Policies Towards Foreign Direct Investment

With the exception of its agricultural sector, foreign investment into Switzerland is generally not hampered by significant barriers, with no reported discrimination against foreign investors or foreign-owned investments.  Incidents of trade discrimination do exist, for example with regards to agricultural goods such as bovine genetics products.

A Swiss government-affiliated non-profit organization, Switzerland Global Enterprise (S-GE), has a nationwide mandate to attract foreign business to Switzerland on behalf of the Swiss Confederation.  S-GE promotes Switzerland as an economic hub and fosters exports, imports, and investments.  Some city and cantonal governments offer access to an ombudsman, who may address a wide variety of issues involving individuals and the government, but does not focus exclusively on investment issues.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic enterprises may freely establish, acquire, and dispose of interests in business enterprises in Switzerland.  Switzerland does not maintain an investment screening mechanism for inbound foreign investment; Parliament instructed the Federal Council to prepare one in March 2020.  This process is expected to take at least two years, and a mechanism may enter into force in 2023.  There are some investment restrictions in areas under state monopolies, including certain types of public transportation, postal services, alcohol and spirits, aerospace and defense, certain types of insurance and banking services, and the trade in salt.  Restrictions (in the form of domicile requirements) also exist in air and maritime transport, hydroelectric and nuclear power, operation of oil and gas pipelines, and the transportation of explosive materials.  Additionally, the following legal restrictions apply within Switzerland:

Corporate boards: A company registered in Switzerland must be represented by at least one person domiciled in Switzerland.  This can be either a member of the board of directors or a member of the executive board (article 718 para. 4 of the Code of Obligations).  Foreign-controlled companies often meet this requirement by nominating Swiss directors.  However, the manager of a company need not be a Swiss citizen, and company shares may be controlled by foreigners.  Further, since January 1, 2021, larger publicly listed companies headquartered in Switzerland must fill at least 30 percent of their board positions with women.  Companies have five years to meet this requirement, otherwise they will be required to state the reasons and outline planned remediation measures in their compensation report to shareholders.  The establishment of a commercial presence by persons or enterprises without legal status under Swiss law requires a cantonal establishment authorization.  These requirements do not generally pose a major hardship or impediment for U.S. investors.

Hostile takeovers:  Swiss corporate equity can be issued in the form of either registered shares (in the name of the holder) or bearer shares.  Provided the shares are not listed on a stock exchange, Swiss companies may, in their articles of incorporation, impose certain restrictions on the transfer of registered shares to prevent hostile takeovers by foreign or domestic companies (article 685a of the Code of Obligations).  Hostile takeovers can also be annulled by public companies under certain circumstances.  The company must cite in its statutes significant justification (relevant to the survival, conduct, and purpose of its business) to prevent or hinder a takeover by a foreign entity.  Furthermore, public corporations may limit the number of registered shares that can be held by any shareholder to a percentage of the issued registered stock.  Under the public takeover provisions of the 2015 Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading and its 2019 amendments, a formal notification is required when an investor purchases more than 3 percent of a Swiss company’s shares.  An “opt-out” clause is available for firms that do not want to be taken over by a hostile bidder, but such opt-outs must be approved by a super-majority of shareholders, and must take place well in advance of any takeover attempt.

Banking: Those wishing to establish banking operations in Switzerland must obtain prior approval from the Swiss Financial Market Supervisory Authority (FINMA), a largely independent agency administered under the Swiss Federal Department of Finance.  FINMA promotes confidence in financial markets and works to protect customers, creditors, and investors.  FINMA approval of bank operations is generally granted if the following conditions are met: reciprocity on the part of the foreign state; the foreign bank’s name must not give the impression that the bank is Swiss; the bank must adhere to Swiss monetary and credit policy; and a majority of the bank’s management must have their permanent residence in Switzerland.  Otherwise, foreign banks are subject to the same regulatory requirements as domestic banks.

Banks organized under Swiss law must inform FINMA before they open a branch, subsidiary, or representation abroad.  Foreign or domestic investors must inform FINMA before acquiring or disposing of a qualified majority of shares of a bank organized under Swiss law.  If exceptional temporary capital outflows threaten Swiss monetary policy, the Swiss National Bank, the country’s independent central bank, may require other institutions to seek approval before selling foreign bonds or other financial instruments.

Insurance: A federal ordinance requires the placement of all risks physically situated in Switzerland with companies located in the country.  Therefore, it is necessary for foreign insurers wishing to provide liability coverage in Switzerland to establish a subsidiary or branch in-country.

U.S. investors have not identified any specific restrictions that create market access challenges for foreign investors.

Other Investment Policy Reviews

The World Trade Organization’s (WTO) September 2017 Trade Policy Review of Switzerland and Liechtenstein includes investment information.  Other reports containing elements referring to the investment climate in Switzerland include the OECD Economic Survey of November 2019.

• Link to the WTO report:

https://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm#bycountry

• Link to the OECD reports / papers: https://www.oecd-ilibrary.org/economics/oecd-economic-surveys-switzerland-2019_7e6fd372-en

Business Facilitation

The Swiss government-affiliated non-profit organization Switzerland Global Enterprise (SGE) has a mandate to attract foreign business to Switzerland on behalf of the Swiss Confederation.  SGE promotes Switzerland as an economic hub and fosters exports, imports, and investments.  Larger regional offices include the Greater Geneva-Berne Area (which covers large parts of Western Switzerland), the Greater Zurich Area, and the Basel Area.  Cantonal and regional Chambers of Commerce provide similar support.  Each canton has a business promotion office dedicated to helping facilitate real estate location, beneficial tax arrangements, and employee recruitment plans.  These regional and cantonal investment promotion agencies do not require a minimum investment or job-creation threshold in order to provide assistance.  However, these offices generally focus resources on attracting medium-sized or larger entities with the potential to create higher numbers of jobs in their region.

