Our team recently wrote about the advantages for international companies of moving to Switzerland when considering international expansion. Some of the reasons why Switzerland is an exceptional place for companies to be based in Europe, include the ease of doing business compared with other “admin-heavy” jurisdictions.
In this post, we take a look at the support structures readily available for companies to plug into, in order to save time, effort and costs.
Before we begin however, a reminder from our first post on the subject, of some of the reasons at the macro-level for a company considering international expansion, to look at Switzerland as a serious option. These are:
- Stable & thriving economy – top notes with international business analysts such as Bloomberg and is regarded as one of the leading economies in the world.
- Favourable tax regulations
- Use of the Double Taxation Agreement (DTA) with country partners.
- Lowest value-added tax rate in all of Europe and the regular value-added tax (VAT) currently at 7.7% (EU Average 21%).
- Goods and services associated with medical care are totally exempted from tax.
- Network Infrastructure – excellent rail, road and air connections make logistics easy and point to Switzerland as a prime location for expanding internationally.
- Business Entity Types & Engagement Models – Swiss legislation provides flexibility to business owners and offers the choice of different business entity types based on the available number of shareholders and the initial capital.
- Standard of Living – Switzerland has one of the world’s highest standards of living. On the latest Eurostat happiness survey, Switzerland came top in Europe as happiest place to live.
- Stable Currency – The Swiss franc is a strong and stable currency making it attractive to both domestic and international investors. The currency is referred to as a safe haven currency due to its stability measured over longer periods.
- Business-Friendly Ecosystem – Switzerland offers pro-business governmental reforms, incentives andorganisations that treat companies and potential investors like customers – with advisors readily available to guide investors through the investment process.
International Expansion Considerations
When considering international growth strategies, companies must address topics such as purpose, goals, profitability & risks to name just a few. But critically resultant “secondary” bi-product topics, such as market viability, governmental support, taxes, business service outsource partners and much more also need addressing. Switzerland scores high points in all these areas.
- Switzerland is a small country geographically speaking at 41’485 Km2, or the size of Vermont and New Hampshire combined. And although there are four official languages (non of which is English), English is widely spoken and most government information sites are also available in English.
- The Federal Council of Switzerland is also deeply committed to ensuring that international companies looking to invest or relocate to Switzerland can plug into a plethora of support services. Mr. Guy Parmelin, Director, Swiss Federal Department of Economic Affairs, Education, and Research (EAER) at the Swiss Federal Council is committed to cultivating and strengthening Switzerland as a location that is attractive both now and in the future for investors. And to “enable local and international companies as well as research institutes from all sectors to keep performing at their best”.
- Switzerland’s average corporate tax rate currently stands at 14.87% with the lowest rate being 11.85%. This is leading rate compared to the United Kingdom, Sweden, the Netherlands, Luxembourg, Germany and France which are taxed at considerably higher rates.
- Comparing typical business risks, Switzerland:
- Ranks 68th out of 190 economies in the World Bank’s “Doing Business – Ease of Getting Credit” report (2018)
- EU Standards are adopted with certain differences such as sales tax (Switzerland 7.7% / EU 21%)
- Bribery & corruption are extremely low. According to Transparency International Switzerland ranked 5th out of 176 countries (2016).
- Intellectual Property protection is straightforward in Switzerland and the Swiss Federal Institute of Intellectual is responsible for intellectual property protection.
- Currency Risks – the Swiss franc is a strong and stable currency. Working with banks and financial exchange providers is relatively straightforward and currency hedging strategies available.
- Engaging a specialist worker in Switzerland can be done without the need for establishing an own company entity in the country. This makes getting started much easier and faster.
- Employment services providers such as Accurity offer a number of payroll management solutions for international companies looking to engage workers in Switzerland without their own presence there.
Outsourced Employment Solutions – Employer of Record
International companies looking to engage skilled specialists in Switzerland can set this up easily and quickly without the need to have their own legal entity in the country. This can be done by working with a SECO licensed employment services company. This is where:
- The client company agrees terms and conditions with the skilled specialist (or “contractor” ) based in Switzerland.
- The employment services company signs:
- An employment agreement with the contractor.
- Agrees terms with the company to act as a supplier (of the skilled contractor’s labour).
- The employment services company is the “Employer of Record” in Switzerland for the contractor, and the process is referred to as “Labour Leasing”.
- Each month the employment services company invoices the client company for the hours the contractor has worked at the agreed rates.
- The employment services company, manages the payroll and ensures all statutory deductions and payments are made including all insurances and pension plan payments.
Summary
Switzerland is a well organised, highly efficient and very supportive environment for companies looking to expand their footprint internationally. In addition to a plethora of resources available for research and market information, business operations can be set up quickly and in an agile manner working with a local employment services partner.
Accurity is SECO licensed with a 20+ year enviable reputation as a trustworthy, reliable and transparent partner for companies of all sizes including SMEs, contractors and recruitment agents. Our core services include Employer of Record or EOR for contractors and international and domestic clients wishing to engage contractors. We also supporter our contractors and clients with advice on state and private pensions, health insurances and on housing and other cost of living services and insurance plans. Our pricing system is fair and transparent. We are based in Switzerland and have excellent local knowledge and connections. Contact our team to see how we can help you.
Michael is a celebrated strategic Marketing and Business development expert with decades of experience and achievements under his belt. He has extensive commercial knowledge in the relocation and travel industry and has specialised in highly individual customer facing services.
As a Swiss national Michael has a broad experience of Switzerland.
