Celebrating UK and Switzerland ties – Switzerland is open for business

Published by Andrew Griggs on 9 March 2022

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Switzerland and the United Kingdom (UK) have long-standing and close relations. These are based on similar ideas on topics such as the rule of law, fundamental freedoms, social and economic order, and good governance. There is a particular focus on economic and financial market issues.

Switzerland and the UK are important trading partners and are closely intertwined economically. Liberal economies and open markets are high priorities for both Switzerland and the UK. The UK is Switzerland’s sixth most important trading partner.

Why Switzerland?

Switzerland has the fourth highest per capita gross domestic product worldwide or, when adjusted at purchase power parity, the fifth highest. The high level of motivation of the employees, the strong link between its industry and trade with foreign countries, and the achievements of the services industry are the keys to these economic results. The nominal gross domestic product of USD 36,000 per capita is 60% higher than the EU average and 41% higher than in Germany and Austria.

Switzerland has always been a stable country. The inflation rate in recent years has continually remained below 1% and is, therefore, clearly lower than in the EU and US. Interest rates in Switzerland have remained low because of the high savings rate and large inflows of foreign money.

Nestled between the Alps and the Jura mountains, Switzerland is a communications and transport centre between northern and southern Europe – a place where European cultures and languages meet. No other country offers such great variety in so small an area. The Swiss economyʼs high degree of development exists thanks to a liberal economic system, political stability, and close integration with the economies of other countries. The state creates the necessary framework and only intervenes when this serves the interests of society at large. The high-quality education system and outstanding infrastructure form the basis for the competitiveness of the Swiss economy.

Main Pillars of the Swiss Economy

Switzerland has a leading position among industrialized countries in enabling the acquisition of new skills and technologies in the growth sectors of the future. This is thanks to the geographic concentration and intensive links between firms and knowledge institutions in specific technology fields. Such highly competitive clusters are also highly appealing to new investors.

Today and in the future, it is the following new technologies and clusters that act as the motors of the Swiss economy:

  • biotechnology
  • medical devices
  • information and communication technologies (ICT)
  • micro- and nanotechnology
  • environmental technology, and
  • shared services

Long-term, stable decision-making fundamentals, liberal legislation, protection of free competition and cooperative authorities encourage the establishment of headquarters and facilities in Switzerland for research and production activities.

Stable, safe, secure

Switzerland is the most competitive business centre in the world. There are numerous good reasons to locate a business in Switzerland: innovation and technology, a liberal economic system, political stability, close links with foreign markets, excellent education and healthcare systems, an outstanding infrastructure, a high standard of living, and a competitive tax system. These fundamental criteria position Switzerland as an advantageous European location for establishing a business.

Internationally integrated

Switzerland continues to be one of the most attractive locations for foreign direct investment. Independent studies, including those by the Economist Intelligence Unit, Ernst & Young’s Investment Monitor, and IMD’s World Competitiveness Yearbook, give the country consistently high marks on the criteria most important to decision-makers when selecting a business site.

The country offers many advantages and benefits for business investors, and our investment representatives work directly with companies to develop customized and attractive business structures.

Switzerland isn’t in the EU, but it has bilateral trade agreements in place with every country in Europe. This ensures the free movement of goods, services, and people. Switzerland has even more free trade agreements than the EU has: in total 41 separate FTAs. Investing in an independent country like Switzerland significantly reduces the risks associated with international expansion.

Liberal Economic System

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.

Easy and liberal labour laws

Switzerland’s labour market is characterized by liberal legislation, light-touch regulation, and exceptional social stability. Labour disputes are resolved by the social partners. Strikes are rare. The social insurance system for workers is based on the principles of solidarity and personal responsibility.

Talent pool

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.

With respect to overall productivity, Switzerland ranks fifth among the world’s leading national economies. The workforce is generally highly motivated, and strikes are almost non-existent.

Switzerland acts like a magnet to qualified workers from abroad and retains the talent it grows. In the Global Talent Competitiveness Index by INSEAD, Switzerland takes first place.

An internationally competitive tax situation

The Swiss tax system is strongly influenced by the federal structure of the country. Emphasis is on direct taxes. By European standards, the tax burden in Switzerland is moderate – both for companies and individuals. The Value Added Tax (VAT) and custom duties are also moderate.

The federal structure leaves ample room for healthy competition between the Cantons. Taxes are determined and levied at the federal, cantonal, and municipal levels. Domestic tax competition plays a significant role in the very low rates of taxation. The most attractive cantons in tax terms are international leaders regarding both corporate taxes and the tax imposed on high-income earners. Numerous bilateral conventions prevent double taxation internationally. Switzerland, as a business location, is therefore also attractive from a tax viewpoint.

Emre Özdemir is Managing Partner of a&o Kreston, a member firm of Kreston Global, an international advisory and accountancy network, for which Kreston Reeves is also a member. Find out more here.

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