References:

• The Swiss government’s online portal (“easygov”) is Switzerland’s online registration website and includes links to the main local interlocutors for business related questions: https://www.easygov.swiss/easygov/#/
• Switzerland Global Enterprise connects companies with potential host regions: https://www.s-ge.com/en/investment-promotion
• Some of the larger promotion offices are:
• Greater Geneva-Bern Area: https://www.ggba-switzerland.ch/en/
• Greater Zurich Area: https://www.greaterzuricharea.com/enBasel Area: https://www.baselarea.swiss/

Switzerland has a dual system for granting work permits and allowing foreigners to create their own companies in Switzerland.  Employees who are citizens of the EU/EFTA area can benefit from the EU Free Movement of Persons Agreement.  Permits for people from countries outside the EU/EFTA area, such as U.S. citizens, are restricted to highly qualified personnel.  U.S. citizens who want to become self-employed in Switzerland must meet Swiss labor market requirements.  The criteria for admittance, which usually do not create unusual hindrances for U.S. persons, are contained in:

• The Federal Act on Foreign Nationals and Integration (unofficial English translation): https://www.admin.ch/opc/en/classified-compilation/20020232/index.html
• Decree on Admittance, Residence and Employment (VZAE) (available in German, French, Italian): https://www.admin.ch/opc/de/classified-compilation/20070993/index.html

Setting up a company in Switzerland requires registration at the relevant cantonal Commercial Registry.  The cost for registering a company can range considerably, from a few hundred Swiss francs in the case of sole proprietorships or joint partnerships, to higher registration costs for limited liability companies or corporations.  A list of Swiss federal fees generally applied for small and medium-sized companies is available at https://www.kmu.admin.ch/kmu/en/home/concrete-know-how/setting-up-sme/starting-business/trade-register%20/registration-costs.html.  However, additional cantonal fees can add significantly to total registration costs, and Public Notary fees may also be necessary, which can also vary considerably by canton.

Other steps/procedures for registration include:  1) placing paid-in capital in an escrow account with a bank; 2) drafting articles of association in the presence of a notary public; 3) filing a deed certifying the articles of association with the local commercial register to obtain a legal entity registration; 4) paying the stamp tax at a post office or bank after receiving an assessment by mail; 5) registering for VAT; and 6) enrolling employees in the social insurance system (federal and cantonal authorities).

The World Bank’s Doing Business Report 2020 ranks Switzerland 36^th in the ease of doing business among the 190 countries surveyed, and 81^st in the ease of starting a business, with a six-step registration process and 10 days required to set up a company.

Outward Investment

While Switzerland does not explicitly promote or incentivize outward investment, Switzerland’s export promotion agency Switzerland Global Enterprise facilitates overseas market entry for Swiss companies through its Swiss Business Hubs in several countries, including the
United States.  Switzerland does not restrict domestic investors from investing abroad.

The United States and Switzerland do not have a bilateral investment agreement (BIT) but signed a bilateral Trade and Investment Cooperation Forum Agreement on May 25, 2006.  This agreement is the primary mechanism for discussions on trade and investment issues between the United States and Switzerland.  Switzerland has concluded numerous investment protection treaties with developing and emerging market economies.  A total of 111 BITs and 36 relevant Free Trade Agreements (FTAs) with investment commitments are in force.

See the UNCTAD Investment Policy Hub for a full listing of BITs: https://investmentpolicy.unctad.org/international-investment-agreements.  Currently, Switzerland (or the EFTA) is in various stages of discussions regarding FTAs with Algeria, India, Malaysia, MERCOSUR, Thailand, and Vietnam. Negotiations with Belarus, Kazakhstan and Russia are currently on hold.

Switzerland concluded an Income Tax Treaty with the United States in 1996.  A 2009 Protocol to this Treaty entered into force in September 2019 after ratification by the U.S. Senate.  The protocol allows greater information exchange to bolster tax compliance and combat tax evasion. Details are accessible on the website of the U.S. Internal Revenue Service: https://www.irs.gov/businesses/international-businesses/switzerland-tax-treaty-documents.

Transparency of the Regulatory System

The Swiss government uses transparent policies and effective laws to foster a competitive investment climate.  Proposed laws and regulations are open for three-month public comment from interested parties, interest groups, cantons, and cities before being discussed within the bicameral parliament or promulgated by the appropriate regulatory authority.  Authorities take comments into account carefully, particularly since proposals may be subject to optional or automatic referenda that allow Swiss voters to reject or accept the proposals.  Only in rare instances – such as the case of the extension of a moratorium until 2025 on planting GMO crops – are regulations reviewed on the basis of political or customer preferences rather than solely on the basis of scientific analysis.

International Regulatory Considerations

Switzerland is not a member of the European Union.  However, Switzerland adopts many EU standards in line with a series of agreements with the EU.

The WTO concluded in 2017 that Switzerland has regularly notified its draft technical regulations, ordinances, and conformity assessment procedures to the WTO TBT Committee.  Switzerland has been a signatory to the Trade Facilitation Agreement (TFA) since 2015.

Legal System and Judicial Independence

Swiss civil law is codified in the Swiss Civil Code (which governs the status of individuals, family law, inheritance law, and property law) and in the Swiss Code of Obligations (which governs contracts, torts, commercial law, company law, law of checks and other payment instruments).  Switzerland’s civil legal system is divided into public and private law.  Public law governs the organization of the state, as well as the relationships between the state and private individuals or other entities, such as companies.  Constitutional law, administrative law, tax law, criminal law, criminal procedure, public international law, civil procedure, debt enforcement, and bankruptcy law are sub-divisions of public law.  Private law governs relationships among individuals or entities.  Intellectual property law (copyright, patents, trademarks, etc.) is an area of private law.  Labor is governed by both private and public law.

