Switzerland 6.7 per square kilometer, Switzerland is one of the continent’s most 2 Singapore 6.6 densely developed countries for motorized transport. Neverthe- 3 France 6.5 less, Switzerland is rightly known as a railway country, particularly 4 Hong Kong SAR 6.5 as the national railway network has a length three times that of the 5 Denmark 6.4 highway network. 10 Germany 6.2 13 Japan 6.0 The Swiss government’s transport policy is primarily aimed at 14 Netherlands 6.0 improving the country’s attractiveness as a business location and 16 Luxemburg 5.9 managing increasing mobility in an environmentally compatible 17 Belgium 5.9 manner. 24 USA 5.7 28 Great Britain 5.6 53 Ireland 4.6 11.1.1 Road network 69 China 4.2 Switzerland’s highway network is one of the densest in the world. 79 Italy 4.0 There are currently 1,790 km (1,112 miles) of national highways 86 India 3.8 in operation, providing access to all parts of the country. The 100 Russia 3.6 high proportion of tunnels is remarkable: today 220 tunnels are 104 Brazil 3.6 in operation covering a total length of 220 km (about 136 miles). Source: World Economic Forum, The Global Competitiveness Report 2011 – 2012 Every eighth kilometer runs underground. When finished, the

104 Handbook for Investors 2012 currently planned national road network should comprise a total of 1,892.5 km (1175 miles) and more than 270 tunnels with a total Customs information on performance-related heavy length of 290 km (180 miles). The main section of the national transport fees road network, which has not yet been completed, is intended to be finished by 2015. At least three-quarters of the Swiss highway www.ezv.admin.ch > Information for companies > Taxes and system consists of four-lane divided superhighways. The national duties highways are also major international transport routes. The con- Languages: German, English, French, Italian nection between Germany and Italy through the Gotthard Tunnel is of critical importance in Europe. 11.1.2 Rail In order to use Switzerland’s superhighways (Autobahns), every Because of the punctuality and reliability of their public transport domestic and foreign motor vehicle weighing up to 3.5 metric systems, the Swiss are the most frequent rail travelers in all of Eu- tons must have a special highway sticker or «vignette» (currently rope. Every day, 9,000 trains run on the 3,000-km (1,865-mile) rail CHF 40). The sticker is valid for a calendar year and can be network operated by SBB (Swiss Federal Railways). In addition to purchased at customs and post offices, gas stations and highway SBB, there are a number of private railway companies in Switzer- rest stations. No special tunnel fees are charged for using the land that operate on tracks covering somewhat more than 2,000 Gotthard and San Bernardino transalpine tunnels. km (almost 1,250 miles). In spite of the fact that this rail network has the highest capacity utilization in Europe, the trains are very A performance-related vehicle fee (LSVA) is levied on domestic punctual. In 2010, 87 % of passenger trains arrived at their desti- and foreign trucks (motorized vehicles with a total weight of more nation within three minutes of the scheduled arrival time. In order than 3.5 tonnes, which are intended for goods transportation). In to protect the population and the environment, more and more addition to the total weight, the fee depends on the respective freight traffic will be moved from road to rail in the future. emissions category (Euro 0 – II) and the kilometers driven in Swit- zerland and the Principality of Liechtenstein. For the most-used Three major rail projects now underway will provide important transit routes from the German to Italian border (around 300 km benefits to Switzerland and Europe over the medium and long [186 miles] from Basel to Chiasso), 40 tonne trucks pay a fee of term. They will increase transport capacities, reduce passenger CHF 270 to 370 depending on the emission category. In addition and freight traffic on roads and highways, and help protect and a night (10:00 pm – 5:00 am) and Sunday driving ban applies to preserve the ecologically sensitive Alpine region. trucks. • Rail 2000: This is a largely completed rail project with the main aim of offering faster and more direct rail connections all over Switzerland. It comprises an increase in frequency as well Federal Roads Office as the building of new infrastructure. This then allows long- distance trains to run every half hour in Switzerland’s central re- www.astra.admin.ch gion (Mittelland), and optimizes the connections between major Languages: German, English, French, Italian centers. As per the end of 2010 only around 13 partial projects remain, which should be finished completely by 2018. • AlpTransit or NRLA Project: The new Lötschberg and Gotthard transalpine lines are designed to provide new, fast north-south Cantonal Road Transport Offices connections and facilitate substantial expansion of capacity and services. 42 passenger trains pass through the Lötschberg www.strassenverkehrsamt.ch base tunnel, completed in 2007, which is 34 km (21 miles) Languages: (depending on the respective Canton) long, every day at speeds of up to 250 km/h (155 mph). This brings both Valais as well as Northern Italy closer to the center of Switzerland. You can now get to Milan from Berne in less than 2 ¾ hours. As for freight transport, the new Lötschberg base route helps meet a key goal of Swiss transport policy,

Handbook for Investors 2012 105 which is to transfer transalpine freight traffic from road to rail. volume in the same period totaled 411,035 tons. The airport cur- It permits a substantial increase in transport capacities, and rently serves 166 destinations on four continents and 55 coun- the larger tunnel cross-sections allow heavier freight trains to tries. Most of the fights (66 %) connect Switzerland with Europe, pass through (shuttle profile). The AlpTransit or NRLA project while 34 % are intercontinental fights. The intercontinental fights («New Rail Link through the Alps») is being built in stages. connect Zurich with 56 cities in 28 countries in North and South The Gotthard base tunnel, which is expected to be opened America, the Middle East, Far East and Africa. in 2015/2016, will be the longest tunnel in the world at 57 km (over 35 miles). The two other international airports in Switzerland – Geneva and • Link to the European high-speed rail network: Connection Euro-Airport Basel – also have a large number of connections to to the European high-speed rail network (TGV and ICE) will key European business centers and holiday destinations and a make Switzerland the most important hub in Europe’s future number of direct flights to overseas destinations. Geneva handled high-speed network. The Swiss government will invest a total 11.9 million passengers and 61,079 metric tons of freight in 2010. of CHF 1,090 million (2003 prices) in the rail network by the The corresponding figures for Basel were 4.1 million passengers end of 2015 in order to provide better connections with the and 43,654 metric tons of freight. European high-speed network. This will shorten travel times from Switzerland to Paris, Lyon, Munich, Ulm and Stuttgart. The fact that the three international airports are located in border areas only a short distance away from neighboring countries facilitates international trade to and from the EU area through Swiss Federal Railways (SBB) Switzerland. Air freight is an important freight transport option for exporting companies in these regions. The most important export www.sbb.ch products include specialty chemical and pharmaceutical prod- Languages: German, English, French, Italian ucts, high-tech products, automotive components and perish- able goods. Three-quarters of Swiss airfreight is processed at the cargo hub in Zurich. But the two other international airports, Geneva and Euro-Airport Basel, are also becoming increasingly Federal Office of Transport FOT important freight support points, particularly for express and courier services. The world’s leading express, package and courier www.bav.admin.ch services have posted steady growth in volume. Languages: German, English, French, Italian The Berne, Lugano and St. Gallen-Altenrhein regional airports also offer attractive scheduled flights to European destinations on 11.1.3 Air a daily basis. Sion and St. Moritz-Samedan have seasonal busi- Zurich airport is one of the most important transport hubs in ness connections that are not only important for tourism but save Europe. Passengers appreciate the excellent standard of service time for the entire service sector. at this airport. This is confirmed by its high ranking in the annual airport rankings. Zurich airport, for example, has already received the World Travel Award as Europe’s leading airport for Overview of air travel the seventh time for its user-friendliness and quality standard. In the renowned Airport Service Quality (ASQ) Award, Zurich airport www.swissworld.org > Economy > Transport > Air travel was awarded third place behind Malta and Porto. The surveyed Languages: German, English, French, Italian, Spanish, Russian, travelers particularly appreciated the pleasant atmosphere and Chinese, Japanese the friendly personnel. For its extensive and systematic environmental management system, Zurich airport also received the Eco-Innovation Award for the first time. Zurich airport was also the first airport to introduce emission-dependent landing fees. In 2010 around 22.8 million passengers used the airport. The freight

106 Handbook for Investors 2012 Fig. 53: Direct air connections: Intercontinental from Zurich (ZRH) and Geneva (GVA), 2009, on at least five days per week; in brackets: airport: number of flights daily; flight duration

19 22 32 20 17 31 18 21 2425 23 26 30 27 28 1 Montreal (GVA: 1; 8:05h; 29 ZRH: 1; 8:10h) 16 2 Toronto (GVA: 1; 11:05h; 15 ZRH: 2; 8:50h) 3 Chicago (ZRH: 1; 9:40h) 4 Philadelphia (ZRH: 1; 9:05h) 5 New York Newark (GVA: 1; 8:45h; ZRH: 2; 9:05h) 12 São Paulo (ZRH: 1; 12:00h) 21 Doha (GVA: 1; 6:10h; 6 New York JFK 13 Johannesburg (ZRH: 1; 10:25h) ZRH: 1; 6:00h) (GVA: 1; 8:35h; ZRH: 3; 8:40h) 14 Casablanca (GVA: 1; 2:50h) 22 Beirut (GVA: 1; 3:50h) 7 Boston (ZRH: 1; 8:15h) 15 Dar es Salaam (ZRH: 1; 9:40h) 23 Abu Dhabi (GVA: 1; 6:25h) 8 Washington (GVA: 1; 9:12h; 16 Nairobi (ZRH: 1; 7:40h) 24 Dubai (GVA: 1; 4:00; 28 Bangkok (ZRH: 2; 11:00h) ZRH: 1; 9:10h) 17 Cairo (GVA: 1; 4:05h; ZRH: 1; 3:55h) ZRH: 3; 6:05h) 29 Singapore (ZRH: 3; 12:05h) 9 Atlanta (ZRH: 1; 10:25h) 18 Marrakesh (GVA: 1; 3:15h) 25 Muskat (ZRH: 1; 7:50h) 30 Hong Kong (ZRH: 1; 11:55h) 10 Miami (ZRH: 1; 10:25h) 19 Tunis (GVA: 1;1:55h) 26 Delhi (ZRH: 1; 7:45h) 31 Shanghai (ZRH: 1; 11:30h) 11 Los Angeles (ZRH: 1; 12:30h) 20 Tel Aviv (GVA: 1; 4:00h) 27 Mumbai (ZRH: 1; 8:15h) 32 Tokyo (ZRH: 1; 11:50h)

Federal Office of Civil Aviation FOCA Zurich Airport

www.aviation.admin.ch www.flughafen-zuerich.ch Languages: German, English, French, Italian Languages: German, English, French

Swiss International Airlines Geneva Airport

www.swiss.com www.gva.ch Languages: German, English, French, Italian Languages: German, English, French

