Switzerland and Liechtenstein WT/TPR/S/208 
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II. TRADE AND INVESTMENT REGIMES  
(1) INSTITUTIONAL FRAMEWORK  
1. Under the 1999 Federal Constitution,  the Swiss Confederation is a federal State, consisting of 
26 cantons.  The political structure of Switzerland comprises three different levels:  the Swiss 
Confederation, the cantons, and the local authorities (communes).  Each canton has wide autonomy, 
with the exception of constitutionally specified areas,  such as international affairs, certain economic 
activities1, border measures, and civil and penal laws, which are under the exclusive competence of 
the federal authority.  All cantons have their own constitutions and laws, but these are subordinate to 
the Federal Constitution and laws.  The status of the 2,715 Swiss communes is defined by cantonal 
legislation, under which concedes wide autonomy to communes. 
2. Article 54 of the Federal Constitution gives the Confederation comprehensive authority in the 
area of foreign affairs and provides the basis for the "conventional foreign economic law", as well as 
for measures relating to international solidarity (such as embargo, development aid, and debt 
rescheduling).  Under Article 101, the Confederation is responsible for protecting the interests of the 
Swiss economy abroad, and is authorized, in excepti onal circumstances, to take measures to protect 
the economy, and to deviate from the principle of  economic freedom.  Such a deviation is also 
allowed under Article 103 (structural policy) in order to support economically threatened regions and 
promote economic branches and professions, if necessary.   In the area of foreign relations, Article 184 
grants the Federal Council the authority to issue time-limited ordinances or adopt decisions, if the 
safeguard of the country's interests so requires.2 
3. Legislative power is vested in the bicame ral Federal Assembly comprising the National 
Council, with 200 members elected directly for four years (renewable) by popular vote and proportional representation (according to the number of  inhabitants in each canton);  and the Council 
of States, comprising 46 councillors elected at th e cantonal level and representing individual cantons.
3  
To be adopted, any decision of the Federal Assembly  must be accepted by both chambers.  Executive 
power is vested in the seven-member Federal Council,  assisted by the Federal Chancellery.  The latter 
advises the Federal Council, and coordinates inter-d epartmental affairs.  The Federal Council also 
signs and ratifies international treaties, subject to approval by the Federal Assembly.  The members of 
the Federal Council (each is head of a federal depa rtment) and the Federal Chancellor are elected by 
the Federal Assembly after each general election of th e National Council.  The President and        
Vice-President of the Confederation are elected annually by the Federal Assembly from among the 
federal councillors.  The Federal Assembly also elects the judges of the Federal Court (Supreme 
Court).4   
4. People's initiatives and referendums are prominen t features of Swiss political life.  A double 
majority (a popular majority and a majority of th e cantons) is required for entry into force of any 
amendment to the Constitution and membership in  certain types of international organization.5  
Citizens seeking a review or amendment to the C onstitution must collect at least 100,000 signatures 
                                                      
1 Such as transport, postal and telecommunication services, nuclear energy, alcohol, and monetary 
policy. 
2 SECO online information, "Legal framework".  Viewed at http://www.seco.admin.ch/themen/00513/ 
00514/index.html?lang=en. 
3 There are two councillors per canton, with the exce ption of the half-cantons of Obwalden, Nidwalden, 
Basel-City, Basel-Country, Appenzell Outer Rhodes, an d Appenzell Inner Rhodes, which have one councillor 
each. 
4 The Federal Court is the court of final instance;  it is responsible for all judicial areas. 
5 A majority of the votes cast through a referendum is sufficient for the adoption of all other matters. WT/TPR/S/208 Trade Policy Review 
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within 18 months.  In the case of federal laws  and certain types of treaty subject to optional 
referendums, 50,000 signatures must be collected w ithin 100 days of their publication, or the 
referendum must be requested by eight cantons.   
5. The State Secretariat for Economic Affairs (SECO), under the Federal Department for 
Economic Affairs (FDEA), is the C onfederation's main agency dealing with economic policy issues.  
It is responsible for all policies relating to trade in goods and services (including foreign trade policy), 
and is Switzerland's lead representation in multilate ral institutions, including the WTO.  SECO and 
the Federal Department of Foreign Affairs (FDF A) maintain a joint Integration Office, which 
coordinates relations and negotia tions with the EC.  SECO is also responsible for economic 
development co-operation and, as such, is in charge  of trade-related technical assistance issues.   
6. SECO has outsourced some of its activities.  The operational aspect of export promotion has 
been outsourced to Osec Business Network Switzerland (Chapter III(3)(vi)).6  On 1 January 2008, 
Osec took over two of SECO's programmes (the Swiss Import Promotion Programme (SIPPO) and 
LOCATION Switzerland) and thus  responsibility for promoting imports, and inward investments.7  
The SIPPO is designed to help (through trade prom otion) small and medium-sized enterprises (SMEs) 
in emerging economies and economies in transition to  enter the Swiss and EC markets, and assists 
Swiss importers in finding new products, new suppliers, and new sourcing markets.8  O s e c  
LOCATION Switzerland serves as a one-stop-shop for fo reign investors, and a point of contact for 
the different regions of Switzerland;  Osec has offices and representatives in a number of countries on all continents, except Australia.  The management of SECO's investment portfolio in developing and 
transition economies has been outsourced to th e Swiss Investment Fund for Emerging Markets 
(SIFEM), a development finance company. 
7. At the domestic level, SECO acts as an interface between business, trade unions, NGOs, and 
government.  It also supports regionally and structur ally balanced developmen t, and deals with issues 
relating to employee protection.   
8. Under the 1921 Constitution (as amended up to 2003 ), the Principality of Liechtenstein is a 
constitutional, hereditary monarchy (male lin e) on a democratic and parliamentary basis.
9  Article 14 
declares, inter alia , the promotion of the general welfare of the people as the supreme function of the 
State.  Article 20 requests the State to promote and assist agriculture, alpine farming, trade, and industry in order to increase employment and to adva nce its economic interests.  Article 22 grants the 
State sovereign rights over hunting, fishing, and mi ning, and instructs it, when legislating on these 
matters, to protect the interests of  agriculture and communal revenues. 
9. The Reigning Prince is the Head of State;  he represents the State in all its relations with 
foreign countries, "without prejudice to the requisite  participation of the re sponsible Government", 
and sanctions all laws passed by the unicameral Parliament ( Landtag ).  In the exercise of his public 
authority, the Prince is bound by the provisions of  the Constitution and laws.  The Constitution grants 
the Reigning Prince jurisdictional immunity.  The Parliament comprises 25 representatives elected by 
universal adult suffrage (under prop ortional representation) for a renewable term of four years.  The 
President and Vice-President are elected from among the members in the first regularly convened 
                                                     