All cantons have a high court, which includes a specialized commercial court in four cantons (Zurich, Bern, St. Gallen and Aargau).  The organization of the judiciary differs by canton; smaller cantons have only one court, while larger cantons have multiple courts.  Cantonal high court decisions can be appealed to the Swiss Supreme Court.  The court system is independent, competent, and fair.

Switzerland is party to a number of bilateral and multilateral treaties governing the recognition and enforcement of foreign judgments.  The Lugano Convention, a multilateral treaty tying Switzerland to European legal conventions, entered into force in 2011 (replacing an older legal framework by the same name).  A set of bilateral treaties is also in place to handle judgments of specific foreign courts.  While no such agreement is in place between the United States and Switzerland, Switzerland operates under the New York Convention on Recognition and Enforcement of Foreign Arbitral Law, meaning local courts must enforce international arbitration awards under specific circumstances.

Laws and Regulations on Foreign Direct Investment

The major laws governing foreign investment in Switzerland are the Swiss Code of Obligations, the Lex Friedrich/Koller, Switzerland’s Securities Law, the Cartel Law and the Financial Market Infrastructure Act.  There is no specific screening of foreign investment beyond a normal anti-trust review.  Parliament instructed the Federal Council to prepare a foreign investment screening mechanism in March 2020, a process expected to take two years with the earliest date for entry into force in 2023.  There are few sectoral or geographic incentives or restrictions; exceptions are described below in the section on performance requirements and incentives.

There is no pronounced interference in the court system that should affect foreign investors.

Useful websites:

• The Swiss Code of Obligations, including an unofficial English translation: https://www.admin.ch/opc/en/classified-compilation/19110009/index.html
• Information on the acquisition of property in Switzerland by persons abroad: https://www.bj.admin.ch/dam/data/bj/wirtschaft/grundstueckerwerb/lex-e.pdf
• The Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (Unofficial English translation):  https://www.admin.ch/opc/en/classified-compilation/20141779/index.html
• The Federal Act on Cartels and other Restraints of Competition including an unofficial English translation: https://www.admin.ch/opc/en/classified-compilation/19950278/index.html
• Switzerland Global Enterprise provides a “handbook for investors” with the relevant laws: https://www.s-ge.com/en/publication/handbook-investors/handbook-investors

Competition and Antitrust Laws

The Swiss Competition Commission and the Swiss Takeover Board review competition-related concerns, and regularly decide on questions concerning mergers, market access, abuse of market position, and other matters affecting competitive advantage.  The Competition Commission is currently considering a case to determine whether MasterCard has the right to refuse co-badging of a National Cash Scheme of Swiss stock exchange operator SIX for cash withdrawals from ATMs, for example.  In May and June 2020, the Commission decided on cases involving state subsidies in the aviation sector due to the COVID-19 crisis.  Subsidies to airlines SWISS and Edelweiss were permitted, but a planned subsidy to SR Technics, an aircraft maintenance provider controlled by China’s HNA group, was disallowed as incompatible with the terms of a Swiss-EU aviation sector agreement.  In September 2020, the Competition Commission fined cable television operator UPC the equivalent of over USD 30 million for having unfairly restricted access by other cable operators to Swiss ice hockey games.  Among notable recent cases of the Takeover Board was the approval in August 2020 for the acquisition of Swiss mobile communications provider Sunrise by cable television operator UPC Switzerland.

The Swiss agricultural sector remains heavily protected, in part through direct subsidy payments comprising two-thirds of an average farm’s profits.  On average, Swiss agriculture has one of the lowest levels of productivity among OECD members.  A newly negotiated trade agreement between EFTA and Mercosur contains provisions which would open Swiss markets to new levels of agricultural imports.  The agreement is pending Parliamentary review and approval.

Expropriation and Compensation

There are no known cases of expropriation within Switzerland.

Dispute Settlement

ICSID Convention and New York Convention

Switzerland has been a member of the International Center for Settlement of Investment Disputes (ICSID) since June 1968, and a member of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards since June 1965.  Switzerland’s Federal Act on Private International Law (Art. 194) sets a minimum standard for the implementation of international arbitration awards in Switzerland.

Investor-State Dispute Settlement

Based on Switzerland’s membership in the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, local courts are entitled to enforce international arbitration awards.  According to the United Nations Conference on Trade and Development (UNCTAD), Switzerland has never been a respondent party to an investment dispute in international arbitration.

International Commercial Arbitration and Foreign Courts

Swiss courts recognize and enforce foreign arbitral awards in the framework of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.  Post has no knowledge of any investor disputes in Switzerland involving U.S. persons within the last 10 years.

As business associations organized at the cantonal level, the Chambers of Commerce and Industry, of Basel, Bern, Geneva, Lausanne, Lugano, Neuchâtel, and Zurich have established the Swiss Chambers’ Arbitration Institution.  This entity offers dispute resolution based on Swiss Rules of International Arbitration and Swiss Rules of Commercial Mediation.  According to the Swiss Chambers’ Arbitration Institution, 96 cases were submitted in 2019 (latest available data); 63 of these cases involved foreign parties.

Bankruptcy Regulations

Switzerland’s bankruptcy law, the Federal Act on Debt Enforcement and Bankruptcy of 11 April 1889 (in German, French and Italian), does not criminalize bankruptcy.  Under the bankruptcy law, the same rights and obligations apply to foreign and Swiss contract holders.  Swiss authorities provide information about Swiss residents and companies regarding debts registered with the debt collection register.

