Over the past few years, more and more companies have started to strategise ways by which they can escape giving their hard-earned profits to governments. This is the reason why many major global firms decide to set up their headquaters in low taxing jurisdictions like Switzerland. Switzerland is one of the most welcoming investment destinations for foreign investors due to its low taxation, a favourable economic legislature, among many other advantages.
Most importantly, Switzerland offers economic and political stability, a transparent and fair legal system. Furthermore, there is reliable and expandable infrastructure and efficient capital markets. In order to lure foreign companies to invest in their jurisdictions, Swiss cantons offer numerous tax incentives. Some of them even go as far as giving up taxes for new businesses for up to 10 years.
Attractive market for foreign investors
It’s more easier for citizens of the EU or EFTA member countries to set up a business in Switzerland or conduct other commercial activities. Despite being a small country, Switzerland has a vast cultural diversity and presents is a very good test market for new products or services. Many companies test the reactions of potential customers on the Swiss market, before expanding their offer to other markets. For example, Starbucks, the famous US coffee company, opened its first European subsidiary in Zurich in 2001. Now, after more than 18 years, the coffeehouse chain is present in most European countries.
As a strategic location for European markets, Switzerland benefits from economic, fiscal and political stability, a transparent administration and a central geographical position in Europe. Furthermore, labor market legislation is built on some liberal principles that come to the benefit of corporations.
Overall, Switzerland is regarded as a tax haven, but low taxation is due in principle to the fact that more than 70 double taxation treaties have been concluded, which allows companies and foreign investors to benefit from lower tax rates. Taxes are levied at federal, cantonal and municipal levels, being among the lowest in the European region, both for individuals and for legal entities. Swiss cantons and municipalities enjoy a high autonomy in terms of setting tax rates and deductions, except those imposed by the federal government. To attract investors, there is a real competition between cantons in terms of tax rates. This is very beneficial for those who want to start a business in Switzerland.
Transparency in the business environment is due to the fact that the bureaucratic processes for setting up a company have been greatly reduced. The Swiss legal system allows a relatively easy incorporation process, shrinking the company registration process to a few weeks. It is also possible to purchase real estate for commercial purposes without the need for special permits.
Cantons also offer a number of tax incentives for companies that create new jobs locally. This benefits the local economy, therefore, everyone wins. The federal government also provides various tax incentives for foreign companies.
Swiss Legislation for Foreign Investments
In order to boost economic growth, Switzerland highly values international investment. It leverages foreign direct investment due to exported industrial goods and services. At the same time, it receives great capital investments from abroad. The number of investors interested in opening companies in Switzerland is steadily increasing.
The authority that sets out regulations and legal disciplines for foreign investment is the State Secretariat for Economic Affairs (SECO). Thus, bilateral investments and agreements (BITs) are protected against violations of international law. Also, market access conditions for obtaining fair and non-discriminatory activities are also negotiated by the SECO. At the same time, the authority is involved in formulating the investment policy for the Swiss Confederation.
Foreign Investment Protection
The international investment rules relevant to Switzerland are coordinated by the World Trade Organization (WTO). But it should be noted that Switzerland has not been involved in any major international disagreement on foreign investment in the recent past. That's because of its transparent and liberal foreign investment policy.
At the same time, to avoid foreign investors being taxed here and in their country of residence, Switzerland has signed double taxation treaties with a large number of countries.
How to start a Swiss company as a foreigner
Before you start your business, there are a number of things you need to consider. Foreigners who want to start a business in Switzerland must be Swiss residents, have a Swiss legal entity or partner who is a Swiss resident.
According to the Agreement on the Free Movement of Persons, citizens in EU or EFTA countries can benefit from many competitive advantages. It stipulates that these citizens do not need a C permit to reside in Switzerland. They only have to obtain a B permit, but at the same time, they must declare their object of activity and prove it. For more isnights into this process and what documents are required as evidence, reach out to our specialists in Switzerland.
For citizens outside of the EU or EFTA area, the process of registering a company may be daunting but it’s doable. In order to benefit from the advantages of a business in Switzerland, the non - EU/non - EFTA people must comply with the standards set by labor law. As long as they can prove that their businesses will have a lasting and positive effect on the Swiss economy, they are allowed to set up their own companies. Of course, a business plan is required.
Quality of life in Switzerland
Switzerland continues to top the list of countries worth living. High standards of living, quality of life and a safe business environment make Switzerland an attractive location for many foreign entrepreneurs.
Although obtaining a residence permit in Switzerland is made on the basis of fairly strict provisions, labor market access is open to EU citizens.
Finally, the Swiss people themselves are one of Switzerland's most attractive factors. They form one of the world's most skilled people, are native traders, multilingual and accustomed to working with international investors. Because doing business is a very serious matter in Switzerland, investments become very simple and direct. Business discussions are methodological and prudent, although the decision-making process can take longer than in other countries, the outcome is always very precise.
Considering all these advantages, Switzerland remains one of the best European and even worldwide destinations for those who want to set up a company, expand their international operations or invest in various business projects in the country. Our swiss consultants offer the best solutions in order to make this process as simple, quick and easy as possible for all the foreign investors.