 
6 Osec stands for Office suisse d'expansion commerciale . 
7 The Swiss Organisation for Facilitating Investments (S OFI), previously in charge of facilitating direct 
investment from Switzerland in deve loping countries and economies in  transition, ceased  operations on 
31 December 2007. 
8 SIPPO online information, "SIPPO at a Glance" .  Viewed at:  http://www.sippo.ch/files/sippo/ 
sippo_at_a_glancee.pdf. 
9 Article 2 of the Constitution. Switzerland and Liechtenstein WT/TPR/S/208 
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sitting for the current year.  Participation in  elections and referendums is compulsory;  non-
participation is a fineable offence.  The members of  the Government (i.e. the Prime Minister and four 
Ministers) are appointed by the Reigning Prince, on the proposal of the Parlia ment, for four years.  
The Prince has the right to dismiss the Government  or its Members, if they lose his confidence.10  
Treaties are signed by a member of the Government, ratified by Parliament, and then assented to by 
the Prince.  They may also be subjected to a referendum. 
10. The 2003 amendments introduced significant cha nges and clarifications to the Constitution.  
In order to avoid the risk of a period without Government, the Reigning Prince is now obliged to 
appoint an interim government immediately should he dismiss the existing one or its members.  
Citizens were granted the possibility of expressing th eir dissatisfaction with the Prince's performance 
by calling a referendum.  However, the Princely House would decide whether disciplinary action 
should be taken against the Prince or if he should be dismissed.  The possibility of abolishing the 
monarchy by referendum was also granted.  More over, the amendments intr oduced a time limit (of 
six months) after which no instruction by the Prince on a bill submitted to him means its rejection.  
11. To amend the Constitution by a referendum , 1,500 signatures (or requests from four 
communes) are required.  Citizens of Liechtenstein ca n also bring to public vote a law passed by the 
Parliament or any financial resolution (if it invo lves a new non-recurrent expenditure of at least 
Sw F 300,000 or a new annual expenditure of Sw  F 150,000);  a minimum of 1,000 signatures is 
required (or request from three of the Principality's eleven communes ).  The possibility of such an 
initiative is excluded if the Parliament declares the law or financial resolution to be urgent. 
12. The Liechtenstein judicial system comprises the Princely Court of First Instance, the Princely 
Court of Appeal, and the Princely Supreme Court (the three-tier progression of courts), and the 
Administrative Court and the State Court of Justice.  The Administrative Court hears complaints against Government decisions and orders, while the State Court of Justice protects constitutional 
rights and examines the constitutionality of laws.  Judges are selected by a joint commission chaired 
by the Prince;  half of the co mmission's members are appointed by the Prince, and half by the 
Parliament.
11  However, the commission may only recommend candidates to the Parliament with the 
Prince's assent.  The recommended candidate, if cho sen by the Parliament, will be appointed a judge 
by the Prince.12  Traditionally Swiss and Austrian judges also sit in the Liechtenstein courts.13 
13. In Liechtenstein, the Office of Economic Affa irs and the Office of Trade and Transport 
(formerly Office of Customs Affairs) are the main agencies dealing with economic issues not covered 
by the Customs Union Treaty (section (2) below).  The Office for Foreign Affairs is in charge of 
coordinating membership in international agreemen ts (including those on trade, such as the WTO 
Agreements and the EFTA Convention), as well as th eir administration;  coordination units may be 
established to deal with new international ag reements.  Each office formulates policies in 
collaboration with other national offices or instituti ons, including the Office for Agriculture, and in 
consultation with the private sector (e.g. the Ch amber of Industry and Commerce, the Chamber of 
Trade and Commerce, the Agricultural Union, the Labour Union, and the Liechtenstein Association 
for Environment).  The Government of Liechtenstein and individual companies are members of Osec Business Network Switzerland, and therefore Liechtens tein companies benefit also from its services. 
                                                     
 
10 If a member of the Government loses the confidence of the Reigni ng Prince, the decision on whether 
to allow him or her to continue in office is taken by the Prince in agreement with the Parliament. 
11 The Parliament appoints one me mber for each electoral group represented in the Parliament.  In 
addition, the Government appoints one of its members to be responsible for supervising the administration of 
justice. 
12 Article 96 of the Constitution. 
13 Press and Information Office (2000). WT/TPR/S/208 Trade Policy Review 
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(2) FORMULATION AND IMPLEMENTATION OF TRADE POLICY  
14. Switzerland and Liechtenstein are economically integrated by the 1923 Swiss-Liechtenstein 
Customs Union Treaty.14  Under the Treaty, Switzerland acts on behalf of Liechtenstein in customs 
union issues, such as trade policy measures affecting imports, and agricultural policy.  The Swiss 
trade regime for goods generally applies to Liec htenstein's trade with all countries, except the 
European Economic Area (EEA) members.  Areas wh ere Liechtenstein maintains its own legislation 
include trade in services, government procurement, consumer protection, investment, and in some 
areas of intellectual property  (Table II.1, section (5), Chapter III(2 )(x) and (xi), and Chapter IV(5)).  
Switzerland's and Liechtenstein's participation in  various preferential trade agreements makes the 
administration of their external trade policy somewhat complex. 
Table II.1 
Main trade-related laws and regulations, September 2008 
Legislation Entry into force/ 
latest amendment Reference 
Switzerland   
Federal laws on intellectual property and protection of data, 1931-01a 1932-2002/2007 Laws in the series RS 23 
Ordinances on animal husbandry, 1984-07a 1985-2008/2007 Ordinances in the series RS 916.3 
Federal Law on government procurement of 16 December 1994a 1 January 1996/2007 RS 172.056.1  
Federal Law against unfair competition of 19 December 1986 1 March 1988/2007 RS 241 
Federal Law on cartels and other impediments to competition of 6 October 
1995 1 February 1996/2006 RS 251 
Federal Law on the protection of animals of 9 March 1978a 1 July 1981/2006 RS 455 
Federal Law on war material of 13 December 1996a 1 April 1998/2007 RS 514.51 
Federal Law on national economic supply of 8 October 1982a 1 September 1983/2006  RS 531 
Customs Law of 18 March 2005a 1 May 2007/2007 RS 631.0 
Federal Law on customs tariffs of 9 October 1986a 1 January 1988/2007 RS 632.10 
Federal law on stamp duty of 27 June 1973a 1 July 1974/2006 RS 641.10 
Federal Law regulating value-added tax of 2 September 1999a 1 January 2001/2007 RS 641.20 
Federal laws on ta xation of tobacco, beer, alcohol, motor vehicles, and 
mineral oils, 1932-06a 1933-2007/2007 RS 641.31;  641.411;  680;  641.51;  
and 641.61 
Federal Law on medicinal products and medical devices of 15 December 2000
a 1 January 2002/2006 RS 812.21 
Federal Law on protection against hazardous substances and preparations of 
15 December 2000a 1 January 2005/2006 RS 813.1 
Federal Law on agriculture of 29 April 1998a 1 January 1999/2007 RS 910.1 
General ordinance on imports of agricultural products of 7 December 1998a 1 January 1999/2008 RS 916.01 
Ordinance on the import and export of vegetables, fruit, and horticultural 
plants of 7 December 1998a 1 January 1999/2007 RS 916.121.10 
Federal Law on hunting and the protection of wild mammals and birds of 
20 June 1986a 1 April 1988/2007 RS 922.0 
Law on price surveillance of 20 December 1985  1 July 1986/2006 RS 942.20 
Ordinance on notification of prices of 11 December 1978 1 January 1979/2007 RS 942.211 
Federal Law on the internal market of 6 October 1995 1 July 1996/2006 RS 943.02 
Federal Law on consumer information of 5 October 1990 1 May 1992/2001 RS 944.0 
Federal Law on Swiss insurance against export risks of 16 December 2005 1 June 2006/n.a. RS 946.10 
Federal Law on export promotion of 6 October 2000 1 March 2001/2006 RS 946.14 
Federal Law on external economic measures of 25 June 1982a 1 January 1983/2007  RS 946.201 
Federal Law on the application of international sanctions of 22 March 2002a 1 January 2003/2004 RS 946.231 
Ordinance on attestation of the non-preferential origin of goods of 
9 April 2008a 1 May 2008/2008 RS 946.31 
Federal Law on technical barriers to trade of 6 October 1995a 1 July 1996/2002 RS 946.51 
Table II.1 (cont'd) 
                                                      