The World Bank’s 2020 “Doing Business” survey ranks Switzerland 49^th out of 190 countries in resolving insolvency.  The average time to close a business in Switzerland is three years (compared to 1.7 years average across the OECD), with an average of 46.7 cents on the dollar recovered by claimants from insolvent firms (compared to 70.2 cents OECD average).

The Swiss Federal Statute on Private International Law (PILS, Art. 166-175, in force since January 1, 1989) governs Swiss recognition of foreign insolvency proceedings, including bankruptcies, foreign composition, and arrangements.  Swiss law requires reciprocity for recognition of foreign insolvency.

Investment Incentives

Many of Switzerland’s cantons make significant use of financial incentives to attract investment to their jurisdictions.  Some of the more forward-leaning cantons have in the past waived taxes for new firms for up to ten years.  However, after criticism by the OECD and European Union, the Federal Council proposed tax reform measures that became known as “Tax Reform and AHV Financing” (TRAF), which entered into force on January 1, 2020.  TRAF obliged Swiss cantons to offer the same corporate tax rates to both Swiss and foreign companies, while allowing cantons to continue to set their own cantonal rates and offer incentives for corporate investment. This can be deductions and preferential tax treatment for certain types of income, such as patents, or expenses, such as research and development.

Overall cantonal tax rates decreased or are expected to decrease under TRAF.  However, certain tax-friendly cantons, such as Zug, will likely remain competitive for foreign investment by continuing to offer aggressive incentives.  In its latest locational quality survey in 2020, Credit Suisse notes that many cantons are offering attractive tax rates, and that the relative advantage of low corporate tax rates between cantons has declined.  Under TRAF, effective tax rates of between 12 and 14 percent can be expected in most cantons, according to PricewaterhouseCoopers.  In Zurich, which is sometimes used as a reference point for corporate location tax calculations within Switzerland due to its role as a prominent business center, the combined effective corporate tax rate fell from 21.15 percent to 19.7 percent as of 2021 (with a further decrease expected in 2023).  This includes municipal, cantonal, and federal tax.

The new corporate tax rules aim to create an internationally compliant, competitive tax system for companies while strengthening the AHV (Swiss pension scheme) by generating additional receipts.  The TRAF tax reform is intended to safeguard the appeal and competitiveness of Switzerland as a business location, and to secure jobs and tax receipts in the medium to longer term.

Personal income tax rates may also vary widely across the 26 cantons.

Foreign Trade Zones/Free Ports/Trade Facilitation

Switzerland’s free ports remain an important hub particularly for art works and collectibles from all over the world.  The country has taken steps in recent years to strengthen anti-money laundering measures and minimize the risks of abuse in free ports, to ensure that processes are in line with international standards.

Performance and Data Localization Requirements

Switzerland does not mandate local employment, but the work of foreign nationals is subject to work permit regulations.  Employees who are citizens of the EU/EFTA area can benefit from the EU Free Movement of Persons Agreement.  Permits for people from countries outside the EU/EFTA area, such as U.S. citizens, are restricted to highly qualified personnel.

There are no “forced localization” laws designed to require foreign investors to use domestic content in goods or technology (e.g. data storage within Switzerland).  In a June 2017 court decision regarding a 2014 Federal Council decision to exclude a foreign competitor from bidding on services related to the government’s critical infrastructure, the court ruled in favor of the Swiss state-owned enterprise involved in the bid.  U.S. companies have to date not voiced concerns.

Switzerland follows strict privacy laws and certain data may not be collected in Switzerland, as it is deemed personal and “worthy of protection.”  The collection of certain data may need to be registered at the office of the Federal Data Protection and Information Commissioner.  Some foreign companies have located data centers in Switzerland due to the country’s strict privacy rules and neutrality.  In April 2018, FINMA published an outsourcing circular clarifying regulations for data storage for the banking and insurance sector at: https://www.finma.ch/en/documentation/circulars/.

Since January 2017, the U.S.-Swiss Privacy Shield mechanism has provided a framework for companies in both countries to comply with data protection requirements when transferring personal data from Switzerland to the United States in support of transatlantic commerce.  On September 8, 2020, the Federal Data Protection and Information Commissioner (FDPIC) of Switzerland issued an opinion concluding that the Swiss-U.S. Privacy Shield Framework does not provide an adequate level of protection for data transfers from Switzerland to the United States pursuant to Switzerland’s Federal Act on Data Protection (FADP).  This followed a July 2020 judgment by the Court of Justice of the European Union declaring in the Schrems II case as “invalid” the European Commission’s Decision 2016/1250 of 12 July 2016 on the adequacy of the protection provided by the EU-U.S. Privacy Shield.  As a result of the FDPIC opinion, organizations wishing to rely on the Swiss-U.S. Privacy Shield to transfer personal data from Switzerland to the United States should seek guidance from the FDPIC or legal counsel.  The United States and the European Union announced in March 2021 that they were intensifying negotiations on an enhanced Privacy Shield framework.  The outcome of these negotiations will likely have a strong impact on developments in the U.S.-Swiss Privacy Shield framework as well.

Real Property

Physical property rights are recognized and enforced within Switzerland, which currently ranks 18^th out of 190 countries in the ease of transferring and registering property, according to the World Bank’s Doing Business Report 2020.

Intellectual Property Rights

According to the World Intellectual Property Organization’s (WIPO’s) World Intellectual Property Indicators, in 2019 Switzerland ranked 8th globally in filing patents, 10th in industrial designs, and 14th in trademarks, which reflects Switzerland’s overall strong protection and enforcement of intellectual property rights (IPR).

