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DOING BUSINESS IN SWITZERLAND

Switzerland Business Services Overview About Switzerland Setting up a business in Switzerland Taxation

ABOUT SWITZERLAND

Overview

Switzerland is a land of incredible variety. Picturesque medieval villages and scenic mountains abound. The numerous lakes and rivers seem to have a special sparkle. The cities, while relatively grand, blend charm and comfortable human-scale settings. The rural scenes are perhaps the finest in the Western world. History has given Switzerland little land, but nature has blessed it with the most astonishing natural sights in Europe.

Undoubtedly one of the most attractive countries in the world to live in, Switzerland offers individuals not only some of the best living standards in the world, but also provides an unsurpassed infrastructure for companies operating in the greater European area.

It is also one of the safest countries in the world. Swiss people are law-abiding to a fault, rendering even the minimal police presence superfluous. A recent survey also ranked the country among those with the lowest level of corruption in the world.

Switzerland is Europe’s most mountainous country, with a large number of ski resorts and villages in the mythic alpine regions.

The country comprises 26 cantons.

Although it does not belong to the European Union (UE), it is a full member of the European Free Trade Association (EFTA). Likewise, Switzerland does not belong to the European Monetary System, yet it is a member of the International Monetary Fund (IMF).

Switzerland is also a member of a number of international economic organisations, including the United Nations (UN), the World Trade Organization (WTO) and the Organization for Economic Cooperation and Development (OECD).

Switzerland has borders with major EU countries, namely with Austria, France, Germany, Italy as well as Liechtenstein. Major Swiss cities include Zurich, Geneva, Basel, Lucerne, Lugano and Lausanne.

The diversity of the landlocked, mountainous country is the essence of Switzerland and gives the country its unique identity. In Switzerland, seasons are very distinct, with summers that are hot without being scorching and winters that are cold enough to go skiing, but without extreme temperatures.

Nature and leisure activities are among the most important aspects of Swiss tourism. It goes without saying that Switzerland is one of the best winter sports destinations in the world. Ski resorts of all grades, facilities, atmospheres and costs cover the country. The best-known, such as Zermatt, Crans-Montana, Verbier, St Moritz and Davos need no introduction.

Swimming and water-sports have big followings at all the lakeside resorts, and almost everywhere, water is clean. Boats and equipment for windsurfing are available for rent on almost all lakes. Rowing, canoeing, walking, skating and other healthy pursuits are also popular.

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Economy

Switzerland’s gross domestic product (GDP) is estimated to be CHF 322.3 billion (2005 estimation) with CHF 28,165 of the GDP per capita.

A high degree of political and monetary stability as well the central location of the country are the major factors of the economical appeal of Switzerland whose economy is on of the most productive in the world. The political system of the country is free of bureaucracy. The labour force of the country is highly educated and dynamic.

Switzerland is one of the world’s major financial centres. Swiss banking network is one of the most highly developed in the world. In 1998, around 3.9% of the economically active population in Switzerland was working in the finance and banking industry. The Electronic Stock Exchange in Zurich is Europe's third largest, based on the value of equity trading.

An important aspect of the Swiss banking system is its tradition of banking secrecy, which is protected by law. Any violation of bank secrecy automatically gives rise to criminal proceedings. Bank secrecy is an expression of the importance given to the protection of the individual’s private affairs. Consequently, as a rule, banks are not required nor are they permitted to give any information to the tax authorities. However, banking secrecy is not absolute as it can in particular be lifted in the scope of criminal proceedings.

The main strength of the Swiss finance centre is the asset management and investment advisory services. The total funds under management in Switzerland currently amount to roughly 2.800 billion Swiss Francs. About 50 % of that impressive sum is owned by foreign clients.

In addition, Switzerland is highly industrial country with the following major industries: machinery, pharmaceutics, chemical manufacture, high-technology and precision instruments.

The freight forwarding, insurance and tourism are another significant part of the country’s economy.

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Government

Switzerland is a federal state composed of 26 following cantons: Aargau, Appenzell Ausser-Rhoden, Appenzell Inner-Rhoden, Basel-Landschaft, Basel-Stadt, Bern, Fribourg, Geneve, Glarus, Graubunden, Jura, Luzern, Neuchatel, Nidwalden, Obwalden, Sankt Gallen, Schaffhausen, Schwyz, Solothurn, Thurgau, Ticino, Uri, Valais, Vaud, Zug and Zurich.

The cantons retain some attributes of sovereignty, such as fiscal autonomy and the right to manage internal cantonal affairs. Under the 2000 Constitution, cantons hold all powers not specifically delegated to the federation.

The primary seat of power is the bicameral Swiss parliament, the Federal Assembly, which has two houses – the Council of State and the National Council, both having equal powers in all respect, including the right to introduce the legislation. The Council of state consists of 46 members who are directly elected in each canton by majority voting. The National Council consists of 200 members also elected in each canton but under the system of proportional representation. Members of both houses serve for 4 years.

Through referenda, citizens may challenge any law voted by federal parliament and through initiatives introduce amendments to the federal constitution, making Switzerland a direct democracy.