14 The Treaty entered into force on 1 January 1924. Switzerland and Liechtenstein WT/TPR/S/208 
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Legislation Entry into force/ 
latest amendment Reference 
Liechtenstein    
Laws on Government Procurement 1998-07 1998-07 Laws in the series LR 172.05 
Laws on intellectual property, including author's right, industrial property, 
and data protection, 1957-02 1957-02 Laws in the series LR 23 
Law against unfair competition of 22 October 1992 1 November 1994/2004 LR 24 
Law on indication of prices of 3 September 1996 24 September 1996/1999 LR 240.12 
Law on consumer information of 23 October 2002 17 December 2002/2005 LR 944 
Law on measures concerning economic transactions with foreign states 
(Sanctions Act) 8 March 1991 LR 946.21 
n.a.   Not applicable. 
a   Also applicable to Liechtens tein, due to the Customs Treaty. 
Source: The Federal Authorities of the Swiss Confederation online information, "Recueil systématique du droit fédéral".  
 Viewed at:  http://www. admin.ch/ch/f/rs/rs.html. 
15. In Switzerland, new federal laws may be propo sed by any member of the Federal Assembly, 
any parliamentary group or committee, as well as any Canton or the Federal Council.15  E a c h  
department of the Federal Government formulates policies in its field of activities and drafts the 
related bills on behalf of the Fe deral Council after consultation with  the interested groups, including 
cantons and private associations (e.g. chambers of commerce, industry and agriculture, the Swiss 
Business Federation, and labour unions).  The bills  are then transmitted by the Federal Council to 
either Chamber of the Federal Assembly.16  After examination by the relevant committee of one 
Council, the bill goes through introductory deba te, discussion on each clause, and vote.  This 
procedure is repeated in the other Council.  In case of disagreement betw een the Councils, the bill 
goes through a conciliation procedure17, with the possibility of a conciliation conference, until a 
compromise is reached.  The Councils proceed separat ely to a final vote (by simple majority).  Once 
adopted by the Federal Assembly and approved (in a popular vote if a referendum is requested) 
(section (1) above)), the law is published a nd enters into force on a stated date. 
16. Primary responsibility for the formulation and coordination of economic policies (including 
trade) lies with the SECO, under the authority of the FDEA (section (1) above).  Initiatives may come 
from other departments and institutions, as well as from the private sector.  Different categories of 
extra-parliamentary commission have been created u nder the FDEA to advise or deal with various 
issues, including trade-related matters.18  As a general rule, the Federal Council has the competence to 
abolish or amend ordinances concerning the import re gime, without legislative approval.  In some 
cases (e.g. customs tariffs), ex-post approval by the Federal Assembly is required (Chapter III(2)(iii)). 
17. In Liechtenstein, the Reigning Prince, the Parlia ment, and citizens with the right to vote may 
make legislative proposals.  Each department of the Government fo rmulates policies in its field of 
activities, and drafts the related bills after cons ultation with interested groups, including private 
associations and communes.  After passing the Go vernment, the bill goes through parliamentary 
procedures similar to those in Switzerland (prelimin ary debate and two readings, followed by a final 
vote on the bill as a whole), but there is only one cham ber;  detailed deliberations on bills take place 
in the plenary sittings of Parliament.  For a bill to  become a law, it must receive the assent of the 
                                                      
15 Article 160 of the Federal Constitution. 
16 The Speakers decide whether the National Council or the Council of States will examine the bill first.  
In case of a disagreement they proceed to a random draw. 
17 The bill moves back and forth between the two Councils. 
18 For detailed information, see Les autorités fédérale s de la Confédération Suisse online information, 
"Commissions extraparlementaires".  Viewed at:  http://www.admin.ch/ch/f/cf/ko/index_kommart.html. WT/TPR/S/208 Trade Policy Review 
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Parliament and be sanctioned by the Reigning Prin ce, countersigned by the Head of the Government 
or his deputy, and promulgated in the National Legal Gazette  (Landesgesetzblatt ).  If the Prince does 
not give his assent within six months, the law is deemed  to have been refused.  In general, a law enters 
into force eight days after its publication in the National Legal Gazette , unless otherwise stated in the 
law itself.  The law may be subject to a referendum (section (1) above).  The Reigning Prince can also 
issue emergency decrees (valid at most for six m onths) that may limit the applicability of provisions 
of the Constitution, except in areas such as non-derogable human rights. 
18. Switzerland and Liechtenstein have  monistic legal systems, under which treaties (including 
the WTO Agreements) become an integral part of  the national law upon entry into force.  In the 
hierarchy of Swiss legal norms, federal law prevails  over cantonal law.  At the federal level, the 
Constitution comes first, followed by  federal laws, federal orders ( arrêtés fédéraux ) and federal 
ordinances ( ordonnances fédérales ).  At the cantonal level, the cantonal Constitution is followed by 
cantonal laws, and cantonal orders ( arrêtés cantonaux) .  Cantonal law must conform with federal law.  
In Liechtenstein, the Constitution is foll owed by laws, decrees, and ordinances.  
(3) TRADE POLICY OBJECTIVES  
19. Given the degree of their economic integration, Liechtenstein broadly shares the trade policy 
objectives of Switzerland.  The general objective of  the Swiss foreign economic (including trade) 
policy is to safeguard the interests of the Sw iss economy abroad (Article 101 of the Federal 
Constitution) with the view of increasing the well-bei ng in Switzerland.  The strategy to achieve this 
objective was set out in, inter alia , the introductory chapter to the SECO report on foreign economic 
policy 2004.19  It aims to increase integration into the world economy in order to bring the Swiss 
economy back on the growth path, after years of st agnation (Chapter I(2)).  The strategy has three 
dimensions:  (i) foreign market access and intern ational set of regulations;  (ii) domestic market 
policy;  and (iii) contribution to the economic development of partner countries. 
20. To improve market access for Swiss and Li echtenstein products and services, the main 
method of choice is multilateral liberalization.  Th erefore, the trade regime accords great importance 
to the development of multilateral rules (notably for competition) and to the enhancement of their 
base, primarily within the framework of the WTO.  Emphasis is also placed on export promotion, to 
ensure that Swiss and Liechtenste in companies can take advantage of the improved market access.  
Priority is then given to bilateral libera lization with the European Communities (EC) 
(section (ii)(c) below), and other trading partners .  Switzerland is to conclude new preferential 
agreements in order to accelerate the trade liberalizat ion process, but also to avoid being "left behind".  
The launch of negotiations for such agreements is guided by the economic importance of the country 
in question, together with the feasibility of the agreement, followed by existing or potential 
discrimination against Switzerland compared with th e main competitors on the market.  Priority is 
being given to "tomorrow's economic giants", such as Brazil, China, India, and Russia.  Importance is 
increasingly being granted to services, investment and government procurement, in addition to trade 
in goods, IPRs, and competition.  Agreements th at do not cover all the areas mentioned above 
normally contain an evolutionary clause allowing for fu ture extension of the scope of the agreement.   
21. The competitiveness of economic branches that ha ve been working mainly for the internal 
market, is planned to be improved through, am ong other things, increased competition from abroad 
(through imports and direct investment). 
22. Switzerland and Liechtenstein are also interested  in contributing to the economic and political 
stability of their trading partners through b ilateral and multilateral cooperation for economic 
                                                      