In 2020, Switzerland was removed from USTR’s Special 301 Watch List for revisions to its Copyright Act intended to address specific difficulties in Switzerland’s system of online copyright protection and provisions to facilitate civil and criminal enforcement, particularly regarding online infringement.  The revisions came into force on April 1, 2020.  This was an important step after many years of engagement, and the United States is carefully monitoring the implementation, interpretation, and effectiveness of the newly enacted legislation and will continue to engage with the Swiss government on these and other IP issues.

Federal customs authorities in Switzerland have the authority to seize counterfeit goods upon request from the IPR holder or from related interest groups (e.g. professional associations).  Goods can be seized and held for 10 days if there is reasonable suspicion that they are counterfeit.  Provisional measures can also be obtained from a Swiss court to ensure evidence is not destroyed.  If the destruction of goods is requested by an IPR holder, the owner of the goods can dispute that claim in writing within 10 days.  The boom in online trade and tighter border controls during the COVID-19 health crisis have led to a major increase in the number of counterfeit goods seized by federal customs.  In 2020, Swiss Customs conducted 4,433 interventions to seize counterfeit commercial goods, up 50 percent from the number of cases in 2019.  The number of items seized decreased from 22,324 in 2019 to 18,788 in 2020, most of which were counterfeit bags and watches.  In 2020, a total of 7,486 consignments of unauthorized pharmaceuticals were seized, the large majority of which were unauthorized erectile dysfunction medications.

Detailed information is available on Swiss Customs website: https://www.ezv.admin.ch/dam/ezv/en/dokumente/stab/fakten-und-zahlen-2021.pdf.download.pdf/FaktenZahlenEZV_2021_EN_Webversion.pdf

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en/.

Capital Markets and Portfolio Investment

The Swiss government’s attitude toward foreign portfolio investment and market structures is positive, resulting in high global rankings by many indices.

The SIX Swiss stock exchange based in Zurich is a significant international stock market  based on market capitalization.

Money and Banking System

Switzerland is home to a sophisticated banking system that provides a high degree of service to both foreign and domestic entities.  Switzerland also has an effective regulatory system that encourages and facilitates portfolio investment.  The Swiss Bankers Association, which has nearly 300 member financial institutions, estimated that Switzerland’s banking sector managed assets amounting to approximately USD 8 trillion in 2019, almost half of which come from abroad, making Switzerland the world market leader in cross-border wealth management.  The largest banks, UBS and Credit Suisse, have total assets of approximately USD 1 trillion and USD 800 million, respectively, while Raiffeisen Switzerland holds about USD 250 billion and Zurich Cantonal Bank holds roughly USD 170 billion.  Switzerland’s independent central bank is the Swiss National Bank (SNB).

U.S. citizens who are resident in Switzerland may face difficulties in opening bank accounts at smaller Swiss banks as a result of the administrative costs of complying with additional regulatory and administrative procedures required for the accounts of U.S. persons under accepted disclosure rules.  Several associations provide information about Swiss banks that offer services to U.S. clients.  For more information, see the following page at the U.S. Embassy Bern website: https://ch.usembassy.gov/u-s-citizen-services/local-resources-of-u-s-citizens/living-in-ch/banking-resources/

The Swiss government created a blockchain task force in January 2018 to foster cooperation between the traditional banking sector and the nascent industry and to discuss potential legal and regulatory reforms to attract blockchain technologies while maintaining anti-money laundering controls.  In December 2018, the Swiss government endorsed a report on the legal framework for blockchain and distributed ledger technology (DLT) in the financial sector, with the goal of creating favorable conditions for Switzerland to evolve as a leading location for fintech and DLT companies.  In September 2020, Parliament approved a “blockchain act,” proposed by the Swiss government to adapt federal legislation to recent developments in DLT.  The act will be implemented in two phases.  Company law reforms came into force on February 1, 2021, and a second batch of legislation on financial market infrastructure upgrades will follow in summer 2021.  This opens the doors to a fully regulated cryptocurrency and digital securities industry in Switzerland.  There are now a wide range of companies in Switzerland that can create and list DLT-compatible digital securities.  A network of trading platforms is expected to be established in 2021 as well.

Foreign Exchange and Remittances

Foreign Exchange

In 2015 the Swiss National Bank (SNB) abandoned the Swiss franc’s euro peg (CHF 1.20 / EUR), starting a period of strengthening of the franc over time.  Perceived as a “safe haven” currency, the franc often strengthens during times of economic downturn or crisis.  As of March 2021, the franc traded at just over CHF 1.10 / EUR, and just over CHF 0.94 / USD.

Since 2015, the SNB has attempted to limit the excessive strengthening of the franc by instituting a negative interest rate for commercial bank deposits at the SNB, currently set at -0.75 percent, while continuing an expansionary monetary policy through intervention in the foreign currency market.

In December 2020, the U.S. Treasury Department released its semi-annual Foreign Exchange Policies report, concluding that Switzerland had manipulated its currency under the terms of the Omnibus Trade and Competitiveness Act of 1988 and the Trade Facilitation and Trade Enforcement Act of 2015.  The report found that Switzerland met all three criteria used to determine currency manipulation in the 12 months through June 2020: a goods trade surplus with the United States of over $20 billion, a current account surplus of over 2 percent of GDP, and one-sided currency interventions totaling at least 2 percent of GDP.  The report acknowledged the economic upheaval from COVID generated massive safehaven inflows to the Swiss franc, which dramatically increased the upward pressure on the franc.  The SNB assessed in December 2020 that the franc was “highly valued,” and said it would maintain its current monetary and foreign currency intervention policies as needed to stabilize the economy and prices.  The strength of the franc lowers effective prices of imports to Switzerland, but also harms Swiss competitiveness as an export-oriented economy.