Handbook for Investors 2012 107 Fig. 54: National and regional airports in Switzerland EuroAirport Basel

www.euroairport.com Languages: German, English, French

For international corporations, the ability to schedule business fights at short notice is becoming more and more critical. In addition to the national airports, there are also regional airports throughout the country set up to handle business aviation, and most of them are suitable for smaller jets (10 regional airfields). The modern infrastructure of these airports is designed for business travelers, offering either customs clearance or allowing authorized cross-border travel by persons from the areas covered Source: Federal Office for Civil Aviation (FOCA) by the Schengen Agreement (the Schengen Area). In Switzerland there are countless providers of business flights which have their own offices at larger airports and airfields. The offers range from 11.2 Energy. charter planes to the use of pooled planes. Switzerland has a reliable and secure nationwide energy supply system. Petroleum products accounted for 44.8 % of gross Aerosuisse (Swiss aerospace umbrella organization) energy consumption in Switzerland in 2010. Nuclear power plants supplied 23.1 % of the nation’s energy, and 11.3 % were pro- www.aerosuisse.ch duced using hydropower. Gas also plays a relatively significant Languages: German, French role, supplying 10.6 % of the energy requirements in 2010. Elec-

tricity accounted for 24 % %5% of final consumption and was generated for the most part in Switzerland. Compared to the neighbor-

ing countries, Switzerland has a practically CO2-free production Aircraft Owners and Pilots Association Switzerland mix. The most important power suppliers in Switzerland are hydro power plants (2010: 56.5 %) and atomic power plants (2010: www.aopa.ch 38 %). Compared to other countries, Switzerland thereby has an Languages: German, French attractive energy mix at relatively low production costs, which are not directly linked to the price of oil and gas. Switzerland’s integration into the interconnected European energy system ensures that the entire country is supplied with electricity, even during periods of particularly high power consumption. This also applies to the other forms of energy, such as natural gas and petroleum. There is an extensive network of gasoline stations that provide fuel for motor vehicles: over 3,600 for gasoline and diesel as well as over 120 for natural and biogas. Within the scope of Swiss environmental policy, mineral oil taxes are levied on gasoline and diesel (approx. 75 rappen per liter), which are specially appropri- ated and largely flow back into road building (steering tax). To promote environmentally-friendly fuels, fuels from renewable sources (such as biogas, bioethanol, biodiesel, vegetable and animals oils) are partially or fully exempt from the mineral oil tax. The

108 Handbook for Investors 2012 taxation of natural and liquid gas, which are used as fuels, is also 11.3.1 Drinking water reduced. In addition there are voluntary private measures such The water that flows through all water pipes in Switzerland is so as the climate charges on fuels, with which reduction measures fresh and pure that it meets the purity requirements for mineral are financed domestically and abroad. Nevertheless, the price of water but is a thousand times cheaper. Even the water from gasoline, at CHF 1.69 per liter (2010) is comparatively moderate. public fountains can be drunk without hesitation. Only 2 % of annual precipitation is utilized for the drinking water supply. The Swiss electric power market is highly fragmented. Approxi- The Swiss population uses about 400 liters of water per capita mately 850 electric utility companies supply the country with per day in households, industry and commercial operations. electricity, including eight associated companies, and numerous Household consumption accounts for 160 liters of that amount small producers. Since 2009, large consumers (requiring more on average. Drinking water from water pipes costs on average than 100,000 kWh per year) are able to select the supplier of their about CHF 1.60 per thousand liters in Switzerland. At a daily cost choice (partial liberalization of the market). From 2014 this option of CHF 0.26 per person, the cost is just under CHF 0.80 per day is also intended for small companies and private consumers. for a 3-person household. Ground water from wells and springs accounts for 80 % of consumption, and the rest comes primarily from lakes. Federal Office for Energy BFE

www.bfe.admin.ch Drinking water Languages: German, English, French, Italian www.trinkwasser.ch Languages: German, French, Italian

Large-Scale Power Consumer Group (Gruppe Grosser Stromkunden) 11.3.2 Waste water disposal and water pollution control www.stromkunden.ch Switzerland’s role as the «moated castle of Europe» means that Language: German Switzerland is obligated to make special efforts in the area of water pollution control. Purification of waste water is a necessary requirement for maintaining and preserving water ecosystems over the long term. Thanks to modern waste water purification 11.3 Water. technology, there is no health risk associated with swimming in Switzerland’s many lakes and rivers. The waste water from Switzerland is a country rich in water resources. 6 % of Europe’s households, industry, business and agriculture is piped to pu- fresh water supply is stored in the Swiss Alps. The Gotthard mas- rification systems through sewage pipes totaling 40,000 km to sif in the center of the Swiss Alps is a continental divide. From 50,000 km in length (about 25,000 to 31,000 miles). Today 97 % here the Rhine flows to the North Sea, the Rhone to the western of all Swiss households are connected to one of the country’s Mediterranean, the Ticino (Po) to the Adriatic Sea, and the Inn approx. 900 waste water treatment plants. (Danube) to the Black Sea. 11.4 Communication. Federal Office for the Environment (FOEN) – Water With 120 mobile phone subscriptions per 100 inhabitants, Swit- www.bafu.admin.ch > Topics > Water zerland was in the middle of the OECD comparison in 2009. How- Languages: German, English, French, Italian ever, since 2005 strong growth rates of 4% to 10% have been noted. After a somewhat restrained growth at first, the UMTS standard (“Universal Mobile Telecommunications System”) now also seems to be enjoying increasing popularity: the number of

Handbook for Investors 2012 109 customers with subscriptions who also have access to UMTS, is growing quickly and in 2009 was 59 % of subscription customers. Federal Office of Communications (OFCOM)

In 2010, 77 % of households in Switzerland had a broadband www.bakom.ch internet connection, whereby Switzerland was above the average Languages: German, English, French, Italian level of the European Union (61 %). To ensure that the further development of internet services and applications is possible, the speed and performance of the network has to be constantly increased. Consequently, the coordinated implementation of a IT companies – Indicators national optical fibre network – to which all residential and commercial buildings are connected – is being intensively promoted www.bfs.admin.ch > Topics > IT companies («Fibre to the Home»). Languages: German, French

This continually strong increase in the number of mobile phone users as well as the progress in internet technology have an effect on the development of infrastructure. In particular, for ex- Internet domain name registry (.ch, .li) ample, landline connections are increasingly being replaced with mobile phone connection – and albeit to a modest extent – by www.nic.ch VoIP phones. Languages: German, English, French, Italian

Fig. 55: Internet subscribers, 2010 Subscribers to high-speed Internet connections 11.5 Postal services. per 100 inhabitants Netherlands 38,1 Swiss Post serves the entire country (universal nationwide service). It Switzerland 38,1 is a byword for reliability, breaking European records again and again. Denmark 37,7 Norway 34,6 In recent years, the postal market has undergone fundamental Korea 34,0 changes. In addition to the government postal system, numer- France 33,7 ous private companies are now offering postal delivery services in Luxemburg 33,5 certain areas in which competition is allowed. The package delivery Great Britain 31,9 market (for packages over 1 kg) has been liberalized since 2004. Germany 31,9 Letters weighing more than 100 g can now be handled by private Sweden 31,8 postal services, provided that they have the required license. This Belgium 30,8 change occurred in April 2006. Swiss Post has maintained its Canada 30,7 monopoly only over delivery of domestic letters and letters from Finland 28,6 abroad weighing 50g or less. Further liberalization steps are cur- USA 27,7 rently not being taken, whereby full liberalization is being discussed. Japan 26,7 OECD 24,9 With more than 3,400 post office branches and agencies, the post Austria 23,9 office network is very dense. In an international comparison with Spain 23,4 DSL seven other European countries, Switzerland has the highest density Italy 22,1 Cable modem of post office branches per area and the smallest average distance Ireland 21,1 Optical fiber/LAN to the nearest post office branch. In addition, Swiss Post offers total Portugal 19,8 Other high-speed connection logistics solutions ranging from procurement through warehousing Source: OECD to information logistics, including cross-border service.

110 Handbook for Investors 2012 Fig. 56: Healthcare infrastructure, 2011 Swiss Post 1 = Does not meet society’s needs 10 = Meets society’s needs www.post.ch 1 Belgium 9.24 Languages: German, English, French, Italian 2 Switzerland 9.04 3 Austria 8.92 4 Iceland 8.53 11.6 Healthcare. 5 Germany 8.33 6 Denmark 8.23 7 France 8.17 11.6.1 Medical care 9 Singapore 8.08 Highly trained medical professionals, famous hospitals and top medical institutions help make the Swiss healthcare system 11 Luxemburg 8.04 among the best in the world. Approximately 11.4 % of gross 15 Netherlands 7.77 domestic product was spent on healthcare in 2010. A dense net- 16 Japan 7.68 work of hospitals, medical and dental practices, and pharmacies 22 Hong Kong SAR 6.90 ensures universal access to out-patient and in-patient care. Apart 24 Great Britain 6.74 from 121 (2010) general hospitals, there are 179 (2010) special- 27 Italy 6.38 ized clinics. Emergency medical care on the road (emergency 32 USA 6.00 services of hospitals) or by air (Swiss air-rescue service - Rega) 39 Ireland 4.43 is well developed and functions professionally. An organization 43 India 4.03 called Spitex provides residential medical care in one’s own 46 China 3.82 home. 53 Russia 2.77 55 Brazil 2.15

Source: IMD World Competitiveness Online 2011 Federal Office of Public Health

www.bag.admin.ch Languages: German, English, French, Italian Swiss Hospitals

www.hplus.ch Languages: German, French, Italian Swiss Red Cross

www.redcross.ch Languages: German, English, French, Italian Swiss Medical Association

www.fmh.ch Languages: German, French, Italian

Handbook for Investors 2012 111 Swiss Index of Doctors

www.medindex.ch Languages: German, French, Italian

Swiss Air-Rescue Service (Rega)

www.rega.ch Languages: German, English, French, Italian

Swiss Spitex Association

www.spitexch.ch Languages: German, French

11.6.2 Health insurance The basic health insurance that all persons residing in Switzerland are required to carry guarantees access to good medical care. It covers medical treatment in the event of illness and in the event of accidents if treatment is not covered by accident insurance (even in foreign countries in some cases). Health insurance is not government insurance but is offered by 94 private insurers (health insurance funds). Supplemental insurance is optional.