19 SECO (2004). Switzerland and Liechtenstein WT/TPR/S/208 
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development in order to, inter alia , guarantee benefits from increased access to their markets.  Among 
the UN Millennium Development Goals, priority is given to the eighth goal, which calls for a global 
partnership for development.  
(4) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) WTO 
23. Switzerland is an original member and host natio n of the WTO and plays an active role in its 
work.  Liechtenstein joined the WTO on 1 Septem ber 1995.  Switzerland and Liechtenstein grant at 
least MFN treatment to all their trading partne rs, except those subject to economic sanctions.20  They 
are both signatories to the Plurilateral Agreement on  Government Procurement (GPA).  In addition, 
Switzerland is a signatory to the Plurilateral Ag reement on Trade in Civil Aircraft and to the 
Ministerial Declaration on Trade in Information T echnology Products;  both of which also apply to 
Liechtenstein under its Customs Union Treaty with Switzerland. 
24. In the Doha Development Agenda (D DA) negotiations, Sw itzerland supports a 
comprehensive round that not only increases market access but also improves existing trade rules, 
introduces new ones, and promotes coherence betw een the multilateral trading system and other 
issues such as environmental and development policies.21  On agriculture, Switzerland is of view that, 
in addition to improvements in market access a nd reduction in production subsidies, non-trade 
concerns must be addressed (such as extension of  geographical indication protection beyond wines 
and spirits22;  consumer information, including on pr oduction methods;  food safety and security;  
landscape management;  and animal and enviro nmental protection).  Switzerland supports the 
elimination of all agricultural export subsidies, and stronger disciplines on export restricting measures 
(such as marketing boards).  On non-agricultural market access, Switzerland seeks improved access to other markets (particularly in emerging economies)  through reductions in tariffs and non-tariff 
measures (such as testing and certification procedures).  It is in favour of establishing sectoral      
duty-free exemptions. 
25. Switzerland aims to promote progressive liberaliza tion of trade in services.  Its revised offer, 
submitted in June 2005, include d horizontal issues, business services (professional, computer, 
rental/leasing, and other business services), comm unication services, construction, distribution 
services, education, tourism and travel, trans port, environmental, and financial services.
23  I t  h a s  
submitted or co-sponsored num erous negotiation proposals.24  Switzerland has particular trade 
interests in financial services, intra-corporate transferees, installation and maintenance services, 
logistics services, selected business services, and distribution and tourism services. 
                                                      
20 Switzerland and Liechtenstein implement UN Security Council Resolutions and align themselves 
with EC Common Positions.  Sanctions such as embargos (mainly arms embargos), import and export restrictions, financial sanctions and/or travel bans are cu rrently in force against Belarus, Côte-d'Ivoire, Congo, 
Democratic Republic of Korea, Iran,  Iraq, Lebanon, Liberia, Myanmar, Sierra Leone, Somalia, Sudan, 
Uzbekistan, and Zimbabwe.  No sanctions are currently applied unilaterally.  
21 SECO online information, "Doha Round:  Swiss Position".  Viewed at:  http://www.seco.admin.ch/ 
themen/00513/01238/01243/index.html?lang=en.  
22 On geographical indications (GIs), Switzerland's pr iority is extension of the scope of GIs to other 
agricultural and industrial products (such as cheese and watches), and creation of a legally binding multilateral 
register for wines and spirits. 
23 For more details, see SECO online informat ion, "The Swiss Offers".  Viewed at: 
http://www.seco.admin.ch/themen/00513/00586/00587/index.html?lang=en. 
24 For further details, see SECO online information, "The Swiss negotiating proposals".  Viewed at:  
http://www.seco.admin.ch/themen/00513/00586/00587/index.html?lang=en. WT/TPR/S/208 Trade Policy Review 
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26. Switzerland considers it important to improve and tighten-up WTO rules.  It is in favour of 
strengthening discipline in anti-dumping and coun tervailing measures, and defining more precise 
WTO rules on free-trade agreements (FTAs) to  increase legal certainty and transparency.  
Nevertheless, it considers that these rules should not restrict the space for FTA negotiations;  due 
account should be taken of the particularities of the Sw iss foreign trade policy, notably with respect to 
agriculture.  Switzerland is actively involved in multilateral negotiations to  review the dispute 
settlement mechanism (DSM).  It has made two submissions with a view to strengthening the position 
of third parties:  one is aimed at ensuring that WTO members are regularly informed on the status of 
ongoing disputes, and the other (submitted together w ith Cuba, Egypt, India, Malaysia, and Pakistan) 
suggests that the parties to a dispute notify detailed terms of mutually agreed solutions to the Dispute 
Settlement Body in due time. 
27. Switzerland, together with the EC, is pushing for improved coherence between the WTO rules 
and environmental agreements.  Negotiations on trade f acilitation are also considered to be a priority.  
Switzerland expects the WTO Members to concl ude a new agreement containing comprehensive 
measures to improve transparency and facilitate tr ade in goods.  Switzerland takes the view that 
special and differential (S&D) treat ment provisions should be tailored to deal with specific problems 
of individual countries.  Regarding the TRIPS Agreement and access to medicines, Switzerland 
ratified the amendment to the TRIPS agreement on 5 July 2006, and integrated it in its national law 
(entry into force 1 July 2008).  This is to rende r its manufacturing capacity in the field of innovative 
pharmaceuticals accessible to developing countries by, exceptionally, allowing exports of goods 
produced under a compulsory licence.25 
28. In the DDA negotiations, Liechtenstein focuses on its areas of special and direct importance, 
and for which it can act on its own behalf.  These include services and investments, intellectual property, geographical indicati ons, and government procurement.
26  In June 2005, Liechtenstein 
submitted a revised offer for services that include a list of Article II (MFN) exemptions, horizontal 
commitments, and sector specific commitments.  The latter cover business services (e.g. computer and 
related services, research and development,  professional, and rental/leasing services), 
telecommunication, distribution, education, transp ort, tourism and travel, recreational, cultural, 
sporting, environmental, and financial services.27  Liechtenstein does not have external trade authority 
in areas such as agricultural and non- agricultural products, and therefore agreements concerning these 
sectors are negotiated by Switzerland and are applicab le to Liechtenstein under the Customs Treaty.  
Liechtenstein shares Switzerland's views regard ing non-trade concerns and S&D treatment.28 
29. Most of Switzerland's notifications to the WT O also cover Liechtenstein (Table AII.1).  
However, Liechtenstein has submitted individual notifications on anti-dumping measures29;  subsidies 
and countervailing duties30;  and state trading.31 
                                                      
