Switzerland is one of the most highly developed and progressive economies in the world. For many years it has been a byword for stability and security, but it is less well known for its innovation.
Despite the country’s strength in traditional sectors like banking and big pharma, Switzerland also leads the way in innovation; investing heavily in research and development and cultivating new industries such as fintech, medtech, cybersecurity and robotics.
Figures from the Federal Department of Foreign Affairs (FDFA) show that Swiss gross domestic product (GDP) per capita in 2015 stood at CHF77,943 (EUR73,000), the second highest in the world. The figures also reveal that it spends close to 3 per cent of annual GDP on research and development, more than CHF 18.5 billion (EUR 15 billion) in 2015.
Investment in cutting edge technological development contributes heavily to the Swiss economy’s ability to remain resilient and relevant, but this talent for innovation extends into other areas, which are equally important to Switzerland’s success and its attractiveness as a place to do business.
Progressive Swiss attitudes have contributed to an extremely attractive tax environment, light-touch labour laws, a mature, stable financial system and a highly developed and integrated system of international trade.
The Swiss tax framework is different from others in Europe, based as it is on a system of domestic tax competition between autonomous cantons and communes within the Swiss Confederation. The most attractive of its 26 cantons, in tax terms, are international leaders with regard to both corporate taxes and the tax imposed on highly skilled workers. Innovations in the tax arena are ongoing, with a new framework for corporate tax, called TP17, currently being evaluated.
In terms of international trade, Switzerland is not part of the European Union, but does have bilateral trade agreements with every country in Europe. According to the FDFA, around 78 per cent of Swiss imports are from the EU, while 43 per cent of Swiss exports are destined for EU countries. In total, Switzerland has 41 separate free trade agreements (FTAs), which makes it an attractive base for international investment or expansion.
The innovative spirit of the Swiss people can also be seen in the type of organisations that thrive in Switzerland. More than 99 per cent of Swiss firms are small and medium-sized enterprises (SMEs), as defined by 250 employees or less. This drives a real entrepreneurial culture and provides plenty of scope for high-growth investment opportunities.
The labour force that fuels this entrepreneurialism is highly skilled, multicultural and multilingual. According to Switzerland Global Enterprise (an organisation enabling new business in Switzerland), an excellent social security system and low unemployment means labour disputes are rare, enabling labour regulations to be liberal and light-touch.
To confirm this, we can refer to The Global Talent Competitiveness Index compiled by international business school INSEAD. It ranks countries and cities in terms of flexible regulatory and business landscape, employment policies which combine flexibility and social protection, plus external and internal openness and diversity for competitiveness.
In their 2018 study, Switzerland topped the country list, ahead of Singapore, USA and Norway, while Zurich topped the city list, ahead of Stockholm, Oslo and Copenhagen.
This potent mixture of stability and innovation is the hallmark of Switzerland, which should be considered a key global investment destination for internationally-minded corporates. In the following pages, you will hear from a range of legal experts providing interesting detail on a variety of different specialisms, including employment law, competition law, data protection regulations and corporate transactions.
Their thoughts should serve to further highlight the strengths of this vibrant, stable, hi-tech and innovative country at the heart of Europe.