Overview of Health Insurance

www.bag.admin.ch > Topics > Health insurance Languages: German, English, French, Italian

112 Handbook for Investors 2012 12. Education and research.

For a country lacking in natural resources such as Switzerland, a well-educated work force and constant innovation are its Swiss Conference of Cantonal Ministers of Education (EDK) most important capital. The Swiss education and research policy is designed accordingly. Public schools, universities, www.edk.ch postgraduate studies and international private schools and Languages: German, English, French, Italian boarding schools are known worldwide for their quality. The federal structure of the country also ensures proximity of the business world and research institutions to the education system, as well as high quality. One special feature of Swiss The Swiss Education Server education is the dual training system: students have a choice between the traditional educational path at high schools and www.educa.ch universities, or trade and industrial vocations and careers in Languages: German, English, French, Italian the service sector, where they receive hands-on training on the job.

Educational statistics 12.1 Schooling and vocational training. www.bildungssystem.bfs.admin.ch Languages: German, French Under the Swiss system, the cantons are responsible for the quality and type of education (basic education, universities, universities of applied sciences) within their territory. Only the Swiss Federal Institutes of Technology are under federal direction. Various coordination bodies ensure that the education and instruction plans are harmonized among the cantons.

Handbook for Investors 2012 113 Fig. 57: Switzerland’s educational system

Source: EDK, CDIP, CDEP, CDPE, October 2011

114 Handbook for Investors 2012 12.1.1 Basic and further education schools enjoy a good reputation. In the 2009 OECD Program for Education begins at the kindergarten level at age five or six. International Student Assessments (PISA), Swiss students scored Primary school starts at age seven and runs through to grades higher than the average in OECD states, with the public schools four to six, followed by the lower secondary level, the name and achieving higher scores than the private schools. curriculum of which vary from canton to canton. Students attend a secondary school which corresponds to their personal level. The public schools not only provide an education, they also fulfill With the completion of the lower secondary level, students have an important integration function: children with different social, finished the nine compulsory school years. Students can then ei- linguistic and cultural backgrounds all attend the same schools. ther begin vocational training, attend high school to prepare them For Switzerland, a country with four national languages, multi- for university studies or earn a specialized diploma. lingual skills are extremely important. In addition to their mother tongue, children are taught a second national language and 95 % of students finish their mandatory education at the public English beginning in primary school. school where they reside; only 5 % attend private schools. Public Fig. 59: Public spending on education per head in US dollars, Fig. 58: Quality of the education system, 2011 2009 1 = does not meet the needs of the economy 1 Luxemburg 5,788 10 = meets the needs of the economy 2 Norway 4,712 1 Finland 8.39 3 Denmark 4,480 2 Switzerland 8.18 4 Sweden 3,592 3 Singapore 8.05 5 Switzerland 3,554 4 Canada 7.64 7 USA 3,050 5 Iceland 7.60 8 Netherlands 2,880 7 Belgium 7.55 9 Belgium 2,821 8 Denmark 7.44 10 Ireland 2,734 9 Ireland 7.22 11 Great Britain 2,730 12 France 2,684 10 Germany 6.97 19 Italy 1,787 14 Netherlands 6.68 20 Germany 1,778 15 New Zealand 6.66 21 Japan 1,678 16 Hong Kong SAR 6.56 26 Singapore 1,197 18 India 6.24 27 Hong Kong SAR 1,073 24 USA 6.56 41 Russia 413 25 Great Britain 5.45 42 Brazil 412 26 France 5.42 54 China 114 28 Japan 5.26 56 India 36 30 Luxemburg 5.13 36 Italy 4.69 Source: IMD World Competitiveness Online, 2011 47 China 4.10 51 Russia 3.43 58 Brazil 2.22 PISA study Source: IMD World Competitiveness Online, 2011 www.pisa.oecd.org Languages: German, English, French, Spanish

Handbook for Investors 2012 115 12.1.2 Vocational training Federal Office for Professional Education and Technology Basic vocational training begins after the completion of compul- OPET sory education. Great importance is placed on practical on-the- job training. Over three-quarters of all young people complete an www.bbt.admin.ch apprenticeship, which lasts three to four years and consists of Languages: German, English, French, Italian practical work in a company and theoretical studies at a vocational school. In addition, students are eligible to obtain professional certification, which entitles them to enter a university of Information of the Federal Department of Economic Affairs applied sciences where they can earn a Bachelor’s or, in some FDEA about education, research and innovation cases, a Master’s degree. Universities of applied sciences provide a tertiary level of education. 80 % of Swiss students continue www.evd.admin.ch > Topics > Education, Research their education once they have completed compulsory school- and Innovation ing, placing Switzerland near the top of all OECD countries with Languages: German, English, French, Italian regard to further education.

This dual system ensures that businesses have a choice of well- qualified and practically trained employees in a given industry. Swiss education system The rate of unemployment among young people is approximately half as high as in Germany, Sweden and the United States. It is www.swissworld.org > Education important to note that vocational training as a foundation of the Languages: German, English, French, Italian, Spanish, Russian, Swiss school system does not reduce the importance of scientific Chinese, Japanese subjects in education.

Professional education and training play an important role in Switzerland. Higher specialist and professional training courses are Choice of profession, field of studies, career conducted with the approval of the federal authorities and professional associations. Successful completion of these courses leads www.berufsberatung.ch to a Swiss federal vocational certificate or diploma. In Switzerland Languages: German, French, Italian there are over 100 federally recognized schools offering professional college degree programs, the majority of which are engineering colleges. These schools teach qualifications that often are learned only at universities in other countries. Vocational degrees 12.2 Further education. are mutually recognized through bilateral agreements between Switzerland and the EU. Continuing education plays an important role in Switzerland. Public institutions such as universities or universities of applied sciences offer post-graduate programs and courses on various specialized topics which are open to everyone, not just graduates. Non-students can also sign up to sit in on regular courses. Adult education courses are publicly subsidized and open to everyone. There is also a wide variety of courses offered by private schools – from language courses to yoga to management courses.

116 Handbook for Investors 2012 In the 2010/2011 autumn semester, around 131,000 students Overview of schools and courses were enrolled in these twelve universities, 50 % of whom were female and 27 % were foreign students. This is one of the highest www.weiterbildung.ch percentages of international students worldwide. At 48 % (2009), www.ausbildung-weiterbildung.ch the number of foreign professors is also comparatively high, and www.seminare.ch has been rising since 2002, underlining the international aspect of Language: German Swiss universities.

There is a very wide range of subjects of study offered at Swiss universities. With the exception of medicine, there are no specific Association of Swiss Adult Education Centers restrictions on admission. For a Bachelor’s/Master’s degree, foreign students must meet the language requirements and some www.up-vhs.ch universities require students to pass an admissions exam. Tuition Languages: German, French fees for international students are also very reasonable. In addition to tuition, between CHF 18,000 and CHF 28,000 a year are required for living expenses, depending on the city and personal needs. As a result of the Bologna Accords, which aim to create 12.3 Universities and colleges. a European higher education area, all Swiss universities have converted all courses of study to the Bachelor’s/Master’s system. 12.3.1 Universities and technical colleges Within the scope of this reform, courses of study are increasingly offered partially or fully in English (esp. Master’s courses). Swit- Fig. 60: Swiss higher-education landscape zerland participates in international student exchange programs such as ERASMUS, making it possible for foreign students to study at a Swiss university for a semester.

Swiss universities have earned high praise worldwide for their curricula and fields of research in certain areas of specialization in various degree subjects. The two federal institutes of technology in Zurich (ETHZ) and Lausanne (EPFL) work together with the international research community to conduct cutting-edge research. They strive to attract world-renowned scientists. Swiss universities regularly rank among the top 100 universities worldwide and even higher in Europe, while some of the institutes are part of the world elite. Swiss colleges and universities are also involved in international research programs – particularly the EU Framework Program for Research and Technological Develop- Source: SER State Secretariat for Education and Research ment – and offer postgraduate studies (e.g. in cooperation with foreign academic institutions). In Switzerland there are ten cantonal universities at which the main language of instruction is either German (Basel, Berne, Zurich, Lucerne, St. Gallen), French (Geneva, Lausanne Neuchâ- tel), Italian (Lugano) or German and French (Fribourg). There is a Swiss Federal Institute of Technology in Lausanne (French) and one in Zurich (German).

Handbook for Investors 2012 117 Fig. 61: Tuition fees in CHF per year (2011/12)

Federal Federal Univer- Univer- Univer- Univer- Univer- Univer- Univer- Univer- Univer- Univer- Institute Institute sity of sity of sity of sity of sity of sity of sity of sity of St. sity of sity of of Tech- of Tech- Basel Berne Fribourg Geneva Lausanne Lucerne Neuchâ- Gallen Zurich Lugano nology nology tel (Lugano, Lausanne Zurich Mendri- sio) Swiss students 1,266 1,288 1,400 1,310 1,224 1,000 1,160 1,570 1,030 2,040 1,378 4,000 Additional fees for – – – – 300 – – – 550 300 200 4,000 international students Total international 1,266 1,288 1,400 1,310 1,524 1,000 1,160 1,570 1,580 2,340 1,578 8,000 students

Source: CRUS Rectors’ Conference of the Swiss Universities

Overview of universities Studying in Switzerland

www.ch.ch > Individuals > Education and Research > University www.crus.ch Languages: German, English, French, Italian Languages: German, English, French, Italian

12.3.2 Universities of applied sciences State Secretariat for Education and Research Universities of applied sciences offer practical training at the Bachelor’s and Master’s level for professionals, most of whom www.sbf.admin.ch have professional certification and have already gathered experi- Languages: German, English, French, Italian ence in their trade. In addition to normal teaching, these universities conduct research and development projects with private companies, in particular smaller and medium-sized companies, and provide advanced training courses to local enterprises. University rankings

www.universityrankings.ch Overview of universities of applied sciences Languages: German, English, French www.bbt.admin.ch > Universities of Applied Sciences Languages: German, English, French, Italian

Swiss University Continuing Education Association As a result, universities of applied sciences have partial respon- www.swissuni.ch sibility for regional science and technology transfer and therefore Languages: German, English, French, Italian are in continuous interaction with the industry. They have a large pool of teaching, research, development and services competence which is strongly geared to clients, markets and practice. In their role as research institutes, they are supported at the national Information for foreign students level by the CTI Commission for Technology and Innovation and the Swiss Federal Institutes of Technology and universities. www.swissuniversity.ch Language: English

118 Handbook for Investors 2012 12.3.3 Executive MBA program (EMBA) A special type of further education is the Executive MBA program, Programs at Swiss universities which is aimed at managers with many years of experience under their belt. Generally, EMBA courses are work-study programs that www.swissuniversity.ch are based on a module system. Most of the degree programs Language: English also include time studying abroad in addition to the courses in Switzerland. IMD in Lausanne is a prime example of a top Swiss school whose EMBA program is regularly ranked as one of the best in the world. The program at the University of St. Gallen is Economist ranking also in the top 50 in the world. www.economist.com/whichmba Fig. 62: Executive MBA: the top schools Language: English