25 In accordance with the 30 August 2003 Decision on the Implementation of Paragraph 6 of the Doha 
Declaration on the TRIPS Ag reement and Public Health. 
26 Principality of Liechtenstein online information, "WTO".  Viewed at:  
http://www.liechtenstein.li/en/eliechte nstein_main_sites/portal_fuerstentum_liechtenstein/fl-staat-staat/fl-staat-
aussenpolitik/fl-staat-aussenpolitik-multilateral/f l-staat-aussenpolitik-multilateral-wto.htm.  
27 WTO document TN/S/O/LIE/Rev.1, 20 July 2005.   
28 WTO document WT/MIN(05)/ST/74, 15 December 2005. 
29 WTO document G/ADP/N/153/Add.1, 17 April 2007 (the latest notification). 
30 WTO documents G/SCM/N/123/LIE, 19 September 2006 and G/SCM/N/138/Add.1/Rev.2, 
1 May 2007 (the latest notifications). 
31 WTO document G/STR/N/10/LIE, 23 August 2004 (the latest notification). Switzerland and Liechtenstein WT/TPR/S/208 
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(ii) Regional and bilateral agreements 
30. Switzerland and Liechtenstein are members of th e European Free-Trade Association (EFTA).  
In addition, Liechtenstein is a member of the European Economic Area ( EEA) where Switzerland has 
observer status. 
31. In general, agreements on trade in goods concluded by Switzerland apply also to 
Liechtenstein under the Customs Union Treaty.  Howeve r, Liechtenstein applies EEA rules in its trade 
relations with the EC and other EEA members, exce pt in agriculture where its trade is based on the 
Customs Union Treaty and the 1972 FTA between Switzerland and the EC, through a supplementary 
agreement.  The Switzerland/EC bilateral Agreemen t on Agriculture was extended to Liechtenstein by 
the Agreement between the EC, Switzerland and Li echtenstein of 27 September 2007.  The 2004 
Bilateral Agreement on Processed Agricultural Prod ucts (covering tariffs onl y) between Switzerland 
and the EC also applies to Liechtenstein in accordance with the Customs Union Treaty 
(section (c) below). 
32. As members of EFTA, Switzerland and Liechtenstein  participate in 16 FTAs (Table II.2).  
Switzerland also maintains a bilateral FTA with the Faeroe Islands, and has reached an agreement (in 
principle) on a Free Trade Agreement with Japan. 
Table II.2 
Participation in free-trade agreements (o ther than with the EC), September 2008 
Signature Entry into 
force Notified to GATT/WTO
(document series) Agreement 
04.01.1960 03.05.1960 L/3328 (GATT) 
WT/REG154 
S/C/N/207 Convention establishing the EFTA (applies to Iceland, Liechtenstein, Norway, 
and Switzerland)  
(amended in 2002) 
10.12.1991 01.04.1992 L/6989/Add.1 (GATT)  
WT/REG86 G/L/349 EFTA-Turkey
a 
02.05.1992 01.01.1994 WT/REG138 
S/C/N/28 EEA (applies to all EC member states , Iceland, Norway, and Liechtenstein) 
12.01.1994 01.03.1995 WT/REG24 Switzerland-Faeroe Islands (goods) 
17.09.1992 01.01.1993 L/7129 and Add.1 
(GATT) EFTA-Israel (goods, IP, competition, st ate aid, dispute settlement, government 
procurement, services, and invest ments with evolutionary clause)a 
19.06.1997 01.12.1999 WT/REG91 EFTA-M orocco (goods, IP, competition, state aid, dispute settlement, 
government procurement, services, and i nvestments with evolutionary clause)a 
30.11.1998 01 07.1999 WT/REG79 EFTA-Pal estinian Authority (goods, IP, competition, state aid, dispute 
settlement, government procurement, services, and investments with 
evolutionary clause)a 
27.11.2000 01.07.2001 WT/REG126 
S/C/N/166 EFTA-Mexico (goods, IP, competition, state aid, dispute settlement, 
government procurement, se rvices, and investment)a 
21.06.2001 01.04.2002 WT/REG132 EFTA-Cro atia (goods, IP, competition, state aid, and dispute settlement;  
government procurement, services, and i nvestments with evolutionary clause)a 
21.06.2001 01.09.2002 WT/REG133 EFTA-Jor dan (goods, IP, competition, state aid, and dispute settlement;  
government procurement, services, and i nvestments with evolutionary clause)a 
19.06.2000 01.05.2002 WT/R EG117 EFTA-FYROM (goods, IP, competition, state aid, and dispute settlement;  
government procurement, services, and i nvestments with evolutionary clause)a 
26.02.2002 01.01.2003 WT/REG148 
S/C/N/226 EFTA-Singapore (goods, IP, competition, state aid, dispute settlement, 
government procurement, se rvices, and investment)a 
26.06.2003 01.12.2004 WT/REG179 
S/C/N/309 EFTA-Chile (goods, IP, competition, stat e aid, dispute settlement, government 
procurement, services, and investment)a 
24.06.2004 01.01.2007 WT/R EG224 EFTA-Lebanon (goods, IP, competition, state aid, and dispute settlement;  
government procurement, services, and i nvestments with evolutionary clause)a 
Table II.2 (cont'd)WT/TPR/S/208 Trade Policy Review 
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Signature Entry into 
force Notified to GATT/WTO
(document series) Agreement 
17.12.2004 01.06.2006b  WT/REG201 EFTA-Tunisia (goods, services, IP, competition, state aid, and dispute 
settlement;  government procurement, services and investment with 
evolutionary clause)a 
15.12.2005 01.09.2006 WT/REG217 
S/C/N/373 EFTA-Republic of Korea (goods, IP, competition, state aid, dispute settlement, 
government procurement, se rvices, and investment)a 
01.07.2006 01.05.2008  EFTA -Southern African Customs Union (goods, competition, state aid, and 
dispute settlement;  IP, services, government procurement, and investment with 
evolutionary clause)a 
27.01.2007 01.08.2007 WT/R EG232 EFTA-Egypt (goods, IP, competition, state aid, and dispute settlement;  
government procurement, services, and i nvestment with evolutionary clause)a  
26.01.2007 Ratification 
process  EFTA-Canada (goods, IP, competition, state aid, and dispute settlement;  
government procurement, services, and i nvestment with evolutionary clause) 
a Switzerland maintains with these trading partners separate bilateral agreements on selected basic agricultural products, gran ting 
 preferential tariffs for specific agricultural goods.  
b Implemented since 1 June 2005. 
Source : WTO Secretariat;  and EFTA Secretariat (2007), 46th Annual Report of the Europe an Free Trade Association 
 2006 .  Viewed at:  http://secretari at.efta.int/Web/Publications/AnnualR eport/2006/annual_report_2006_web.pdf. 
33. Under the Early Announcement provision of the Transparency Mechanism for RTAs, i.e. for 
RTAs under negotiation, or signed but not yet in fo rce, the following agreements have been notified 
to the WTO:  Canada-EFTA, Colombia -EFTA, Peru-EFTA, and Japan-Switzerland. 
(a) European Free Trade Association (EFTA) 
34. Switzerland and Liechtenstein are members of EFTA, together with Iceland and Norway.32  
The EFTA Convention was revised in 2001 (and in fo rce since 1 June 2002) to take into account the 
principles and rules under the EEA and the Switzerland-EC agreements.33  As a result, all EFTA 
members benefit from practically the same privile ged relationship among themselves as they do with 
the EC.34  The two main bodies of the EFTA are th e Council (the governing body of EFTA) and the 
Secretariat (the servicing body).  The Chairmanship of the Council rotates among member states on a 
six-monthly basis.  In connection with the EEA Agreement of 1992,  the EFTA Surveillance 
Authority and the EFTA Court were set up (section (c) below) .  In addition to free trade in             
non-agricultural products (including  fish and other sea products), th e convention covers technical 
barriers to trade, competition (including state aid,  practices of public undertakings, and monopolies), 
intellectual property rights, free movement of pers ons (including coordination of social security 
systems and mutual recognition of professional qualif ications), investment, trade in services, and 
government procurement.35   
35. WTO provisions are referred to in three ar eas of the revised EFTA Convention and its 
annexes.  Regarding state aid and countervaili ng measures, the WTO Agreement on Subsidies and 
Countervailing Measures is incorporated into the co nvention;  EFTA members agree, however, not to 
apply, to intra-EFTA trade, anti-dumping or countervailing measures, or "measures against illicit 
commercial practices attributable to third countries" .  In relation to sanitary and phytosanitary (SPS) 
                                                      
