6 reasons for Switzerland as a settlement country

This development has provided our country with exceptional prosperity. Despite global networking, Switzerland was surprisingly also able to master the economic challenges caused by the financial crisis and the strong Swiss Franc.

However, the effects of globalization have also come under increasing scrutiny in recent years and the international community has agreed to combat the undesirable effects of the globalized economy. For Switzerland, the projects in which the Tax Planning of globally active companies was scrutinized were important. The OECD, together with the G20 countries, developed measures to restrict the Tax Planning of globally active companies on the basis of the investigations. These measures are now known as BEPS . They oblige the member states of the OECD, including Switzerland, to adapt certain tax rules. At the same time, BEPS leads to new transparency between countries with regard to the tax treatment of taxpayers.

But also in Switzerland itself, the effects of the ever-increasing interconnectedness of the world were discussed and culminated in the adoption of the mass immigration initiative, which obliges politicians to re-regulate immigration in our country. For Switzerland, this means turning away from framework conditions that have been an essential part of its success in recent years and decades.

As a result of this development, our country is undergoing a fundamental change and must redefine its role and place in the community of states. Even though the exact design of the of the new framework conditions is hotly debated in politics and business, all camps agree on the direction of the new framework conditions.

In its message on the Corporate Tax Reforms III, the Federal Council stated:

[...] safeguarding a continued competitive corporate tax burden, the restoration of international acceptance of central characteristics of the Swiss corporate tax regulation as well as securing the financial yield of income tax for the federal government, cantons and municipalities.

The Corporate Tax Reform III (CTR III), which mainly aimed to establish an international acceptance of the tax framework, has been rejected by the Swiss people on 12 February 2017. Switzerland was obligated to develop a new bill regarding the reform of the corporate tax law, which is better suited to the needs of the Swiss people - the Steuervorlage 17 / TRAF .

But none of the concerned parties is disputing that Switzerland wants to and will continue to be an attractive location for international corporations.

The following explanations show why Switzerland, despite change, is and remains the perfect country in which to settle.

Reason 1: Switzerland's position in global competition

In addition to democracy and the rule of law, Switzerland is repeatedly praised for its political and economic stability. This is due to the fact that the federal system creates good conditions in which national decisions are made through consensus and concordance.

A liberal national economy particularly promotes competitiveness. Accordingly, a WEF study places Switzerland in the top spot for the tenth time in a row when most competitive country in the world.

The fact that Switzerland is not a member of the EU and EEA gives the country extensive scope when designing framework conditions. There is extensive leeway especially in the legal field, i.e. tax law, company law, labour law or social insurance law but also with regard to the regulation of capital markets as well as in the environmental sector. This means that in the past the location conditions could be autonomously adjusted to the requirements of globally active companies. And so, from the companies’ point of view, Switzerland can positively distinguish itself from the regulations applicable in the EU’s internal market.

Reason 2: The location and internationality

Switzerland is geographically located in the middle of Europe. The Swiss economy is closely linked to neighbouring countries such as Germany or France, as one of the most important pillars in the EU. The Swiss Confederation is therefore considered an important trading partner for the EU. The high number of multinational corporations based in Switzerland proves that Switzerland is a unique location for internationally oriented activities. Swiss industry, with a large number of small and medium-sized enterprises, is highly export-oriented. The number of multinationals based in Switzerland, combined with the strongly export-oriented domestic economy, creates a climate of internationality and cosmopolitanism that makes it possible to recruit competent, well-trained and linguistically skilled employees.

Reason 3: Legal certainty

One of the most important location factors of all is legal certainty. Not only domiciliary companies, but also international groups have confidence in the continuity of the regulatory framework. Legal certainty is a valuable asset that has been built up and maintained by the company over decades. Based on the political culture and the practiced concordance at all political levels, this will not change in the future.

Reason 4: Research, development and innovation

Nowadays, international companies are increasingly focusing on research and development activities. In terms of innovative capacity, Switzerland currently occupies first place as the most innovative country in the world. The reasons for this are the successful industry, the protection of intellectual property, the diversified and prudent education policy as well as the internationally recognized research centers. Cooperation between companies, research institutions and universities, which act as catalysts for each other, plays a major role in this innovative capacity. Ultimately, Switzerland's innovation policy is proving its worth and research funding is falling on fertile ground. In this respect, Switzerland is also at the forefront in terms of the number of patents protected throughout Europe and the number of citations in specialist journals.

Reason 5: The tax framework

Experience shows that the factor "tax environment" is a central criterion for companies' choice of location. A competitive tax system is an important prerequisite for choosing a location. Switzerland's tax model is by all means considered competitive and is flexible and federalist in character. Among all the cantons, Nidwalden, Lucerne, Zug, Obwalden, Glarus and Appenzell-Ausserrhoden are particularly attractive for internationally active companies, with a tax burden on profits of between 12 and 15%.

Even if Switzerland has had to abandon individual elements (e.g. abolition of the special regimes for holding companies, mixed companies and principal companies; finance branch) of its previous tax attractiveness as part of Tax Proposal 17 / TRAF and replace them with new rules, it should not be forgotten that the general tax burden and the generally applicable tax rules, in conjunction with the open and transparent culture of discussion between taxpayers and tax authorities, represent an extremely attractive combination of advantages in an international comparison.

Reason 6: First-class infrastructure

In addition to the optimal tax conditions, the existing infrastructure proves to be a great advantage of Switzerland. The transport and education infrastructure, as the main pillar of a state infrastructure, are considered exemplary. Swiss punctuality is legendary.

In addition to these important pillars of transport and education, all other elements for a well-functioning state system are also exemplary. These include, among others, the leisure and cultural facilities, safety, health facilities and linguistic diversity.

Conclusion

Switzerland is not considered a country of immigration in the classical sense. However, Switzerland can be described as a country of settlement in the best sense. The economy and politics are anxious and interested in our country being perceived as an attractive country for the settlement of economic activities. The federal government maintains an active and global economic promotion policy. In fact, every canton has its own economic development agency that provides interested companies and individuals with the best possible support in settling in the country. The settlement business is an important market sector for the consulting industry. The Confederation and the cantons organise global events and presentations to show our country in the best possible light. Switzerland measures itself against its competitors in Europe and Asia in the areas of education and research, legislation and tax law, and regularly occupies top positions in the rankings in terms of attractiveness. The universities and especially the ETH are among the best educational institutions in the world.

As a small country, Switzerland is accustomed to and practiced in asserting and proving itself in international competition through performance and perseverance. Flexibility and searching for the best solutions are anchored as a social drive in the consciousness of the population. In the current difficult environment, it is this flexibility and focusing on good solutions that form the basis for good and future-orientated solutions. Switzerland wants to and will continue to be an attractive location.