School Location Homepage IMD Lausanne (Switzerland), www.imd.ch/programs/ Europe (Ireland, Roma- emba nia), Shanghai (China), English Silicon Valley (USA) Financial Times ranking Omnium Alliance Brazil, China, India, www.omniumgemba. (University of St. Gallen, Canada, Switzerland com, www.gemba. www.rankings.ft.com > MBA/EMBA University of Toronto, unisg.ch partner schools) English Language: English University of St. Gallen St. Gallen (Switzerland), www.emba.unisg.ch Hungary, China, Brazil German University of Zurich Zurich (Switzerland), www.emba.uzh.ch Yale (USA), Shanghai German (China), Hyderabad 12.4 International private schools (India) Rochester-Berne/Uni- Berne (Switzerland), www.executive-mba.ch and boarding schools. versity of Berne, Univer- Rochester (USA), English sity of Rochester Shanghai (China) The Swiss education system also includes private schools. There GSBA Zurich, University North America, Europe www.gsba.ch/mba are more than 260 private schools that teach courses in one of of Maryland and Asia German, English the three national languages of German, French and Italian or ZfU International Busi- Zurich, Boston (USA) www.zfu.ch/weiterbil- ness School dung/masters in English (and some also offer other languages) to more than German 100,000 students. Above all, international schools are important for employees of foreign companies, who often only stay in Switzerland for a short MBA/EMBA programs in Switzerland time. There, children receive a suitable education in their native language or an international education and are prepared for the www.find-mba.com/switzerland school leaving certificates valid in their home country, such as the Language: English Abitur, Baccalauréat or US University Admission Certificate. There is a suitable institute in every region and all big cities. The school fees are average compared to other countries.

Swiss Education Portal

www.ausbildung-weiterbildung.ch Language: German

Handbook for Investors 2012 119 Fig. 63: School fees for international private schools English School French School German School City Annual tuition – Annual tuition – Annual tuition – Annual tuition – Annual tuition – Annual tuition – Primary Secondary Primary Secondary Primary Secondary Ljubljana 8,483* 9,068* 6,455 9,898 n.a. n.a. Dublin 17,256* 20,677* 4,901 7,298 6,340 5,960 Barcelona 13,568 14,765 5,852 6,291 6,276 6,419 Singapore 21,981 27,009 14,225 15,961 12,153 14,026 Budapest 20,923 21,939 6,921 8,189 4,662 4,662 Milan 17,120 19,386 5,510 6,920 7,531 7,531 Geneva 26,292 35,384* 17,897 21,707 15,176 15,176 Vienna 17,190* 21,826* 6,039 6,039 n.a. n.a. Frankfurt 20,548* 22,312* 4,891 5,967 n.a. n.a. Amsterdam 19,847 21,103 7,007 11,028 9,467 9,467 Paris 27,162 31,665 6,562 6,606 10,027 10,027 New York 34,500 36,750 21,470 24,450 17,000 17,000 London 20,936 22,134 7,701 7,701 8,873 8,873 Brussels 32,346 39,375 6,380 7,805 12,580 14,258

* No English school available; data is based on the international school. Source: Mercer, Cost-of-Living Report, September 2011, www.mercer.com

Swiss boarding schools are not just known for their high level 12.5 Research and development. of education, but also for their strict discipline and international student body. Often they have very selective acceptance criteria 12.5.1 Swiss research industry and are known for their elite standing in the world. The faster the pace of technological change, the greater the role that research and development play in the economy of a country. Switzerland is a country with intensive research activities. It spent Private school registry of Switzerland over 3 % of its GDP on research and development in 2008. Since 1996 the real rate of change is 4.1 % as an annual average and is www.swissprivateschoolregister.com thereby higher than the annual average economic growth during Languages: German, English, French, Italian the same period (2.1 %). All relevant indicators position Switzer- land in the top ranks of international comparisons.

Of the total CHF 16.3 billion spent on research and development Association of Swiss Private Schools (VSP) in 2008, 73 % was financed by the private sector (approx. CHF 12 billion). The pharmaceuticals industry (CHF 4.6 billion) and the www.swiss-schools.ch machine industry (CHF 1.4 billion) have the highest expenditure. Languages: German, English, French, Italian, Spanish The combined R&D expenses of all universities and research institutes amounted to CHF 9 billion in 2008, which was nearly one-quarter of total Swiss expenditure. In 2008 around 62,000 people were involved in research, nearly 40,000 of whom work in Swiss Group of International Schools the private sector.

www.sgischools.com Language: English

120 Handbook for Investors 2012 Fig. 64: Total per capita expenditure for research and Fig. 65: Nobel prizes per million inhabitants, 2010 development in USD, 2009 1 Switzerland 1,953 1 Switzerland 1.53 2 Luxemburg 1,801 2 Norway 1.23 3 Finland 1,766 3 Sweden 0.97 4 Denmark 1,694 4 Great Britain 0.92 5 Sweden 1,586 5 USA 0.84 8 Japan 1,316 6 Denmark 0.72 9 USA 1,307 8 Netherlands 0.48 11 Germany 1,149 9 Germany 0.37 14 France 936 13 Belgium 0.28 15 Netherlands 886 14 France 0.27 16 Ireland 878 15 Ireland 0.22 17 Belgium 860 17 Hong Kong SAR 0.14 18 Singapore 833 19 Japan 0.09 20 Great Britain 658 21 Italy 0.08 23 Italy 448 22 Russia 0.07 30 Hong Kong SAR 236 25 China 0.00 36 Russia 108 26 India 0.00 37 Brazil 102 27 Brazil 0.00 42 China 64 27 Luxemburg 0.00 54 India 9 27 Singapore 0.00 Source: IMD World Competitiveness Online 2011 Source: IMD World Competitiveness Online 2011

Government funding is provided principally for basic research. The CTI Commission for Technology and Innovation can make The private sector and the scientific community work closely significant financial contributions to research and development together. Each institute at the university and college level has projects in which companies cooperate with non-profit research a coordination office for cooperation with the private sector. organizations.

Fig. 66: Research institutions in Switzerland Institution Location Website CERN European Organization for Nuclear Research Geneva www.cern.ch English, French EAWAG Swiss Federal Institute of Aquatic Science and Technology Dübendorf (ZH), www.eawag.ch Kastanienbaum (LU) German, English, French EMPA Materials Science and Technology Research Institution Thun (BE), Dübendorf (ZH), www.empa.ch St. Gallen German, English, French PSI Paul Scherrer Institute Villigen (AG) www.psi.ch German, English, French SLF WSL Institute for Snow and Avalanche Research Davos (GR) www.slf.ch German, English, French, Italian The Graduate The Graduate Institute of International and Development Geneva www.graduateinstitute.ch Institute Studies English, French WSL Swiss Federal Institute for Forest, Snow and Landscape Birmensdorf (ZH), www.wsl.ch Research Bellinzona (TI) German, English, French, Italian

Source: Swiss National Science Foundation

Handbook for Investors 2012 121 12.5.2 International research and development cooperation State Secretariat for Education and Research SER The Swiss private sector has a keen interest in research cooperation with partners abroad, particularly from the EU. Research and www.sbf.admin.ch > Topics > Research development cooperation with innovative foreign partners also Languages: German, English, French, Italian allows smaller companies access to know-how from which they can benefit. The bilateral agreements with the EU create even more favorable conditions for this type of cooperation and allow Switzerland to participate fully in all programs and activities of the Innovation promotion agency EU’s Framework Research Programs.

www.kti-cti.ch Languages: German, English, French, Italian International research and development cooperation

www.snf.ch > International Languages: German, English, French, Italian Swiss National Science Foundation

www.snf.ch Swiss international cooperation in education, research and Languages: German, English, French technology

www.sbf.admin.ch > Topics > International cooperation Languages: German, English, French, Italian Promotion of science

www.ch.ch > Individuals > Education and Research > Promotion of science Languages: German, English, French, Italian

Swiss Portal for Research and Innovation

www.myscience.ch Languages: German, English, French

122 Handbook for Investors 2012 13. Living in Switzerland.

Thanks to the excellent quality of life and the safe environ- Fig. 67: Global comparison of quality of living, 2010 ment, life expectancy in Switzerland is among the highest in New York, USA = 100 the world. The undamaged natural surroundings and varied 1 Vienna. Austria 108.6 cultural and recreational opportunities attract not only many 2 Zurich. Switzerland 108.0 tourists but also qualified foreign employees. Swiss house- 3 Geneva. Switzerland 107.9 holds have an average monthly earned income of CHF 6,956, 4 Vancouver. Canada 107.4 of which about 70 % remains as disposable income for 4 Auckland. New Zealand 107.4 consumption after deduction of social security contributions 6 Dusseldorf. Germany 107.2 7 Frankfurt. Germany 107.0 and taxes. Switzerland therefore has the highest purchasing 7 Munich. Germany 107.0 power in the world, despite relatively high prices. 9 Berne. Switzerland 106.5 10 Sydney. Australia 106.3 11 Copenhagen. Denmark 106.2 13.1 Safety and quality of life. 13 Amsterdam. Netherlands 105.7 15 Brussels. Belgium 105.4 Switzerland is a very safe country and offers an extremely high 17 Berlin. Germany 105.0 quality of life. Switzerland receives high marks, in both cities and 19 Luxemburg. Luxemburg 104.6 rural regions, for important criteria such as income, healthcare, 26 Dublin. Ireland 103.6 climate and geography, political stability, safety and security, 28 Singapore. Singapore 103.5 individual freedoms, and family and community life. 34 Paris. France 102.9 39 London. Great Britain 101.6 40 Tokyo. Japan 101.4 Everyone is guaranteed freedom of movement and safety – 49 New York. USA 100.0 everywhere and at all times. There are relatively few large population centers or extensive monotonous and impersonal housing Source: Mercer Survey, Quality of Living Global City Rankings, 2010 developments. Children generally walk to school unaccompanied. The safe environment and the traditional discretion of the Swiss people are widely valued. Even internationally known celebrities can often move about in Switzerland without personal protection.