All citizens of 18 or older have the right to vote and run for office in national, cantonal, and communal elections.

The top executive body and collective Head of State is the Federal Council, a collegial body of seven members elected by the Federal Assembly for 4-year terms. The President of the Confederation is elected from the seven to assume special representative functions for one year.

Laws, Regulations and Standards

While the substantive law of Switzerland is mostly federal, civil procedure law is cantonal. Each canton has its own code of civil procedure. The organisation of courts vary from one canton to another. However, some basic rules of civil procedure are applicable in all cantons.

As a rule, each canton's procedural code provides for two court levels, the courts of first instance and the courts of appeal.

Most cantonal codes of civil procedure also provide for a court of cassation, which can cancel judgments issued by lower courts. Some civil procedure laws provide special courts for commercial, lease and labour conflicts.

The highest court of Switzerland is the Federal Supreme Court in Lausanne. The function of the Federal Supreme Court is to hear appeals of cantonal courts of the administrative rulings of the federal administration. The judges of the Federal Court are elected by the Federal Assembly for six-year terms.

The Federal Parliament formally enacts Swiss federal laws. Under the Federal Constitution, the cantons are given lawmaking competence, unless a specific provision confers this power to the Federal Assembly. Areas of federal control include matters of national interest such as defence and foreign affairs, fiscal policies, and rail and postal services.

Swiss law is primarily statutory law. Constitutional provisions take precedence over ordinary statutes and administrative regulations. Such statutory law can be found in the federal and cantonal corpus juris.

Decisions of a court are not binding on other courts.

The private law primarily comprises civil law and the law of obligations. Civil law, family law, estate and property law were codified at the federal level in the Swiss Civil Code in 1907.

The law of obligations covers contract law, unjust enrichment (quasi contracts), torts, partnerships, corporations and negotiable instruments. It was codified in the Swiss Code of Obligations in 1881. These laws are issued in German, French and Italian, but unofficial English translations are available.

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Facts and Figures

Official Name Swiss Confederation
Capital Bern
Other major cities Zurich
Geneva
Basel
Lucerne
Lugano
Lausanne
Official Languages German, French and Italian
Currency Swiss franc (CHF)
GDP (purchasing power parity) CHF 322.3 billion (2005 estimation)
GDP - real growth rate 1.2% (2005 est.)
GDP - per capita: purchasing power parity CHF 28,165 (2005 est.)
Unemployment rate 3.8% (2005 est.)
Labor force 3.8 million (2005 est.)
Inflation rate 1.2% (2005 est.)
Exchange Rate Swiss francs per US dollar - 1.23 (2005)
Trading Partners
Exports Germany 20%
US 9.1%
France 9.1%
Italy 8.8%
UK 4.9%
Imports Germany 29%
Italy 11.8%
France 11.1%
US 7.6%
Austria 4.5%
UK 4.5%
Netherlands 4.3%
Population 7,489,370 inhabitants (2005 estimation)
Religions Roman Catholic 41.8%
Protestant 35.3%
Orthodox 1.8%
other Christian 0.4%
Muslim 4.3%
Area Size 41 284 sq km

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The People

Key Concepts

Switzerland is a small country with approximately 41 284 sq km of land and 7,48 million inhabitants. There are 4 national languages: German (65% of the population), French (20%), Italian (7.5%) and Romansch, a Rhaeto-Roman dialect spoken in parts of the Grisons (0.5%). English language is very widespread and it is often used as a link between Switzerland's various linguistic communities. Switzerland is extremely open culturally and economically, and thus should have all the services a foreign language speaker could possibly want.

Swiss quality enjoys worldwide recognition. It is the result of a good educational system, a strong work ethic and co-operative industrial relations. The country ranks among the top five globally in terms of educational structures and enjoys high standards of education at all levels. Public universities, which are mainly located in Lausanne, Geneva, Bern, Basel, Zürich, St. Gall, Neuchâtel, and Fribourg, offer well regarded advanced degrees and polytechnic universities are world known for their research. In addition to the excellent Swiss public school system, international curricula are available in most large towns.

Zurich, Geneva and Basel have international airports. They are efficient, accessible and offer direct daily flights to all major European cities. A reliable rail network links cities and towns throughout the country.

Business Practice and Etiquette
  • In Swiss business culture, clothing is formal and conservative.
  • Clothing styles for both men and women are more subdued in the German north than in the French and Italian speaking regions.
  • Standard attire for men includes finely tailored suits, starched shirts, and ties.
  • Standard attire for women includes suits with skirts of a conservative length. Pantsuits, in classic styles, can also be acceptable.
  • The Swiss may initially seem reserved. But once you develop a rapport with them, you'll generally find them honest, responsible people and loyal.
  • The Swiss are very punctual. Usually, meeting are set up several weeks in advance;
  • The Swiss are very polite and good listeners. They are extremely attentive, rarely interrupt, and remember practically everything you say to them.
  • The Swiss tend to be conservative in their opinions and do not change their minds easily but it would be wrong to think of them as unnecessarily stubborn.

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