32 Switzerland is a founding member of the EFTA, while Liechtenstei n acceded in 1991.   
33 The Vaduz Convention of 21 June 2001 updated the original Stockholm Convention of 1960.  
34 EFTA Secretariat (2003). 
35 Annexes to the Vaduz Convention cover rules of origin;  customs matters;  tariff concessions; 
agriculture (including organic);  seeds;  sanitary and phytosanitary measures;  technical regulations;  mutual 
recognition of conformity assessment;  intellectual property rights;  free movement of persons;  national 
reservations concerning services and investment;  land and air transport;  government procurement;  Council 
bodies;  arbitration;  and territorial application.  Join t Declarations by the members cover development of law;  
competition;  investment protection;  and quotas for vehicles. Switzerland and Liechtenstein WT/TPR/S/208 
 Page 27 
 
 
measures, the rights and obligations of EFTA me mbers are governed by the WTO Agreement on the 
Application of SPS Measures.  On the protection of  intellectual property, the members reaffirmed 
their obligations under international agreements to which they are parties, notably the WTO 
Agreement on Trade-Related Aspects of Intell ectual Property Rights.  EFTA members have 
undertaken commitments on government procurement (in terms of sectoral coverage, and threshold 
values) beyond those under the Plurilatera l Agreement on Government Procurement 
(Chapter III(2)(xi)). 
36. EFTA states maintain a network of bilateral trade agreements with third parties (Table II.2).  
The agreements cover non-agricultural goods (inc luding fish) and processed agricultural goods, as 
well as trade disciplines, and rules on competition, protection of intellectual property, and payments and transfers.  Trade in basic agricultural produc ts is covered by separate bilateral agreements 
between individual EFTA members and third countri es.  FTAs with several partners also contain 
provisions on trade in services, investment, and public procurement.  Pan-European cumulation of 
origin applies within EFTA and under the bilatera l trade agreements with the EC.  It has been 
extended to several Mediterranean countries.  Th is extended system (pan-Euro-Med cumulation of 
origin) operates between the EFTA;  the EC member s;  Turkey;  the Faeroe Islands;  and the 
signatories to the Barcelona Declaration
36, i.e. Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the 
Palestinian Authority, Syria, and Tunisia.37 
37. The EFTA members are negotiating bilateral free-tr ade agreements with Algeria, India, Peru, 
and Thailand.  Negotiations with  Colombia and the Gulf Co-operation Council (GCC) have been 
concluded in substance.  They also envisage entering into bilateral negotiations on free-trade 
agreements with, inter alia , Albania, Indonesia, Serbia, and Ukraine.  
(b) European Economic Area (EEA) 
38. Liechtenstein is a member of the EEA which pr ovides for free circulation of goods, services, 
capital, and persons in a single market consisting of  the 27 members of the EC and Iceland, Norway, 
and Liechtenstein (EEA EFTA countries).  Followi ng the accession of Bulgaria and Romania to the 
EC, the legal texts of the latest EEA Enlarg ement Instrument were signed on 25 July 2007.38  Pending 
their ratification by the parliaments of all 30 EEA  States, the enlargement agreements have been 
applied on a provisional basis sinc e 1 August 2007;  a possibility was left open to invoke a safeguard 
clause during the first three years in case of a serious breach of the functioning of the internal market.  
Under the EEA framework, non-EC members must adopt part of the EC law relating to its internal 
market. 
39. The EEA EFTA members have not transferred legislative competence to EEA organs.  
Therefore, the institutional connection between  the EFTA members and the EEA operates under a 
"two-pillar" system of joint EEA bodies on the one hand and EEA EFTA bodies on the other.39  The 
joint EEA bodies are the Council (of Ministers) , Joint Committee (of Ambassadors and high level 
officials), Joint Parliamentary Committee (o f representatives from the EFTA Parliamentary 
Committee and the European Parliament), and the Consultative Committee (liaising with workers, 
employers, and other "civil society" organizati ons).  The EEA EFTA bodies are the EFTA Standing 
                                                      
36 The 1995 Barcelona Declaration launched a Euro-Mediterranean partnership based on three chapters 
of cooperation: political dialogue;  economic relations (including free trade);  and human, social, and cultural 
relations. 
37 EFTA Secretariat (2006). 
38 The latest EC enlargement was on 1 January 2007 when Bulgaria and Romania joined. 
39 EFTA Secretariat online information, "Two-Pillar System".  Viewed at: http://secretariat.efta.int/ 
Web/EuropeanEconomicArea/institutions/TwoPillarSystem. WT/TPR/S/208 Trade Policy Review 
Page 28 
 