Remittance Policies

There are currently no restrictions on converting, repatriating, or transferring funds associated with an investment (including remittances of capital, earnings, loan repayments, lease payments, royalties) into a freely usable currency at the legal market clearing rate.

Sovereign Wealth Funds

Switzerland does not have a sovereign wealth fund or an asset management bureau.

The Swiss Confederation is the largest or sole shareholder in Switzerland’s five state-owned enterprises (SOEs), active in the areas of ground transportation (SBB), information and communication (Swiss Post, Swisscom), defense (RUAG, which was divided into two companies in January 2020 – see below), and aviation / air traffic control (Skyguide).  These companies are typically responsible for “public function mandates,” but may also cover commercial activities (e.g., Swisscom in the area of telecommunications).

SOEs typically have commercial relationships with private industry.  Private sector competitors can compete with SOEs under the same terms and conditions with respect to access to markets, credit, and other business operations.  Additional publicly owned enterprises are controlled by the cantons in the areas of energy, water supply, and a number of subsectors.  SOEs and canton-owned companies may benefit from exclusive rights and privileges (some of which are listed in Table A 3.2 of the most recent WTO Trade Policy Review – https://www.wto.org/english/tratop_e/tpr_e/tp455_e.htm).

Switzerland is a party to the WTO Government Procurement Agreement (GPA).  Some areas are partly or fully exempted from the GPA, such as the management of drinking water, energy, transportation, telecommunications, and defense.  Private companies may encounter difficulties gaining business in these exempted sectors.

Privatization Program

In the aftermath of a 2016 cyberattack, the Federal Council reviewed Swiss defense and aerospace company RUAG’s structure in light of cybersecurity concerns for the Swiss military, and decided in June 2018 to split the company. RUAG was split into two holding companies as of January 1, 2020.  A smaller company, MRO Switzerland, remains state-owned and provides essential technology and systems support to the Swiss military.  A larger company, RUAG International, includes non-armaments aviation and aerospace businesses, and will be gradually fully privatized in the medium term, according to the Swiss government.

The Swiss Confederation and Swiss companies are generally aware of the importance of pursuing due diligence to responsible business conduct (RBC) and demonstrating corporate social responsibility (CSR).  In response to criticism from civil society about the business practices of Swiss companies abroad, the Swiss government commissioned a series of reports on the government’s role in ensuring CSR, particularly in the commodities sector, and in December 2016 published a national action plan in conjunction with its commitments under the UN Guiding Principles on Business and Human Rights (https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-64884.html).  In June 2017, the Swiss government concluded that Switzerland promotes voluntary principles, such as the upholding of human rights standards, and also supports including mandatory CSR market incentives, such as minimum conditions for the protection of workers abroad, in forthcoming legislation.  In January 2020, the Swiss government approved the CSR Action Plan 2020-2023, which covers sixteen measures – particularly promoting sustainability reporting and due diligence by companies, stakeholder dialogue, and the alignment of private section CSR instruments with the OECD Guidelines for Multinational Enterprises.

The latest updates on corporate social responsibility are available on https://www.seco.admin.ch/seco/en/home/Aussenwirtschaftspolitik_Wirtschaftliche_Zusammenarbeit/Wirtschaftsbeziehungen/Gesellschaftliche_Verantwortung_der_Unternehmen.html

In November 2020, a referendum known as the “Responsible Business Initiative,” which would have placed new obligations on Swiss companies to protect human rights and the environment internationally, was narrowly rejected by Swiss voters.  Instead, a proposal of Parliament will come into force, obliging covered companies to report on environmental and labor issues, human rights and the fight against corruption and to exercise due diligence with regard to conflict minerals and child labor.  Also, Swiss companies involved in minerals extraction abroad will be required to source all minerals in compliance with international labor standards and applicable environmental laws, and must report on measures to ensure their international activities do not involve or support child labor.

In March 2021, Swiss voters approved a free trade agreement between Indonesia and the EFTA, of which Switzerland is a member.  The agreement requires that any palm oil imported under preferential tariffs be produced sustainably.  This is said to be the first-ever agreement of its type that links trade preferences to sustainable methods of production.

Switzerland ranked 3rd out of 180 countries in the 2020 Yale University-based Environmental Performance Index (EPI).

The Swiss government implements the OECD Due Diligence Guide for Responsible Supply Chains of Minerals from Conflict and High-Risk Areas.  Switzerland is a member of the Extractive Industries Transparency Initiative and supports the Better Gold Initiative, which promotes responsible gold mining in Peru,  Bolivia and Colombia.  Switzerland’s Point of Contact for the OECD Guidelines at the State Secretariat for Economic Affairs (SECO) may be contacted at: https://mneguidelines.oecd.org/ncps/switzerland.htm.  Information about the Swiss Better Gold Association is available at: https://www.swissbettergold.ch.

Switzerland has signed a number of nonbinding agreements outlining best practices for corporations, including the Voluntary Principles on Security and Human Rights and the International Code of Conduct for Private Security Service Providers. The latter was the result of a multi-stakeholder initiative launched by Switzerland.

Switzerland is also a signatory state of the Montreux Document, a non-binding instrument on the obligations of states under international law with regard to the activities of private military and security companies.

