Switzerland has a highly developed services sector focused on the financial services industry, and it also excels in high-tech and knowledge-based production. Other key sectors include the chemical, pharmaceutical and life-sciences industries. Switzerland has one of the highest levels of per capita gross domestic product (GDP) in the world. Its currency, the Swiss franc, is regarded as a “safe haven currency” due to the country’s stable economy. 

As Switzerland is a relatively small country, the economy relies heavily on trade. To bolster its openness towards external markets, Switzerland has low tariffs on imports. Switzerland’s status as an investment haven is due to its highly developed financial sector offering a suite of financial instruments, while the Swiss banking industry is well capitalised. 

Foreign investors typically enjoy the same regulatory treatment as Switzerland’s national investors, including the same tax regulation and corporate laws. There are no significant barriers to foreign investment. The country’s geographical location gives it access to the European, African and Middle Eastern markets. Switzerland’s state-of-the-art infrastructure further enhances its connectivity within the region.  

Corporate Treasury in Switzerland 

Switzerland has been consistently rated as one of the top five most competitive economies in the world by the World Economic Forum. In this section, we highlight some of the key factors relevant to treasury and cash management in Switzerland.  

Financial Market Development 

• Zurich is ranked 10th and Geneva is ranked 20th in the 2021 Global Financial Centres Index by Z/Yen Group. 
• Switzerland has excellent business infrastructure, high levels of innovation, a highly skilled multilingual workforce and strong legal protections. Switzerland offers one of the most stable macroeconomic environments in the world.  
• There are no foreign-exchange controls in Switzerland. The Swiss National Bank (SNB) regularly intervenes in the market to try to limit the Swiss franc’s appreciation.  
• Switzerland is positioning itself as a leading centre for sustainable financial services and green financial technology (fintech) solutions. 

Sophistication of Banking Systems 

• Switzerland is one of the world’s leading banking centres.  
• There are more than 240 banks in Switzerland, including state/canton, regional and savings banks, stock-exchange banks, around 70 foreign-controlled banks, and more than 20 branches of foreign banks.  
• Switzerland has a very active debt market with both government and corporate bonds widely available. The market is dominated by corporate issuers, with foreign issuers accounting for a greater market share than domestic. Yields on Swiss government bonds are currently negative.  

Regulatory Bodies 

• The banking industry is regulated by the Swiss Financial Market Supervisory Authority (FINMA). SNB is the central bank.  

Tax 

• Corporate income tax (CIT) is charged at a federal, cantonal and communal level.  
• At the federal level, the CIT rate is 8.5% on profit after-tax. CIT is deductible for tax purposes, giving a federal CIT rate on profit before-tax of around 7.83%. Each canton and commune also levies its own corporate income and capital taxes at different rates.  
• Tax reforms abolishing special canton tax regimes, such as for holding companies and domicile companies, came into force on 1 January 2020. Also, most cantons either reduced or plan to reduce their CIT rate, giving an effective tax rate of between 12% and 15% in the majority of cantons.  
• Resident companies are taxed on their worldwide income, except for profits derived from foreign branches and foreign immovable property. Non-resident companies are taxed on their Swiss-sourced income only. There is no branch profits remittance tax on the remittance of profits to the head office by the branch of a foreign company.  
• Interest income is a taxable item. Interest expenses paid to third parties are generally tax-deductible. Interest paid to related parties must reflect the fair market rate and is subject to limitations. Please note that on an annual basis, the tax authorities in Switzerland issue safe harbour interest rates to be used on loans denominated in Swiss francs.  
• The standard Value Added Tax (VAT) rate is 7.7%, with certain goods and services qualifying for lower rates of 2.5% or 3.7% (including the hotel and lodging industry). VAT exemptions exist for most banking services and insurance premiums.  
• A securities transfer tax of 0.15% is levied on the transfer of Swiss securities, including shares and bonds, and 0.3% is levied for foreign securities. Various exemptions may apply.  
• Issuance stamp tax is charged at 1% of the fair market value of equity contributions to Swiss companies. However, the first CHF1 million of equity in exchange for ownership rights are exempted from issuance of stamp duty. Various exemptions may apply.  
• There is no capital gains tax at the federal level. However, capital tax is levied at the cantonal and the communal level, based on the company’s equity, with rates ranging from 0.001% to 0.5% (depending on location).  
• There is no withholding tax (WHT) on interest. WHT on dividends is either 0% or 35% for resident companies. WHT, at the rate of 35% on dividends and 0% or 35% on interest, is payable by non-resident companies where no tax treaty is in place. Where a tax treaty is in place and the non-resident can provide a Certificate of Residence, rates range from 0% to 25% on dividends and 0% to 15% on interest.  
• Switzerland has tax treaties with more than 90 countries and territories.  
• Switzerland is a signatory to the Organisation for Economic Co-operation and Development’s Multilateral Competent Authority Agreement, through which information is exchanged between tax administrations, to provide a single, global picture on some key indicators of economic activity within multinational enterprises.  

Benefits for Regional Treasury Centres 

• Cash concentration is available in Switzerland on a domestic and cross-border basis. Companies may include accounts from different legal entities in their liquidity-management structures.  
• Notional pooling is permitted on both a cross-border and domestic basis but used less than cash concentration as Swiss banking law does not permit credit and debit balances to be offset.  
• Switzerland is a member of the European Free Trade Association (EFTA) and has established bilateral trade agreements with the European Union (EU).  
• Switzerland is located in Europe with trading hours that overlap with Asia and North America.