 
Committee (meeting at Ministerial or official le vel), the EFTA Surveillance Authority (which 
monitors the application of the provisions of the EEA agreement in the member states), and the EFTA 
Court (which judges cases brought to it by the Su rveillance Authority concerning infringement of 
EEA rules, and renders advisory opinions on th e interpretation of EEA law requested by national 
courts).  Switzerland is participating as an obser ver to the EEA Consultative Committee, EEA Joint 
Parliamentary Committee, and EFTA Standing Comm ittee.  The Chairmanship of the Standing 
Committee rotates among member states on a six-monthly basis.  
40. In order to respect Swiss import requirements, Liechtenstein maintains a Market Control and 
Surveillance Mechanism (MCSM), which applies to im ports subject to customs tariffs or non-tariff 
requirements that are different in the EEA and Switzerland (Box II.1).  In practice (but not yet 
formally), the Mechanism also covers genetically  modified organisms (GMOs).  The differences in 
technical regulations between Switzerland and the EE A have been reduced substantially since 1995.  
An amendment of Annex 1 to the Customs Treaty has been proposed40;  after its implementation, only 
a few products (chemicals, some telecom equipment,  GMOs, and items subject to different customs 
tariffs) are expected to remain under the MCSM.  
Box II.1:  Liechtenstein Market Control and Surveillance Mechanism 
In general, Swiss legislation on trade in goods applies also to Liechtenstein under the 1923 Customs Union 
Treaty.  The Treaty has been extended by various arrangements (including on agriculture).  As a result of its EEA membership since 1 May 1995, and in order to avoid entry into the Swiss market, through Liechtenstein, of goods that do not satisfy Swiss import requirements, Liechtenstein applies a mechanism for the parallel application of Swiss and EEA regulations, the Market Control and Surveillance Mechanism (MCSM). 
The MCSM applies to professional traders, i.e. distribut ors/dealers (but not to small importers), and to three 
categories of goods:  products on which Swiss and EEA import requirements are different (e.g. fertilizers, pharmaceuticals, phytosanitary products, poisons, goods dangerous to the environment, animal feed, genetically modified organisms, some telecom equipment, and some ot her "sensitive products" such as foodstuffs, cosmetics, 
tobacco, and other smokers' articles);  goods carrying di fferent tariffs under the 1972 FTA between Switzerland 
and the EC on the one hand, and the EEA agreement on the other (e.g. fish, flax, and cork); and salt, because, in accordance with the EEA provisions on state monopolies, Liechtenstein no longer participates in the Swiss state monopoly over this product (Liechtenstein has replaced the monopoly with an excise duty).  Where import requirements differ, goods destined for Liechtenstein, in transit in Switzerland, are registered at the Swiss 
Customs, which sends a copy of the customs document s (transmitted mostly by electronic means) to the 
Liechtenstein Office of Trade and Transport (formerly O ffice of Customs Affairs).  The customs documents are 
processed in Liechtenstein.  When in doubt (e.g. whether an importer has obtained a wrongful reimbursement of customs duties, or has paid the required customs duties on goods re-exported to Switzerland), the Liechtenstein administration may launch further investigations.  For this purpose, any business involved in the production and import of the relevant goods must appoint an official contact person.  Wholesalers and retailers must specify in their stores that use of the products is limited to the Liechtenstein territory and must keep proof of sales. 
Under the MCSM, the Swiss Federal Customs Administration clears imports to Liechtenstein, collects duties, and 
informs the Liechtenstein Office of Trade and Transport.  Where customs tariffs differ, the Swiss Customs reimburses importers the duties paid and informs them of their obligations, including proofs of sales in 
Liechtenstein to be submitted to the Office by wholesale traders.   
Infringers of provisions of the MCSM are liable to fines of up to twenty times the amount of the customs duties 
wrongfully reimbursed or unpaid, or to imprisonment for up to six months.  Infringements identified so far have not entailed any criminal action;  they have led only to written reprimands. 
The MCSM is accepted by the other EEA members (EEA Council Decision No. 1/95) to avoid restrictions on trade that would have resulted from the membership of Liechtenstein in the EEA. 
Source:  WTO Secretariat. 
                                                      
40 The legally necessary exchange of notes for these amendments is under preparation. Switzerland and Liechtenstein WT/TPR/S/208 
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(c) Switzerland's relations with the European Communities (EC) 
41. The EC is by far Switzerland's largest trade a nd investment partner.  Switzerland's relations 
with the EC are governed by a set of bilateral agreements, including the FTA in 1972, the Insurance 
Agreement in 1989, Bilateral Agreem ents I in 1999, and Bilateral Agre ements II in 2004 (Table II.3).  
Joint Swiss/EC committees are charged with administering the agreements.  In its 2006 report on 
Europe41, the Federal Council reached the conclusion that  for the time being, the objectives (economic 
and non-economic) would be best achieved through the further development of the bilateral approach;  
membership of the EC remained nevertheless a long-term option. 
Table II.3 
Swiss-EC bilateral agreements, September 2008 
Bilateral agreements Entry into force  Provisions 
Free Trade Agreement (FTA) 1973 Establishes a Switzer land-EC free trade zone for industrial products 
Prohibits any form of customs duty or quotas in trade in industrial products 
Insurance Agreement 1993 Grants reciprocal freed om of establishment to  insurance companies 
(excluding life insurance) 
Agreement on the carriage of 
goods 1991 Regulates the controls and forma lities for goods transport at the border 
between Switzerland and the EC 
Aims to simplify customs processing as much as possible 
Bilateral Agreements I   
Agreement on the Free 
Movement of Persons 2002 Provides for equal treatment of Swiss and EC citizens in taking up 
residence and work Regulates reciprocal, gradual, and c ontrolled opening up of labour markets 
(transitional arrangements) 
Regulates the recognition of professi onal diplomas and coordinates the 
social security systems 
Accompanying measures were introduced to protect employees (ensuring 
compliance with pay and working conditions in Switzerland) 
Agreement on Reducing 
Technical Barriers to Trade 2002 Calls for the mutual recognition of c onformity assessment results for most 
industrial products 
Agreement on Public 
Procurement Markets 2002 Extends WTO rules on public procurement markets 
A new feature is that larger te nders by municipalities or licensed 
entrepreneurs are subject to compulsory tendering 
Agreement on Agriculture 2002 Simplifies trade in ag ricultural products by reducing customs duties and 
eliminating non-tariff barriers to trade 
Partly liberalizes the agricultural market (free trade in cheese from 
1 June 2007) 
Agreement on Overland 
Transport 2002 Regulates the introduction of a heavy vehicle tax and the increase of the 
maximum weight limit for trucks to 40 tonnes 
Helps to shift freight crossing the Alps from road to rail 
Coordinates the Swiss and EC trans port policies in order to meet the 
demands of increasing mobility and protection of the environment 
Agreement on Civil Aviation 2002 Regulates the recipr ocal access to aviation markets for airlines 
Agreement on Research 2002a Covers the participation of Swiss re search bodies (universities, companies, 
and individuals) in EC research programmes (ERP) 
Bilateral Agreements II   
Schengen Agreement Formally, in 2008 Facilitates travel by  abolishing identity checks at the Schengen internal 
borders Guarantees security thanks to closer cross-border cooperation between the 
police and justice systems through, inter alia , the Schengen Information 
System (SIS) Extends the area of application of the Schengen visa (valid for three 
months) to Switzerland 
Dublin Agreement Formally, in 2008 Coordinate s national responsibilities for asylum procedures 
Gives access to the EURODAC fingerprint data bank 
Table II.3 (cont'd) 
                                                      
