Switzerland: Presenting a resilient and stable location in the heart of Europe

The global tax landscape surrounding multinational businesses and their supply chains was already evolving through the course of the OECD BEPS project, the European Anti-Tax Avoidance Directive, and the imposition of blacklists and restricted jurisdictions. COVID-19 has since painfully revealed the fragility of global supply chains and, as a result, businesses have been required to make significant adjustments in many instances to increase their supply chain resilience. 

Additionally, in some cases, changes are needed to fulfil local supply requirements and regulations of some industries, such as the pharmaceutical industry. There is a certain shift away from the concept of merely ‘just-in-time’ to a concept of ‘just-in-case’. 

While COVID-19 may lead to de-globalisation to a degree in some areas, the new catchword is ‘glocalisation’. However, there is little doubt that the tried and tested concept of principal entrepreneurs with global supply chain responsibility will remain crucial in the future.

While major headquarter locations across the globe are increasingly under scrutiny by internal and external forces, Switzerland has moved to increase its attractiveness through its corporate tax reform by becoming fully compliant in phasing out harmful tax regimes, while retaining a tax friendly environment with competitive tax rates. 

Switzerland has created an optimal world for global principal companies, explaining the large number of international companies located there. They profit from a competitive tax environment, such as through: 

• Low headline tax rates of as low as around 11.3% (effective tax rate, combined effective federal/cantonal/communal rate);

• Overall business-friendly tax authorities;

• Absence of controlled foreign corporation (CFC) legislation;

• Strong, global double tax treaty network meeting the OECD minimal standards;

• Establishment of capital contribution reserves on migrating to Switzerland, which can be distributed withholding tax (WHT) free and with no legal distribution limitations;

• Step-up on migration to Switzerland, where hidden reserves can be amortised tax effectively up to 10 years; and

• The possibility to migrate into Switzerland with a ‘leveraged’ buy-in, with no interest limitations based on earnings before interest, taxes, depreciation and amortisation (EBITDA).

Whereas taxation is a key factor to attract global headquarters, Switzerland also continuously ranks among the best locations for doing business as: 

• One of the best locations to attract highly qualified ‘top’ talent;

• One of the most innovative countries/markets;

• Access to ‘world-class’ infrastructure;

• Access to global markets; and 

• Its convenient location within the heart of Europe.

Likewise, Switzerland’s stability, reliability and resilience may be seen as some of the key assets of the country, which are among others, the result of a well-trained and disciplined workforce and a stable political environment. These assets have proven invaluable in challenging times and will remain a key strength of the country in the future.

René Zulauf

T: +41 58 279 60 00

E: rzulauf@deloitte.ch

Manuel Angehrn

T: +41 58 279 60 00

E: maangehrn@deloitte.ch