Handbook for Investors 2012 123 Fig. 68: Personal safety and property rights, 2011 Fig. 69: Attractiveness for highly qualified employees from foreign 1 = low, 10 = high countries, 2011 1 Denmark 9.3 1 = not attractive, 10 = very attractive 2 Austria 9.2 1 Switzerland 9.0 3 Finland 9.2 2 USA 8.4 4 Switzerland 9.1 3 Singapore 8.1 5 Germany 9.0 4 Australia 8.1 7 Hong Kong SAR 8.9 5 Qatar 7.8 9 Singapore 8.8 6 Great Britain 7.7 11 Japan 8.6 7 Hong Kong SAR 7.6 12 Netherlands 8.6 10 Luxemburg 7.4 13 Luxemburg 8.5 14 Netherlands 6.4 17 Ireland 8.3 15 Ireland 6.3 20 USA 8.2 16 China 6.3 23 Great Britain 7.8 18 Brazil 5.9 24 Belgium 7.8 19 India 5.9 27 France 7.5 23 Russia 5.5 34 India 6.7 24 Belgium 5.4 37 Italy 6.4 35 France 5.0 46 China 5.0 36 Germany 5.0 51 Brazil 4.7 41 Denmark 4.5 58 Russia 1.8 44 Japan 4.1

Source: IMD World Competitiveness Online 2011 55 Italy 2.8 Source: IMD World Competitiveness Online 2011

13.2 Relocation and integration. Personal effects of the person moving location (household items, personal collections, animals, vehicles etc.) can be imported into There are currently more than 8,600 foreign enterprises operating Switzerland duty-free. The only requirement is that the imported in and from Switzerland. Many of them often send foreign manag- objects must have been used by you personally, abroad, for at ers and specialists to Switzerland for short-term temporary stays least six months and will continue to be used by you after import. to work as expatriates. There are specialized relocation agencies, Apart from the completed application form the entry-point customs expat groups, books and websites designed to help these trans- office has to be submitted an application form, an employment ferred employees orient themselves quickly to life in Switzerland. contract, rental contract or the deregistration certificate from the country of departure (for citizens from the EU/EFTA with the ex- 13.2.1 Relocation ception of Romania and Bulgaria) upon entering the country. After A move to a foreign country raises many questions depending on entering Switzerland you are obligated to register within the first one’s individual situation. Which school is the most appropriate? fourteen days with the local residential authorities. To do so the Where can you shop? How do we find a house? How high are the following documents are required: taxes, duties and other fees? There are competent, internationally • Valid official identity document such as passport or identity experienced consultants in all parts of the country who can give card (for each family member entering the country) further assistance with these issues. Specialized relocation agen- • Confirmation of health insurance (proof of mandatory basic cies offer comprehensive packages that cover relocation issues coverage). The period for registering with a Swiss health insur- and the initial orientation period in Switzerland. The Internet offers ance fund is three months, so confirmation of health insurance a wealth of information. A number of the cantonal economic devel- can also be submitted later opment agencies also have their own online information platforms • One passport photo (for each family member entering the that cater specifically to expatriates. country)

124 Handbook for Investors 2012 • Personal documents (e.g. extract from register of births and can pay the rent. This document can be obtained from the local marriages, marriage certificate, birth certificates for minor debt enforcement office. children, etc.) • Employment contract 13.3.1 Security deposit and lease agreement Tenants must often pay a certain amount in advance as a security If a vehicle is being brought into Switzerland, it must be registered deposit. It may total as much as three months’ rent and is depos- for a technical inspection and insured and licensed in Switzerland ited in a special bank account in the tenant’s name. The deposit within twelve months. A Swiss driver’s license is also required serves as security for the landlord. After moving out, the tenant within the same time period. will receive the deposit back, with interest.

The tenant has the right to move into a clean and functional Application form for personal effects property. The formal handover takes place before the new tenant moves in. The tenant and landlord inspect the condition of the www.ezv.admin.ch > Information for private individuals > Im- property together and record any defects in writing. portant note > Moving house, getting married and inheritance Languages: German, English, French, Italian In general, tenants pay rent monthly – in advance for the next month. Usually tenants also pay additional costs such as heating, hot water or cable television costs. Tenants receive monthly bills 13.2.2 Language courses from the utility company for the electricity consumed in the apart- Many Swiss citizens understand English and/or a second national ment itself. Since there are various providers of telephone and language of Switzerland. In order to become integrated into Swiss Internet connections (and often cable television as well), tenants society, however, knowledge of the national language spoken enter into separate agreements for these services and pay provid- in the particular region is a great advantage. Depending on the ers directly. area, the language may be German (spoken by 64 % of the Swiss population), French (20 %), Italian (7 %) or Romansh (1 %). The If landlords wish to increase the rent (after renovations or a rise fact that there are four national languages in Switzerland does not in mortgage rates, for example), they must do so using an official mean, however, that all Swiss people can speak four languages. form. Any tenant who considers a rent increase unreasonable has 30 days in which to submit a written appeal to the arbitration There are large numbers of private companies and individuals of- authority. fering language courses tailored to every need. Public institutions also offer language courses in the respective national language The lease or rental agreement may be terminated by either the in conjunction with immigrant integration efforts. Consulting the tenant or the landlord. The required terms of notice are stated in Yellow Pages or the website of the Swiss Federation for Adult the agreement. Any tenant giving notice of termination must do Learning is recommended. so in writing, preferably by registered letter. Married couples have equal rights. This means that the notice of termination is not valid unless signed by both spouses. When moving out, tenants are 13.3 Renting an apartment. required to hand over a clean property. The tenant and landlord inspect the condition of the property together and record any Anyone interested in renting an apartment should contact the defects in writing. They decide jointly which party shall pay for advertiser (often a professional property management company) any repairs that might be necessary. and set up an appointment to see the apartment. If the apartment meets your expectations, you are generally asked to fill out an ap- 13.3.2 House rules and maintenance plication form. This form includes information such as age, marital In most cases, professional property management companies status, profession or occupation, children, residence status, em- are responsible for building management. In large buildings in ployer, salary and pets. Applicants are often required to provide particular, there is also a building superintendent who can answer an abstract from the debt enforcement register as proof that they tenants’ questions, make small repairs and oversee security and

Handbook for Investors 2012 125 maintenance. Regional tenants’ associations can also assist ten- sion channels via satellite. Anyone listening to the radio or watching ants with problems. television in Switzerland must always pay reception fees. These fees must be paid regardless of which programs are watched or listened to or how they are received. The reception fees for radio Useful information for tenants and TV channels are invoiced and collected by Billag AG.

www.bwo.admin.ch > Documentation > Publications > Information sheet on living Telephone book Languages: German, English, French, Italian www.local.ch Languages: German, English, French, Italian

Tenants’ associations

German-speaking Switzerland: www.mieterverband.ch Service providers and price comparisons Language: German French-speaking Switzerland: www.asloca.ch www.comparis.ch Language: French Languages: German, English, French, Italian Ticino: www.asi-infoalloggio.ch www.teltarif.ch Language: Italian Language: German

13.4 Telephone, Internet and TV. Billag

Until liberalization in 1998, the Swiss telecommunications market www.billag.com was dominated by Swisscom. Today the population can choose Languages: German, French, Italian among numerous providers of landline and mobile telephone, VoIP and Internet services. Swisscom, Orange and Sunrise are the major providers of mobile telephone services. In addition, however, there are also other companies that use the networks 13.5 Insurance. of the major providers and offer very attractive terms (including M-Budget Mobile, Coop Mobile, yallo and mobilezone). All services Swiss citizens have comprehensive insurance coverage. Swiss are also available to foreign nationals who are living in Switzerland families spend an average of 21 % of their household budget on temporarily. However, registration is obligatory (even for prepaid insurance overall. Medical insurance is by far the most expensive. plans). Setting up Internet access is easy. Analog connections, ISDN, DSL and various cable connections are available. Contributions to social security and unemployment insurance are mandatory, as is medical and fire insurance. Contributions upc cablecom and Swisscom are the market leaders for television. to social security and unemployment insurance are set by the With upc cablecom’s analog cable connection, which is already government and are directly deducted from the salary. Medical installed in half of all Swiss households, you can get approximately and liability insurance can be purchased privately based on one’s 40 TV channels with any television set. An additional receiver is own choice of provider. required for digital reception. It is also possible to receive over 100 channels via the telephone line with Bluewin-TV (from Swisscom). Anyone who rents an apartment is urged to take out insurance More than 300 regional cable operators offer services similar to covering household contents and personal liability (available either those of upc cablecom. And of course you can also receive televi- separately or in combination). Contents insurance covers damage

126 Handbook for Investors 2012 such as floor damage caused by an overflowing bathtub. Personal liability insurance covers any damage caused by the insured per- Traveling in Switzerland for foreign visitors son to third parties (property damage and/or personal injury). www.swisstravelsystem.ch Every owner of a motor vehicle is required to have motor vehicle Languages: German, English, French, Italian liability insurance. It covers personal injury and/or property damage caused by operation of the insured motor vehicle, regardless of who is driving the vehicle at the time of the accident. Partial and comprehensive/collision insurance coverage is also recommended. 13.7 Leisure activities.

Fig. 70: Favorite leisure activities 13.6 Public transport. Daily At least once per week Thanks to public transport, people in Switzerland have many Meeting friends 11.9 % 65.5 % ways to get around even if they do not have their own car. The Reading 70.9 % 19.0 % rail, bus and boat network is very dense, and traffic intensity one Going for walks 22.3 % 51.6 % of the highest in the world. Boats not only operate for tourism Going to bars/restaurants 4.0 % 42.6 % purposes but also represent important transport connections. Handicrafts and gardening 13.1 % 41.1 % There is not a single village in Switzerland that is not served by Playing sport 6.5 % 54.5 % some form of public transport at least every two hours. Surfing the internet 32.7 % 29.5 % Going to the movies 0.1 % 1.8 % There is a wide range of tickets and passes for public transport. Going to the theater or opera 0.0 % 1.6 % The basic rule is that the longer a pass is valid, the cheaper it Visiting sporting events 0.1 % 8.4 % is. For a 12-month pass you pay the equivalent of eight months’ Going to discos 0.0 % 6.9 % worth of single tickets. And with the «General-Abo», a one-year Playing music 8.7 % 16.5 % pass for all forms of public transport, you can travel freely on the Attending courses 0.3 % 9.7 %

SBB rail network, most private railways, boats, buses and urban Source: Federal Statistical Office, 2006 transit networks. The low-priced «Halbtax-Abo», which is available for one, two or three years, gives holders a 50 % discount 13.7.1 Leisure and cultural activities on the full price. Children up to 6 years of age ride free, and Switzerland offers a great variety of cultural and recreational children under 16 years can travel with the «Junior ticket» at no activities. It is no accident that the country is an ideal year-round charge when they are accompanied by their parents, and with the destination for nature lovers, sports enthusiasts, people seeking «grandchildren card» accompanied by their grandparents. Young peace and quiet, art lovers, and business travelers. Switzerland people between the ages of 16 and 25 can ride free in 2nd class stands for individuality, true relaxation, adventure and prestige. cars after 7 p.m. with the «Gleis 7» pass. While these special Both tourists and permanent Swiss residents find just what they rates benefit people residing in Switzerland, tourists can also need here: summer and winter sports on the doorstep, charming benefit from offers that are designed especially for them. market towns or busy urban centers, culture or nature, relaxation or action, every hour of the day. Cultural life and opportunities for participating in sports and social activities are plentiful, both Timetables, tickets in the city and the countryside, due to decentralized residential development. Switzerland is home to prestigious events such as www.sbb.ch > Travelcards & tickets the Lucerne Festival and the Montreux Jazz festival, the Menuhin Languages: German, English, French, Italian Festival in Gstaad, the Film Festival in Locarno, the Art Basel, the Omega European Masters golf tournament in Crans-Montana, and Swiss Indoors Basel or the athletics meeting in Zurich. In addition to these major events, there is also a lively local cultural scene.

