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Doing Business in Switzerland

Legal System

Switzerland has a statute based legal system. The Federal Constitution leaves all law-making power to the 26 cantons, except as expressly delegated to the federal authorities by the Constitution itself. Switzerland is neither a member of the NATO nor of the European Union. However, it is a member of the United Nations, the OECD, the WTO, and the European Free Trade Area (EFTA), and has autonomously implemented large parts of the 'acquis communautaire', e.g. parts of EU law particularly connected to commercial matters.
With a bilateral agreement to the Schengen system, Switzerland will have access to the instruments for cooperation on security within the EU. The Schengen agreements abolished controls of persons at the internal frontiers of the EU, thus permitting the free movement of persons between EU member states. A common "Schengen visa" for visits of up to three months is valid throughout Europe. Swiss tourism will benefit from this: Tourists requiring visas travelling from growth markets such as China, India or Russia thus no longer require a second visa for Switzerland when travelling to Europe. As Switzerland is not a member of the EU customs union, controls of goods will continue to be carried out as before.

Foreign Business and Investment

Switzerland is proud to be one of the best business locations in Europe. Among the many benefits of setting up business operations in Switzerland, the following are the main pillars of the success:

  • High productivity combined with high quality products and services.
  • Investor and business-friendly government in a country with modest taxation.
  • Currency and price stability.
  • First-rate infrastructure.
  • Efficient capital market and a highly professional international banking system.
  • Excellent education - at the public school and academic level, as well as the dual vocational training system.
  • World-renowned universities, technical institutes and R&D institutions.
  • Social peace and political stability.

Switzerland's liberal economic system simplifies location decisions. Internationally recognized institutes consistently give the country top rankings for legal security, long-term stability, guaranteed protection of free competition, property, ownership and minimal bureaucracy. These fundamental criteria position Switzerland as an advantageous European location for establishing a business. Switzerland has one of the most liberal and competitive economies in the world. The banking industry is one of the most important sectors of the Swiss economy. The laws regulating the banking system, and particularly the banking secrecy policies, offer extensive protection for domestic as well as foreign investors.

Foreign nationals are permitted to conduct business in Switzerland, and are subject to the Swiss labour laws. Private persons from foreign countries who invest in Switzerland and who wish to manage a business, as well as managers of foreign companies, are generally granted a work and resident permit, particularly if high-value jobs are created. The immigration procedures to be followed and the required permit depend on whether the persons are EU nationals or citizens of a country outside the EU.

The protection of intellectual property rights is well developed in Switzerland. For internationally active companies, worldwide protection can be achieved through a single entry.

Financing is generally available at low interest rates, thereby reducing overall capital costs. Worldwide competition has made the real estate market much more flexible. Business investors will find a range of prices for commercial space, depending on the region selected.

Swiss financial institutions specialize in financing business investments. In addition to financing arrangements for establishing a business, financial institutions in Switzerland offer a variety of attractive solutions in financing current business activities.

By European standards, taxation in Switzerland is investor-friendly, and the system provides for a variety of tax planning possibilities.

Contracts and commercial

Swiss and foreign parties are free to enter into agreements and business relation at their own discretion. Switzerland has signed the UN Convention of the international sale of goods.
As regards agency agreements the Swiss Code of Obligations (OR) contains only few provisions.
As regards distribution agreements there are no statutory laws or regulations as such. However distribution agreements - especially exclusive distribution agreements - require an examination of the relevant laws on contract, trade marks, competition and EU or other international treaties.

Franchise agreements are not regulated by the law. However various regulations, such as the Swiss Code of Obligations, have an impact on franchise agreements.

Internet and e-commerce are not regulated in special laws. The general provisions of the Swiss Code of Obligations are applicable on new economy.

Company and corporate

When setting up a company, foreign nationals can select from the available forms of legal entities. Swiss law recognizes the following types of business forms:

  • Sole proprietorship (Einzelfirma).
  • Partnership and limited partnership (Kollektivgesellschaft, Kommanditgesellschaft).
  • Public limited company (AG).
  • Association limited by shares (Kommanditaktiengesellschaft).
  • Private limited liability company (GmbH).
  • Cooperative society (Genossenschaft).

All forms of business entities are registered with the Cantonal commercial register. All possible legal forms have their advantages and disadvantages. These can best be identified through a comparison of the different forms. The most common forms of domicile for a foreign company in Switzerland are the subsidiary and the branch.
In general, no approval from the authorities, chambers of commerce or professional associations is required to establish a business. The exercise of certain professions or the establishment of specific businesses may, however, require special licenses or diplomas. To conduct a business personally on a permanent basis, a work and residence permit is required. Foreigners who do not have a residence permit may have their business operated by Swiss nationals. All business sectors are open to foreign investment. It is not necessary that Swiss persons hold a certain percentage of the equity.

Labour and employment

Switzerland's education system ranks among the best in the world and produces a well-qualified workforce at all levels. As a result of the high quality education system and the multicultural society, a large part of the population is fluent in multiple languages.
For foreigners who conduct a business personally on a permanent basis a work and residence permit is required. The immigration procedures to be followed and the required permit depend on whether the persons are EU nationals or citizens of a country outside the EU.
Worker contributions constitute a large part of the Swiss social insurance system. As a result, social security costs for employers remain moderate.
In Switzerland, the annual working hours are longer than in other European countries, and there are relatively few hours lost due to strikes and holidays. Swiss labour laws are fairly liberal and contain very few regulations. The ability to make private arrangements is much greater, and the law is usually interpreted liberally. The labour laws, the Swiss Code of Obligations and collective employment agreements (tariff agreements or GAV agreements) govern the relationship between the employer and the employee.
Wages are regulated either individually, directly between employer and employee, or within the framework of collective agreements (tariff agreements or GAV agreements). Sufficient latitude has been left for direct negotiation between management and labour.
A written agreement is not mandatory, however the employer shall provide the employee with a conformation of the terms and conditions of employment in due time.
Unless otherwise agreed upon, notice of termination is one month during the first year of employment, two months from the second to the ninth year and three months for longer periods of employment.


The Swiss tax system is strongly influenced by the federal structure of the country. The Confederation, the Cantons and municipalities impose direct taxes on the profits and capital of a business, and on the income and net worth of individual persons. Only the Confederation can levy indirect taxes and duties on consumption. By European standards, the tax burden in Switzerland is moderate - both for companies and individuals. As the emphasis is on direct taxes, the Value Added Tax (VAT) rate is a maximum of only 7.6%, making it the lowest VAT burden in all of Europe. Also custom duties are moderate.
The federal structure leaves ample room for healthy competition between the Cantons. Numerous bilateral conventions prevent double taxation internationally. Switzerland, as a business location, is therefore also attractive from a tax viewpoint.
Operating companies principally engaged in manufacturing, trading or the provision of services benefit from traditionally low taxation on net income. In addition, various tax-planning possibilities are available. Both the Cantons and the Federal authorities give preferential treatment to holding companies relieving them from all income taxes, while extensive tax privileges are granted by the Cantons to domiciliary companies without direct business activities in Switzerland. Swiss branches of a corporation based abroad are taxed only on earnings attributable to the operation in Switzerland.
Only the Cantons levy inheritance and gift taxes, not the Confederation. The tax is based on the net assets transferred to the statutory or designated heirs or other beneficiaries. Increasingly, the Cantons are in the process of eliminating the inheritance tax altogether, at least for descendants. Where it still exists, the inheritance tax is low in comparison with other countries.