Switzerland is known for many things, such as luxury goods, delicious cheese and chocolate, beautiful landscapes and high quality financial services. However, Switzerland is also considered one of the best business locations worldwide and lately it has gained the attention of entrepreneurs and companies interested in financial technology, or simply put Fintech.
FinTech is a fast growing industry sector, in which companies use technology to maximize their profits in the financial industry. Through technology, buyers and sellers are connected directly, without using intermediaries.
Some of the most important players in the Fintech industry are cryptocurrency startups. Switzerland is already a great business location for startups due to the favorable business policies and tax system, but now companies developing or working with digital currencies are mostly drawn to the canton of Zug. Zug is considered by now Europe’s Silicon Valley for Fintech companies.
Reasons to open a Fintech company in Switzerland
Zug is an ideal location to open a Fintech company for many reasons. Switzerland has a stable economy, a strong reputation regarding activities in innovation, being ranked at the top spot in the Global Innovation Index and promoting security and privacy. Not only banks and other financial institutions are required to protect the privacy of their clients but most Swiss companies in general require their employees to maintain confidentiality and loyalty.
Furthermore, the Bitcoin has been recognized as a legitimate foreign currency, which means that it is legal to use the currency in the country without any type of uncertainty. FINMA, the Swiss Financial Market Supervisory Authority authorized the Bitcoin stock exchange – ECUREX, thus facilitating the exchange of Swiss Francs to Bitcoin.
Other advantages of opening a Fintech company in Switzerland are related to the country’s legislation, such as having liberal laws, a labor market that functions under flexible regulations, high security and favorable free-trade policies.
Therefore, considering all these factors, it is easy to see why Switzerland has become an established business hub, attracting several multinational companies, including important players from the tech industry. As a matter of fact, Google and eBay are just two of the large companies that have offices open in Switzerland. Google’s largest engineering office outside of the US is based in Zurich.
Switzerland's long history of stability, regulation and political neutrality has made the country a hub for related financial affairs. So, there should be no surprise that the city that accepts Bitcoin for utilities payments is located in Switzerland. In fact, the business environment in Switzerland and the relatively free market economy even helped transfer the Bitcoin wallet and the Xapo exchange to move to Switzerland.
Zug, Switzerland’s Crypto Valley
Located just in the southern part of the canton of Zurich, Zug was once a preponderantly farming town, but now it has become one of the wealthiest and also most sought out cantons in Switzerland. The reason for this change is the drastic tax rate deduction made in the 1940s. The tactic was meant to attract companies to invest there, both local and foreign businesses. Over the last decade, the number of companies operating in Zug increased by more than 70%. It is an advantageous situation for all parties involved. Local authorities receive more tax payments, the local unemployment rate is very low and the companies pay reduced tax rates, compared to other jurisdictions.
It was only a matter of time until Fintech companies made their appearance in the Zug canton and now the location has become a place of development for cryptocurrency companies which has determined the country to establish trading markets, decentralized currencies and encryption methods.
In addition, companies activating in this industry can receive support to relocate from the Bitcoin Association Switzerland and from the Digital Finance Compliance Association, a self-regulatory organization in the Fintech industry.
Although Zug is the main destination for most Fintech companies; other Swiss cities are also emerging as locations for this type of businesses, such as Zurich or Geneva. This is possible because Switzerland provides an attractive framework for various types of investments and business endeavors.
Zug also offers its citizens a relatively hands-off approach to the local economy. Zug offers one of the lowest tax rates in the world. This combination of a government-led hands-off approach and high tax advantages makes this small city a successful economic hub. Also, 3% of the world's crude oil (crude and refined petroleum) is marketed via Zug and its neighboring city, Barr.
These beneficial economic features make Zug an enticing location for Fintech, Bitcoin, and blockchain startups.
Companies and entrepreneurs who want to open a Fintech company in Switzerland are recommended to acquire the services of a form specialized in company formation in Switzerland, which make the entire process of setting up a Swiss company much faster and easier.