Handbook for Investors 2012 127 Swiss tourism, including an events calendar Addresses of municipalities

www.myswitzerland.com www.ch.ch > Index of authorities Languages: German, English, French, Italian, Spanish, Russian, Languages: German, English, French, Italian Chinese, Japanese

13.8 Income and cost of living. Traditions in Switzerland Swiss households consist on average of 2.18 persons and have a www.swissworld.org > Culture > Traditions monthly earned income of CHF 6,956. Together with income from Languages: German, English, French, Italian, Spanish, Russian, other sources and transfer income, gross income totals CHF 9,103. Chinese, Japanese After deduction of social security contributions and taxes, approximately 70 % remains as disposable income for consumption. There are considerable regional differences in real disposable income (after 13.7.2 Clubs and volunteer work the deduction of all fixed costs). Real disposable income is below Many Swiss citizens are active in clubs and pursue hobbies in the Swiss average (low RDI value) not only in the business centers their non-working hours. Even the smallest communities and but also in a small number of mountain communities. These are villages cultivate and promote an active cultural and club life and popular tourism areas with very high real estate prices. The cantons offer the necessary infrastructure. From music, theatre, sports of Aargau, Lucerne, Schaffhausen, Schwyz, Solothurn and Thurgau and politics to hiking and conservation, there is hardly an area are in attractive locations and have high real disposable income of life that does not have its own special club. Men are primar- (high RDI value), while the large cities of Berne, Geneva, Lausanne ily involved in athletics, cultural and political groups, whereas and Zurich are at the other end of the scale (Fig. 71). women participate not only in sports but also in charitable and church-oriented activities. There is often no clear-cut dividing line Example (Credit Suisse Economic Research, study 2011): between hobbies and volunteer work. Approximately one-fourth A couple with two children has a single-family residence of of the population in Switzerland participates in institutionalized medium standard (80 % mortgage). They have CHF 300,000 in volunteer efforts without pay. Since Switzerland does not require savings, and their joint earnings total CHF 150,000. After figuring clubs and organizations to be registered, there is no complete list. in the government family allowance and income from invest- However, the homepages of municipalities generally give informa- ments, the household has a gross income of about CHF 155,200. tion about local clubs. After deducting all the mandatory contributions (taxes, retirement and social security contributions, and premiums for compulsory health insurance) as well as living costs, ancillary costs and utili- Volunteer work ties, the family has the following real disposable income: • in Altdorf (Uri), a community with a high RDI value: CHF 69,700 www.forum-freiwilligenarbeit.ch • in Hergiswil (Nidwalden), a community with a low RDI value: Languages: German, French CHF 39,800 www.benevol.ch Language: German

128 Handbook for Investors 2012 Fig. 71: Real disposable income in Swiss municipalities, 2011

RDI indicator 2011

– 5.2 to – 2.0

– 2.0 to – 1.0

– 1.0 to – 0.3

– 0.3 to – 0.0

0.0 to 0.3 0.3 to 0.6 0.6 to 1.0 1.0 to 1.5 1.5 to 2.0 2.0 to 3.0 Cantons

Sources: Credit Suisse Economic Research, Geostat

According to a UBS study (fig. 73), Switzerland has the highest purchasing power in the world, i.e. the highest real disposable income when compared with prices. The price level in Zurich is the second-highest in the world, followed by Geneva in third place. Only Oslo is more expensive than the two Swiss cities. An international comparison has shown that salaries in Zurich are in first place, followed by Copenhagen in second and Geneva in third.

Handbook for Investors 2012 129 Fig. 72: Average household budget, 2008 Fig. 73: International comparison of purchasing power, 2010 Gross income (earned income, 9,103 100,0 % Cities Net hourly income divided transfers etc.) by the cost of the entire commodities basket, Mandatory transfer expenses − 2,443 − 26.8 % including rent (Zurich = 100) Social insurance contributions − 887 − 9.7 % Zurich 100.0 Taxes − 1,063 − 11.7 % Luxemburg 94.3 Health insurance funds: basic health insurance − 493 − 5.4 % Dublin 93.5 Money transfer expenses to other households − 195 − 2.1 % Geneva 91.1 Available income 6,465 71.00 % New York 90.5 Other insurance, fees and transfers – 532 – 5.8 % Berlin 79.9 Consumer spending − 5,311 − 58.3 % Brussels 79.7 Food and non-alcoholic beverages − 656 − 7.2 % Helsinki 77.4 Alcoholic beverages and tobacco products − 102 − 1.1 % London 77.3 Restaurants and lodgings − 521 − 5.7 % Copenhagen 76.9 Clothing and shoes − 228 − 2.5 % Amsterdam 76.4 Living costs and energy − 1,476 − 16.2 % Lyon 74.9 Furnishing and on-going household costs − 265 − 2.9 % Frankfurt 75.6 Health expenses − 234 − 2.6 % Munich 75.0 Transport − 745 − 8.2 % Tokyo 74.0 Communication − 172 − 1.9 % Oslo 68.8 Entertainment, recreation and culture − 631 − 6.9 % Paris 67.8 Other goods and services − 281 − 3.1 % Hong Kong SAR 49.8 Sporadic income 405 4.50 % Moscow 49.3 Number of people per household 2.21 − 100 % São Paolo 41.7 Singapore 35.2 Source: Federal Statistical Office, HABE 2008 Shanghai 24.1 Beijing 22.9

Consumer spending Source: UBS, Prices and Earnings: a worldwide comparison of purchasing power, August 2010

www.swissworld.org > Economy > Wages and Prosperity Languages: German, English, French, Italian, Spanish, Russian, Chinese, Japanese

Statistics on income, consumption and assets

www.bfs.admin.ch > Economic and social situation of the population > Income, consumption and assets Languages: German, English, French, Italian

130 Handbook for Investors 2012 14. Promoting Switzerland.

Location promotion is an important component of Swiss 14.2 Promotional policy and tools. economic policy and is done in partnership with the business community and the cantons. Within the program «Switzerland In line with Switzerland’s liberal economic system, economic Trade & Investment Promotion.», the activities for promoting policy in Switzerland focuses on optimum structuring and support foreign investment in Switzerland are organized and coordi- of the general business environment. Financial assistance pro- nated on behalf of the state. grams are timely and strategic. In general, government financial assistance always complements private initiatives.

14.1 Responsibilities. The possible funding options, the mix of various instruments and the scale of payments depend on the specific investment project. In accordance with Switzerland’s federal form of government, There is always room for individual solutions. It is therefore advis- responsibility for state location promotion is shared between the able, once a project has been roughly evaluated, to discuss it first federal government and the cantons. with the cantonal economic development agencies. «Switzerland. Trade & Investment Promotion.» can provide assistance in this «Switzerland. Trade & Investment Promotion.» is responsible at the regard. national level for marketing Switzerland as a business location to investors in other countries, serves as the first point of contact for foreign investors and puts them in touch with the appropriate 14.3 Switzerland Trade & Invest- cantonal authorities. ment Promotion services.

It is the job of the cantonal economic development agencies to «Switzerland. Trade & Investment Promotion.» opens the door to inform potential investors about the advantages of locating a Switzerland and the country’s authorities. In close collaboration business in their canton, maintain contact with interested inves- with partners from different regions and cantons and from the tors, present concrete location proposals and organize local private sector, the program assists companies as they plan their support for investors through regional offices and municipalities – operations: even after investments have been made – as a form of customer • Making contact with regional and cantonal economic develop- service. ment offices • Looking for the ideal location in Switzerland • Meeting legal and administrative requirements

Handbook for Investors 2012 131 • Working together with research centers and universities Fig. 74: Examples of cantonal incentives • Entering into partnerships with Swiss companies in the same Area of assistance Type of assistance sector Investment financing • Granting or arranging bank loan guar- • Procuring work and residence permits antees • Defining the ideal corporate structure and learning about the • Interest subsidies or assumption of Swiss tax system interest costs • Interest-free or subsidized-interest cantonal loans «Switzerland. Trade & Investment Promotion.» supports compa- • One-off contributions (non-repayable) nies at any time during the fact finding and investment project. The contact addresses can be found in the appendix. Procurement of land • Arranging for purchase or lease of and premises business premises and land • Cost contributions for planning and/or «Switzerland. Trade & Investment Promotion.» developing industrial sites • Cost contributions for conversion of www.invest-in-switzerland.com plant buildings Personnel • Contributions to initial training or Languages: German, English, French, Italian, Portuguese, retraining costs Russian, Chinese, Japanese Taxes • Tax relief for start-up and development phase and for restructuring projects

Source: Legal and informational documents from the cantonal economic Online portal of the «Switzerland Business and Investment development agencies Handbook»

www.swissnetwork.com Language: English 14.5 Tax relief as part of regional policy.

As part of federal regional policy, there is specific support for 14.4 Cantonal promotion. the economic development of structurally weak regions such as mountainous areas and rural districts. Major investment and Most Swiss cantons have their own economic development agen- innovation projects and the establishment of new companies cies. All cantons can offer tax relief to businesses as an economic in these regions can be supported by the federal government development incentive. Other incentives or forms of economic through tax relief (see map of applicable regions in fig. 75). The assistance vary from canton to canton, depending on interest and main requirement for federal tax relief is that the canton in ques- regional economic conditions (see chapter 15.1). tion also supports the project by providing an equivalent level of tax relief.

The application process for tax relief in connection with regional policies is always handled by the cantons. The cantonal economic development agencies in question provide advice on the best way to proceed.

132 Handbook for Investors 2012 Fig. 75: Applicable regions for tax relief, 2011

Eligible areas based on the DEA ordinance of November 28, 2007 As at 01/01/2011

Source: State Secretariat for Economic Affairs SECO

the development phase. Switzerland has one of the highest levels Tax relief (regional policy) of innovation of any country in the world. CTI has a budget of around CHF 100 million and operates under the «Science to Mar- www.seco.admin.ch > Topics > Site promotion > SME policy ket» slogan. Companies work with universities to generate new Languages: German, French, Italian knowledge that can be used to develop products and services and bring them to market.