Additional Resources

Department of State

• Country Reports on Human Rights Practices (https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/)
• Trafficking in Persons Report (https://www.state.gov/trafficking-in-persons-report/)
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities (https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/)
• North Korea Sanctions & Enforcement Actions Advisory (https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf)

Department of Labor

• Findings on the Worst forms of Child Labor Report (https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings)
• List of Goods Produced by Child Labor or Forced Labor (https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods)
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World (https://www.dol.gov/general/apps/ilab)
• Comply Chain (https://www.dol.gov/ilab/complychain/)

Switzerland is ranked 3rd of 180 countries in Transparency International’s Corruption Perceptions Index 2020, reflecting low perceptions of corruption in society.  Under Swiss law, officials are not to accept anything that would “challenge their independence and capacity to act.”  In case of non-compliance the law foresees criminal penalties, including imprisonment for up to five years, for official corruption, and the government generally implements these laws effectively.  The bribery of public officials is governed by the Swiss Criminal Code (Art. 322), while the bribery of private individuals is governed by the Federal Law Against Unfair Competition.  The law defines as granting an “undue advantage” either in exchange for a specific act, or in some cases for future behavior not related to a specific act.  Some officials may receive small gifts valued at no more than CHF 200 or CHF 300 for an entire year, which are not seen as “undue.”  However, officials in some fields, such as financial regulators, may receive no advantages at all.  Transparency International has recommended that a maximum sum should be set at the federal level.

Investigating and prosecuting government corruption is a federal responsibility.  A majority of cantons require members of cantonal parliaments to disclose their interests.  A joint working group comprising representatives of various federal government agencies works under the leadership of the Federal Department of Foreign Affairs to combat corruption.  Some multinational companies have set up internal hotlines to enable staff to report problems anonymously.

In 2009, Switzerland ratified the United Nations Convention against Corruption.  The Swiss government experts believe this ratification did not result in significant domestic changes, since passive and active corruption of public servants was already considered a crime under the Swiss Criminal Code.

A review by the Council of Europe’s Group of States against Corruption (GRECO) in 2017 recommended the adoption of a code of ethics/conduct, together with awareness-raising measures, for members of the federal parliament, judges, and the Office of the Attorney General (OAG) to avoid conflict of interests.  These measures needed to be accompanied by a reinforced monitoring of members of parliament’s compliance with their obligations.  In March 2018, the OECD Working Group on Bribery in International Business Transactions recommended that Switzerland adopt an appropriate legal framework to protect private sector whistleblowers from discrimination and disciplinary action, to ensure that sanctions imposed for foreign bribery against natural and legal persons are effective, proportionate, and dissuasive, and to ensure broader and more systematic publication of concluded foreign bribery cases.  The OECD Working Group positively highlighted Switzerland’s proactive policy on seizure and confiscation, its active involvement in mutual legal assistance, and its role as a promoter of cooperation in field of foreign bribery.  Regarding detection, the OECD Working Group commended the key role played by the Swiss Financial Intelligence Unit (MROS) in detecting foreign bribery.

A number of Swiss federal administrative authorities are involved in combating bribery.  The Swiss State Secretariat for Economic Affairs (SECO) deals with issues relating to the OECD Convention.  The Federal Office of Justice deals with those relating to the Council of Europe Convention, while the Federal Department of Foreign Affairs (MFA) deals with the UN Convention.  The power to prosecute and judge corruption offenses is shared between the relevant Swiss canton and the federal government.  For the federal government, the competent authorities are the Office of the Attorney General, the Federal Criminal Court, and the Federal Police.  In the cantons, the relevant actors are the cantonal judicial authorities and the cantonal police forces.

In 2001, Switzerland signed the Council of Europe’s Criminal Law Convention on Corruption.  In 1997, Switzerland signed the OECD Anti-Bribery Convention, which entered into force in 2000.  Switzerland signed the UN Convention against Corruption in 2003.  Switzerland ratified the UN Anticorruption Convention in 2009.

In order to implement the Council of Europe convention, the Swiss parliament amended the Penal Code to make bribery of foreign public officials a federal offense (Title Nineteen “Bribery”); these amendments entered into force in 2000.  In accordance with the revised 1997 OECD Anti-Bribery Convention, the Swiss parliament amended legislation as of 2001 on direct taxes of the Confederation, cantons, and townships to prohibit the tax deductibility of bribes.

Switzerland maintains an effective legal and policy framework to combat domestic corruption.  U.S. firms investing in Switzerland have not raised with the Embassy any corruption concerns in recent years.

Resources to Report Corruption

Government Agency Contact:

Michel Huissoud
Director
Swiss Federal Audit Office
Monbijoustrasse 45
3003 Bern / Switzerland
Ph. +41 58 463 10 35
Messages can be submitted via https://www.bkms-system.ch/bkwebanon/report/clientInfo?cin=5efk11

“Watchdog” Organization Contact:

Martin Hilti
Executive Director
Transparency International Switzerland
Schanzeneckstrasse 25
P.O. Box 8509
3001 Bern / Switzerland
Ph. +41 31 382 3550
E-Mail: info@transparency.ch

There is minimal risk from civil unrest in Switzerland.  Protests do occur in Switzerland, but authorities carefully monitor protest activities.  Urban areas regularly experience demonstrations, mostly on global trade and political issues, and some occasionally sparked by U.S. foreign policy.  Protests held during the annual World Economic Forum (WEF) occasionally draw participants from several countries in Europe.  Historically, demonstrations have been peaceful, with protestors registering for police permits.  Protestors have blocked traffic; spray-painted areas with graffiti, and on rare occasions, clashed with police.  Political extremist or anarchist groups sometimes instigate civil unrest.  Right-wing activists have targeted refugees/asylum seekers/foreigners, while left-wing activists (who historically have demonstrated a greater propensity toward violence) usually target organizations involved with globalization, alleged fascism, and alleged police repression.  Swiss police have at their disposal tear gas and water cannons, which are rarely used.