CTI provides funding for Also see chapter 9.4.3 • Market-oriented R&D projects carried out jointly by companies and universities for developing products and services • The formation and development of science-based companies • Knowledge and technology transfer through platforms and 14.6 Other organizations providing networks assistance. R&D project grants are available in all disciplines involving scien- 14.6.1 Commission for Technology and Innovation CTI tific innovation. Project applications are submitted in accordance CTI is Switzerland’s federal innovation promotion agency. For with the bottom-up principle. Grants are awarded on the basis of over 60 years, it has fostered knowledge and technology trans- innovative content and market potential. fer between businesses and universities. It brings partners from these two areas together in applied research and development In its Venturelab program, CTI helps promising entrepreneurs get projects and provides assistance to start-up companies during started by guiding them through customized training modules.

Handbook for Investors 2012 133 The modules give them the tools and methods they need to im- 14.6.2 Technology parks and business incubation centers plement an exciting business idea and establish a new company. Facilities and support centers designed to encourage or facilitate Young entrepreneurs can also apply for professional coaching. entrepreneurial activity are part of a modern economy’s infra- Support is provided to knowledge-intensive technology-based structure. Switzerland has a large number of technology parks companies with great market potential. and business incubator or start-up centers. Most have joined together to form networks or associations. They differ in concept CTI’s KTT initiative strengthens knowledge and technology transfer and specific focus; some have developed in close cooperation between universities and industries in the same region. Investment with universities while others stem from purely private initiatives. mentors provide assistance to SMEs and universities in making They offer premises (generally at preferential rates) for the start- contacts and developing projects. Innovative Swiss companies up and development phase as well as shared infrastructure and and researchers are also offered development opportunities professional support. through access to international programs and networks such as IMS, ESA and EUREKA. Participation by their umbrella organizations in international networks allows them to use technology park infrastructures throughout Europe. This allows companies to speed up the difficult Commission for Technology and Innovation CTI start-up phase and save on start-up costs. A number of business incubation centers have also been formed in major cities. They www.kti.admin.ch also serve as short-term start-up locations for foreign companies Languages: German, English, French, Italian establishing new operations in Switzerland by providing flexible and expandable premises, contacts, and business incubation support.

venturelab Advantages of technology parks and business incubation centers: • Services: advisory services, coaching, telephone service, etc. www.venturelab.ch • Contacts with universities Languages: German, English, French, Italian • An environment surrounded by like-minded entrepreneurs • Infrastructure and flexible premises • Networking • Higher chance of success; average survival rate over 90 % CTI Start-up

www.ctistartup.ch Technopark Allianz Language: English www.technopark-allianz. ch Language: German

Association of Swiss Technology Parks and Business Incubators

www.swissparks.ch Language: English

134 Handbook for Investors 2012 Fig. 76: Technology parks and incubator centers 53

51 50 52

55 49 54

49 49

57 58

Source: Location promotion program of the canton of Zurich, www.gruenden.ch

Berne/Mittelland 10 Y-Parc AG, Yverdon 1 GründerZentrum Bern www.y-parc.ch www.innobe.ch 11 BioAlps*, Geneva 2 Berner Technopark www.bioalps.org www.bernertechnopark.ch 12 Eclosion SA, Plan-les-Ouates GE 3 innoBE AG*, Bern, Biel, Thun www.eclosion.ch www.innobe.ch 13 Fongit, Plan-les-Ouates GE 4 Neuunternehmer-Zentrum WRT Thun www.fongit.ch www.wrt.ch 14 Neode Parc, La Chaux-de Fonds/Neuchâtel 5 e.Tower Thun www.neode.ch www.e-towers.ch 15 Fri Up, Fribourg 6 Gründerzentrum Solothurn*, Solothurn www.friup.ch www.gzs.ch 7 Coaching service du Jura bernois Bévilard Valais www.cep.ch/coaching 16 CimArk SA*, Sion www.cimark.ch Western Switzerland 17 BioArk, Monthey 8 Parc scientifique PSE, Lausanne www.bioark.ch www.parc-scientifique.ch 18 IdeArk, Martigny 9 biopôle park Lausanne, Epalinges www.ideark.ch www.biopole.ch 19 PhytoArk, Sion www.phytoark.ch

Handbook for Investors 2012 135 20 TechnoArk, Sierre 40 glaTec Dübendorf www.technoark.ch www.glatec.ch 21 Fondation The Ark, Sion 41 grow Gründerorganisation Wädenswil www.theark.ch www.grow-waedenswil.ch 22 Centre des Compétences Financières, Sion/Naters 42 Technologiezentrum Linth, Ziegelbrücke www.ccf-valais.ch www.technologiezentrum.ch 43 Stiftung Futur, Rapperswil Central Switzerland www.futur.ch 23 Businesspark Zug 44 Technologiepark Wetzikon www.businessparkzug.ch www.tp-wetzikon.ch 24 Technopark Luzern 45 ri.nova impulszentrum Rebstein www.technopark-luzern.ch www.rinova.ch 25 microPark Pilatus, Alpnach 46 E-Tower*, Chur www.microparkpilatus.ch www.e-towerchur.ch 26 mccs – Micro Center Central-Switzerland AG, Sarnen 47 Innozet, Grüsch www.mccs.ch www.innozet.ch 27 areal #1 Unternehmerzentrum Nidwalden, Stansstad 48 Technopark® Winterthur www.nw.ch www.technopark-winterthur.ch 28 Technologiezentrum Steinen 49 Jung-Unternehmer-Zentrum, Wil, Flawil, Wattwil www.technologiezentrum.ch www.tedizentrum.ch 29 InnovationsTransfer Zentralschweiz*, Horw 50 START! Gründungszentrum, Frauenfeld www.itz.ch www.gruendungszentrum.ch 30 Zentrum für neue Technologien Hohle Gasse, Küssnacht 51 HTC High-Tech-Center AG, Tägerwilen www.hohle-gasse.ch www.high-tech-center.ch 52 Spider Town, Tägerwilen Northwest Switzerland www.spidertown.ch 31 business parc Reinach 53 ITS Industrie- und Technozentrum*, Schaffhausen www.businessparc.ch www.its.sh.ch 32 Tenum AG Liestal 54 tebo, St. Gallen www.tenum.ch www.tebo.ch 33 TZW Technologiezentrum Witterswil 55 BIO-Technopark Zürich-Schlieren www.tzw-witterswil.ch www.bio-technopark.ch 34 Spin-off Inkubator Basel 56 KMU-Zentrum, Vaduz www.eva-basel.ch www.kmu-zentrum.li 35 business parc Reinach im Laufental, Zwingen www.businessparc.ch Ticino 36 Technologie- und Gründerzentrum Zurzibiet 57 Centro Promozione Start-up, Lugano www.zurzibiet.ch www.cpstart-up.ch 37 Technopark Aargau, Windisch 58 Galleria High-Tech-Center, Manno www.technopark-aargau.ch www.galleria.ch

Zurich/Eastern Switzerland * These centers offer services but no office space. 38 Startzentrum Zürich www.startzentrum.ch 39 Technopark Zürich www.technopark.ch

136 Handbook for Investors 2012 15. Appendix.

15.1 Addresses.

Switzerland. Trade & Investment Europe Americas Promotion. c/o Osec Germany Italy Brazil Stampfenbachstrasse 85 Swiss Business Hub Germany Swiss Business Hub Italy Swiss Business Hub Brazil CH-8006 Zurich c/o Schweizerisches c/o Camera di Commercio c/o Consulado Geral da Suíça Tel. +41 44 365 51 51 Generalkonsulat Svizzera-Italia Av. Paulista 1754, 4° andar Fax +41 44 365 52 21 Hirschstrasse 22 Via Palestro, 2 Edificio Grande Avenida [email protected] 70173 Stuttgart 20121 Milano 01310-920 São Paulo www.invest-in-switzerland.com Germany Italy Brazil Tel. +49 711 22 29 43 29 Tel. +39 02 7632 031 Tel. +55 11 33 72 82 00 Fax +49 711 22 29 43 19 Fax +39 02 78 1084 Fax +55 11 32 53 57 16 [email protected] [email protected] [email protected]

France Russia USA Suisse. Promotion du Com- Swiss Business Hub Russia Switzerland. Trade & Investment merce et des Investissements. c/o Embassy of Switzerland Promotion. c/o Ambassade de Suisse Kursovoy Per. 7 c/o Consulate General of 142, rue de Grenelle 119034 Moscow Switzerland 75007 Paris Russia 633 Third Avenue, 30th Floor France Tel. +7 495 225 88 41 New York, NY 10017-6706 Tel. +33 1 49 55 67 07 Fax +7 495 225 88 42 USA Fax +33 1 49 55 67 67 [email protected] Tel. +1 212 599 5700 ext 1032 [email protected] Fax +1 212 599 4266 [email protected] Great Britain Swiss Business Hub UK c/o Embassy of Switzerland 16-18 Montagu Place London W1H 2BQ Great Britain Tel. +44 20 76 16 60 00 Fax +44 20 77 23 64 55 [email protected]

Handbook for Investors 2012 137 Asia Pacific Cantonal Economic Fribourg (FR) Lucerne (LU) Development Agencies Fribourg Development Agency Business Development China Avenue de Beauregard 1 Lucerne Switzerland. Trade & Investment Aargau (AG) P.O. Box 1248 Alpenquai 30 Promotion. Aargau Services CH-1700 Fribourg CH-6005 Lucerne c/o Swiss Business Hub China Location Marketing Tel. +41 26 425 87 00 Tel. +41 41 367 44 00 Sanlitun Dongwujie 3 Rain 53 Fax +41 26 425 87 01 Fax +41 41 367 44 01 100600 Beijing P.O. Box [email protected] [email protected] China CH-5001 Aarau www.promfr.ch www.lucerne-business.ch Tel. +86 10 8532 88 88 Tel. +41 62 835 24 40 Fax +86 10 6532 43 53 Fax +41 62 835 24 19 Geneva (GE) Neuchâtel (NE) [email protected] [email protected] Geneva Economic Office de Promotion www.aargauservices.ch Development Office Économique du canton Japan Rue des Battoirs 7 de Neuchâtel Switzerland. Trade & Investment Appenzell Ausserrhoden (AR) P.O. Box 740 Rue de la Collégiale 3 Promotion. Department of Economic CH-1211 Geneva 4 CH-2000 Neuchâtel c/o Swiss Business Hub Japan Affairs & Agriculture Tel. +41 22 388 34 34 Tel. +41 32 889 68 23 5-9-12 Minami Azabu, Minto-ku Office of Economic Affairs Fax +41 22 388 31 99 Fax +41 32 889 62 95 Tokyo 106-8589 Government Building [email protected] [email protected] Japan CH-9102 Herisau www.whygeneva.ch www.e-den.ch Tel. +81 3 5449 8408 Tel. +41 71 353 61 11 (International calls) Fax +41 71 353 62 59 Glarus (GL) Nidwalden (NW) Tel. 0120 844 313 (Toll-free, [email protected] Office of Economic Affairs Economic Promotion domestic calls only) www.ar.ch/wirtschaft Zwinglistrasse 6 Canton of Nidwalden Fax +81 3 3473 6090 CH-8750 Glarus Dorfplatz 7a [email protected] Appenzell Innerrhoden (AI) Tel. +41 55 646 66 14 CH-6371 Stans Economic Development Fax +41 55 646 66 09 Tel. +41 41 618 76 54 IMEA Marktgasse 2 [email protected] Fax +41 41 618 76 58 CH-9050 Appenzell www.glarusnet.ch [email protected] India Tel. +41 71 788 94 44 www.nw.ch Switzerland. Trade & Investment Fax +41 71 788 94 45 Grisons (GR) Promotion. [email protected] Economic Development and Obwalden (OW) c/o Swiss Business Hub India www.ai.ch Tourism Agency Business & Residential 502 Dalamal House, 5th Floor Economic Development Promotion in Obwalden 206, Jamnalal Bajaj Marg Basel-City (BS) and Basel- Grabenstrasse 1 Dorfplatz 1 Nariman Point Country (BL) CH-7001 Chur CH-6060 Sarnen Mumbai 400 021 BaselArea Tel. +41 81 257 23 42 Tel. +41 41 660 90 66 India Economic Promotion Fax +41 81 257 21 92 Fax +41 41 660 90 69 Tel. +91 22 4343 5600 Aeschenvorstadt 36 [email protected] [email protected] Fax +91 22 2285 6566 CH-4010 Basel www.awt.gr.ch www.iow.ch [email protected] Tel. +41 61 295 50 00 Fax +41 61 295 50 09 Jura (JU) Schaffhausen (SH) [email protected] Economic Development Economic Promotion www.baselarea.ch 12, Rue de la Préfecture Canton of Schaffhausen CH-2800 Delémont Herrenacker 15 Berne (BE) Tel. +41 32 420 52 20 CH-8200 Schaffhausen Berne Economic Development Fax +41 32 420 52 21 Tel. +41 52 674 03 03 Agency [email protected] Fax +41 52 674 06 09 Canton of Berne eco.jura.ch [email protected] Münsterplatz 3 www.economy.sh CH-3011 Berne Tel. +41 31 633 41 20 Fax +41 31 633 40 88 [email protected] www.berneinvest.com

138 Handbook for Investors 2012 Schwyz (SZ) Uri (UR) Zug (ZG) Regional Location Marketing Office for Economy Economic Affairs, Canton of Uri Economic Promotion of the Organisations Bahnhofstrasse 15 Department of Economic Canton of Zug P.O. Box 1187 Development Economic Contact BaselArea CH-6431 Schwyz Klausenstrasse 4 Aabachstrasse 5 Economic Development Tel. +41 41 819 16 34 CH-6460 Altdorf CH-6301 Zug Aeschenvorstadt 36 Fax +41 41 819 16 19 Tel. +41 41 875 24 01 Tel. +41 41 728 55 04 CH-4010 Basel [email protected] Fax +41 41 875 24 12 Fax +41 41 728 55 09 Tel. +41 61 295 50 00 www.schwyz-wirtschaft.ch [email protected] [email protected] Fax +41 61 295 50 09 www.ur.ch/wfu www.zug.ch/economy [email protected] Solothurn (SO) www.baselarea.ch Solothurn Economic Valais (VS) Zurich (ZH) Development Agency Business Valais Office of Economy and Labour Greater Geneva Berne area Untere Sternengasse 2 Office for Economic of the Canton of Zurich Economic Development CH-4509 Solothurn Development Economic Development Agency Tel. +41 32 627 95 23 Maison de Courten Walchestrasse 19 World Trade Center Fax +41 32 627 95 92 Place St. Theodule CH-8090 Zurich Avenue de Gratta-Paille 2 [email protected] CH-1950 Sion Tel. +41 43 259 49 92 P.O. Box 253 www.standortsolothurn.ch Tel. +41 27 606 73 50 Fax +41 43 259 51 71 CH-1000 Lausanne 22 Fax +41 27 606 73 56 [email protected] Tel. +41 21 644 00 90 St. Gallen (SG) [email protected] www.standort.zh.ch Fax +41 21 644 00 99 Location Promotion www.business-valais.ch [email protected] Business Development Agency www.ggba-switzerland.org for the Canton of St. Gallen Vaud (VD) Davidstrasse 35 Economic Development Greater Zurich Area AG CH-9001 St. Gallen Canton of Vaud Limmatquai 112 Tel. +41 71 229 35 60 Avenue de Gratta-Paille 2 CH-8001 Zurich Fax +41 71 229 47 40 P.O. Box 19 Tel. +41 44 254 59 59 [email protected] CH-1000 Lausanne 22 Fax +41 44 254 59 54 www.location.sg.ch Tel. +41 21 644 00 60 [email protected] Fax +41 21 644 00 79 www.greaterzuricharea.ch Ticino (TI) [email protected] Sezione della promozione www.dev.ch St.GallenBodenseeArea economica Economic Development Viale S. Franscini 17 Davidstrasse 35 CH-6501 Bellinzona CH-9001 St. Gallen Tel. +41 91 814 35 41 Tel. +41 58 229 22 14 Fax +41 91 814 44 57 [email protected] [email protected] www.sgba.ch www.copernico.ch

Thurgau (TG) Thurgau Business Development Agency Zürcherstrasse 183 CH-8510 Frauenfeld Tel. +41 52 724 26 06 Important notice Fax +41 52 724 26 37 [email protected] www.wiftg.ch The information and data contained in this publication are drawn from a variety of sources and have been researched with the greatest possible care. Persons wishing to use information from this publication do so at their own risk. Osec as well as third parties who have provided input for the various chapters assume no liability for the accuracy, currency or completeness of the information published in the Investor’s Handbook.

Handbook for Investors 2012 139 15.2 Table of figures.

Fig. 1: Switzerland’s international rankings...... 8 Fig. 38: Salary statement example: employer and Fig. 2: Map showing the location of Switzerland...... 9 employee contributions...... 71 Fig. 3: The political system in Switzerland...... 11 Fig. 39: Labor market deregulation...... 72 Fig. 4: Political stability...... 12 Fig. 40: Employer-employee understanding...... 73 Fig. 5: The most cosmopolitan economies...... 14 Fig. 41: Day, evening and night periods...... 74 Fig. 6: International organizations and important Fig. 42: Appointments and dismissals...... 76 NGOs with their headquarters in Switzerland.....15 Fig. 43: Overview of compulsory contributions...... 77 Fig. 7: Switzerland in figures...... 16 Fig. 44: Global financial centers...... 82 Fig. 8: 2011 (nominal) per capita gross domestic Fig. 45: Mortgage interest rates, 1985 – 2011...... 86 product...... 17 Fig. 46: State incentives...... 88 Fig. 9: Industry structure and percentage of Fig. 47: Credit rating: the ten safest countries...... 89 employees...... 18 Fig. 48: Capital costs Fig.10: 2011 Competitiveness ranking...... 18 Fig. 49: Inflation, 2011...... 90 Fig. 11: 2011 Global Innovation Index...... 18 Fig. 50: Total tax rate (TTR)...... 94 Fig. 12: Trade balance as a percentage of GDP...... 19 Fig. 51: International business activity...... 101 Fig. 13: Imports and exports by economic block...... 19 Fig. 52: Quality of the infrastructure...... 104 Fig. 14: Direct investments...... 20 Fig. 53: Direct air connections: Intercontinental Fig. 15: Economic freedom...... 26 from Zurich (ZRH) and Geneva (GVA)...... 107 Fig. 16: An overview of trademark rights...... 29 Fig. 54: National and regional airports in Switzerland....108 Fig. 17: Overview of legal forms...... 42 Fig. 55: Internet subscribers...... 110 Fig. 18: Procedure for establishing a company Fig. 56: Healthcare infrastructure...... 111 (AG, GmbH)...... 46 Fig. 57: Switzerland’s educational system...... 114 Fig. 19: Foundation costs for stock corporations (AG)....47 Fig. 58: Quality of the educational system 2011...... 115 Fig. 20: Foundation costs for companies with Fig. 59: Public spending on education...... 115 limited liability (GmbH)...... 47 Fig. 60: Swiss higher-education landscape...... 117 Fig. 21: Do I need a visa?...... 50 Fig. 61: Tuition fees in CHF per year...... 118 Fig. 22: Visa regulations for certain countries...... 50 Fig. 62: Executive MBA: the top schools...... 119 Fig. 23: Types of permits...... 53 Fig. 63: School fees for international private schools....120 Fig. 24: Work and residence permits: rules and Fig. 64: Total per capita expenditure for research and procedures...... 56 development in USD...... 121 Fig. 25: Countries with which Switzerland has a Fig. 65: Nobel prizes per million inhabitants...... 121 trainee agreement...... 59 Fig. 66: Research institutions in Switzerland...... 121 Fig. 26: Online sources of information on real estate...... 60 Fig. 67: Global comparison of quality of living...... 123 Fig. 27: Market prices for office space...... 61 Fig. 68: Personal safety and property rights...... 124 Fig. 28: Steps in a purchase transaction...... 62 Fig. 69: Attractiveness for highly qualified employees Fig. 29: Construction sites: market prices for from foreign countries,...... 124 commercial buildings...... 63 Fig. 70: Favorite leisure activities...... 127 Fig. 30: Market prices for rental apartments...... 64 Fig. 71: Real disposable income in Swiss Fig. 31: Market prices for owner-occupied apartments...65 municipalities...... 129 Fig. 32: Permit requirement by group...... 66 Fig. 72: Average household budget...... 130 Fig. 33: International comparison of worker motivation...68 Fig. 73: International comparison of purchasing Fig. 34: International experience...... 69 power...... 130 Fig. 35: Monthly gross salary (central value)...... 69 Fig. 74: Examples of cantonal incentives...... 132 Fig. 36: Gross annual earned income (median) in each Fig. 75: Applicable regions for tax relief...... 133 occupational group...... 70 Fig. 76: Technology parks and incubator centers...... 135 Fig. 37: Industry labor costs: direct remuneration and non-wage labor costs...... 70

140 Handbook for Investors 2012 Countries of Europe.

Handbook for Investors 2012 141 Swiss map.

142 Handbook for Investors 2012 Language regions.

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