The Swiss labor force is highly educated and highly skilled.  The Swiss economy is capital intensive and geared toward high value-added products and services.  In 2020, 77 percent of the workforce was employed in services, 20.4 percent in manufacturing, and 2.6 percent in agriculture.  Full-time work compared to part-time work is more prevalent among foreign workers than among Swiss workers: 40.1 percent of the Swiss population works part-time, compared to 26.9 percent of the foreign working population.  Wages in Switzerland are among the highest in the world.  Switzerland continues to observe International Labor Organization (ILO) core conventions.  Government regulations cover maximum work hours, minimum length of holidays, sick leave, compulsory military service, contract termination, and other requirements.  There is no federal minimum wage law.

Foreigners fill not only low-skilled, low-wage jobs, but also highly technical positions in the manufacturing and service industries.  In 2020, foreigners account for 26.4 percent of Switzerland’s labor force estimated at about 5 million people.  Many foreign nationals are
long-time Swiss residents who have not applied for or been granted Swiss citizenship.  Foreign seasonal workers take many lower-wage jobs in agriculture.

In September 2020, Swiss voters decided against an initiative to limit immigration across European borders, which would have negated the Swiss-EU Free Movement of Persons Agreement, with potentially significant implications for the immigrant-dependent labor market.  However, in the wake of a 2014 referendum to impose limits on immigration, the government introduced a series of measures aimed at bringing traditionally underemployed groups into the labor market – women, older job seekers, refugees, and temporarily accepted asylum seekers.  In July 2018 the Federal Council implemented a parliamentary decision that companies in sectors with more than 5 percent unemployment provide information on job openings to government-run employment centers, which make the openings available to cross-border commuters and EU nationals as well.

Switzerland generally prohibits commerce on Sunday.  Swiss voters narrowly accepted a 2005 revision of the Swiss Federal labor law in order to provide flexible working hours, such as Sunday openings in major railway stations and airports.  Shopping hours outside of these locations remain mainly regulated by cantonal laws.  Employees in the retail sector and in restaurants and bars, in cooperation with other interests, have been successful in resisting the easing of federal and cantonal laws governing opening hours, but in recent years the State Secretariat for Economic Affairs (SECO) has loosened work restrictions on Sundays, for example by allowing a limited number of malls to be open on Sundays.  For much of 2020 and early 2021, significant additional restrictions on business opening hours and mandatory telework policies have been enacted by the Swiss federal or cantonal governments, due to the COVID-19 pandemic.  However, these measures have been temporary in nature, and are expected to be lifted once the pandemic has passed.

Trade union density – the percentage of the workforce represented by trade unions – is on the decline in Switzerland, according to OECD data.  From over 20 percent in 2000, trade union density had fallen to 14.9 percent by 2017, according to the OECD (latest data available).  Labor-management relations are generally constructive, with a general willingness on both sides to settle disputes by negotiation rather than labor action.  According to the Federal Office of Statistics, some 581 collective agreements were in force in Switzerland in March 2018 (latest data available).  Of these, approximately 64 percent concern the services sector, 34 percent the manufacturing sector, and 1 percent the agricultural sector; these are usually renewed without major difficulties.  Trade unions continue to promote a wider coverage of collective agreements for the Swiss labor force.  Although the number of workdays lost to strikes in Switzerland is among the lowest in the OECD, Swiss trade unions have encouraged workers to strike on several occasions in recent years.  In difficult economic times, employers may temporarily shift full-time employees to part-time by registering with cantonal authorities and justifying reductions as necessary to business activities.  This practice, known as Kurzarbeit (“short-time work”), allows for the government to make partial salary payments through the unemployment insurance fund.  Employees can reject the shift to part-time work, but risk dismissal in that case.  Responsibility for establishing and enforcing rules for the Kurzarbeit program ultimately belongs to the Federal Council, the seven-member executive of the Swiss government.  Kurzarbeit has become widespread with the onset of the COVD-19 crisis and the temporary shutdown of wide segments of the Swiss economy.  Officials announced in May 2020 that a total of 1.91 million employees from 187,000 companies – or more than 37 percent of the total workforce – were on reduced working hours under the program.  These numbers reduced drastically later in the year, with a total of 219,388 employees from 22,853 companies participating as of October 2020.  The Swiss government has continued expanded financial support for the Kurzarbeit program throughout the pandemic.

A general prohibition on strikes by Swiss public servants was repealed in 2000, although restrictions remain in place in a few cantons.  The Federal Council may now only restrict or prohibit the right to strike where it affects the security of the state, external relations, or the supply of vital goods to the country.

Switzerland’s average unemployment rate was 4.4 percent in 2019 under ILO Labor Force Survey methodology, while according to Swiss authorities registered unemployment in 2020 was 3.1 percent.  Cantons bordering EU countries experience higher unemployment rates than Switzerland as a whole.

Switzerland does not have a free trade agreement with the United States, but has shown interest in exploring the potential for such an agreement.  Switzerland has no agreed bilateral labor standards with the United States.

Average exchange rate for 2020: 1 USD = 0.939 CHF
Average exchange rate for 2019: 1 USD = 0.994 CHF
* Source: Federal Office of Statistics, Swiss National Bank
**Significant statistical discrepancies are due to methodological differences in measuring foreign direct investment.  Data most recent available.  Swiss data based on ultimate beneficial ownership.

Theodore Fisher
Economic/Commercial Officer
U.S. Embassy in Bern, Sulgeneckstrasse 19, 3003 Bern
+41 31 357 7011
Business-bern@state.gov