41 Federal Council (2006). WT/TPR/S/208 Trade Policy Review 
Page 30 
 
 
Bilateral agreements Entry into force  Provisions 
Agreement on Taxation of 
Savings 2005 Permits cross-border taxation of the sa vings of individuals liable to taxation 
in the EC 
Withholding tax increases on a phase basis to 35% 
Revenue is shared:  75% EC states/25% Switzerland Voluntary exchange of information or  on request in cases of tax fraud 
No taxation on dividends or on licence- fee payments between associated 
companies 
Agreement on the Fight Against Fraud Following ratification 
by Switzerland and each EC member 
state
b,c  Improves cooperation in the fight ag ainst smuggling and other indirect 
taxes-related offences (customs dutie s, VAT, and tax on consumption) 
Agreement on Processed 
Agricultural Products  2005d Abolishes/reduces tariffs and expor t subsidies for numerous processed 
agricultural products 
Free trade in sugar and all products  that contain no other relevant 
agricultural commod ities than sugar 
Agreement on Statistics 2007 Adjusts Switzerland's standa rds of statistical data collection to those of 
Eurostat 
Provides access to a Europe-wide base of comparable data on economic, political, and social questions 
Agreement on the Environment 2006 Regulates Switzerland's participation in the European Environment Agency 
The Agency collects and analyses data  on the environmental situation, and 
advises the European Commission on environmental policy 
MEDIA Agreement 2006e Regulates the participation of Swiss film-makers in the EC's MEDIA 
programme 
Agreement on the Pensions 2005 Abolishe s double taxation on the pensions of  former EC officials living in 
Switzerland 
Agreement on Education In negotiation Regulates Switzerland's participation in the EC's education programmes 
Improves the offer and mobility in education and vocational training 
a Renewed in 2004 and 2007. 
b Approved by the Swiss Parliament in 2004. 
c Has been ratified by 19 EC member states out of 27. 
d Revises Protocol 2 of the 1972 FTA. e Renewed agreement signed on 11 October 2007;  applied provisionally since 1 September 2007. 
Source :   Integration Office FDFA/FDEA online information, "B ilateral agreements Switzerland-EU".  Viewed at:  
 http://www.europa.admin.ch/ themen/00500/index.html?lang=en. 
42. A first set of seven bilateral agreements w ith the EC (Bilateral Agreements I), mainly 
involving classic market liberalization (with the exce ption of the Agreement on Research), was signed 
on 21 June 1999.  They were accepted by popul ar vote on 21 May 2000, ratified by the Swiss 
Government on 16 October 2000, and put into force on 1 June 2002.  All except one of the bilateral 
agreements (Table II.3) were exte nded to the ten new member States of the EC in May 2004 and,  to 
two new members in January 2007.  The bilateral agreement on free movement of persons will be 
extended to the new member States that joined th e EC in 2004 on 30 April 2011 the latest.  However, 
separate transitional measures appli cable for seven years (with a safe guard clause for three additional 
years) have been negotiated for the states that join ed in 2007.  In addition, the Agreement allows, until 
2014, the application of quotas on resident permits under a safeguard clause in the case of a sudden large influx of foreign nationals. 
43. The second set of bilateral agreements (Bilate ral Agreements II (Table II.3) was signed on 
26 October 2004, and ratified by the Swiss parlia ment on 17 December 2004.  A referendum was held 
on the Schengen/Dublin Association Agreements, which were approved by  54.6% of the Swiss 
electorate in June 2005.  Unlike Bilateral Agreements  I, Bilateral Agreements  II have entered into 
force individually.  All except the Agreement on th e Fight against Fraud, are currently in force.
42  The 
                                                      
42 Integration Office FDFA/FDEA online informati on, "Bilateral Agreements II".  Viewed at: 
http://www.europa.admin.ch/themen/00499/00755/00758/index.html?lang=en. Switzerland and Liechtenstein WT/TPR/S/208 
 Page 31 
 
 
Schengen/Dublin Association Agreements entere d into force formally on 1 March 2008, but 
Switzerland's full participation in the Schengen/Dublin cooperation is expected to take place after an 
evaluation period, in spring 2009.  The second set of b ilateral agreements currently in force have also 
been extended to the new member States. 
44. Currently, free trade is established for non-ag ricultural goods.  The Agreement on Agriculture 
provides for complete liberalization of trade in  cheese (effective 1 June 2007); duty-free access, 
generally under tariff quota, for a range of other products, such as meat, horticultural products, and 
cut flowers; and mutual recognition of sanitary and phytosanitary norms.  Switzerland's concessions 
on fresh products are generally on a seasonal basis.  Geographical indications of wines and spirits are 
given mutual protection. 
45. Under the Agreement on processed agricultural pr oducts, in exchange for the EC's reduction 
of import duties and export subsidies43, Switzerland agreed to reduce its customs duties and export 
subsidies to the level of the difference between the pr ice of Swiss raw materials and that of the EC.  It 
also agreed to eliminate customs duties and e xport subsidies for processed products that do not 
contain agricultural commodities that are subject to the Price Compensation Mechanism 
(Chapter IV(2)(ii)).44   
46. The exploratory phase of an extended FTA that wo uld cover agricultural products at all stages 
of the value-added chain (including food products) has been completed. 
47. Several agreements cover trade in services,  such as the Insurance Agreement and the 
Agreement on Civil Aviation.  In the framework of  the Bilaterals II, negotiations were formally 
undertaken for a general liberalization of services;  however, the negotiations have been suspended 
since March 2003.   
48. The Swiss-EC Agreement on Public Procuremen t Markets goes beyond the areas covered by 
the GPA (Chapter III(2)(xi));  it additionally cove rs public procurement by local authorities and 
railway, as well as private concessions in the water, electricity, and gas subsectors.  Following their 
privatization, telecommunication services, which were  initially covered by the Agreement, have been 
exempted from coverage since 2002. 
(d) Other 
49. Under their GSP scheme, Switzerland and Liechtenstein grant preferential access to their 
markets to all developing countries (DCs), with special provisions for least developed countries 
(LDCs).  DCs enjoy duty-free and quota-free access for most industrial products, with the exception 
of textiles and clothing.   DCs are entitled to substantial (i.e. up to 100%) reductions on most 
agricultural products of interest to them (includi ng vegetables and cut flowers).  LDCs enjoy since 
1 April 2007 duty-free and quota-free (DFQF) market access for all products, with the exception of 
broken rice for animal consumption, and sugar.  In addition, DCs who participate in an international 
debt-relief initiative benefit (on a temporary basis) from the same preferential treatment as the LDCs. 
                                                      
43 The EC eliminated customs duties on all processed agricultural products from Switzerland covered 
by the Agreement, as well as subsidies on all processed products exported to Switzerland. 
44 Integration Office FDFA/FDEA onlin e information, "Processed agricultu ral products:  Fact sheet".  
Viewed at:  http://www.europa.admin.ch/them en/00500/00506/00512/index.html?lang=en. WT/TPR/S/208 Trade Policy Review 
Page 32 
 
 
(iii) Trade disputes and consultations 
50. Switzerland and Lichtenstein have not been involved (as a complainant, res pondent, or third 
party) in any dispute settlement case in the WTO during the period under review.   
51. There have been no disputes between Switzerland or Liechtenstein and their EFTA partners 
during the review period.45  
(5) INVESTMENT REGIME  
(i) Switzerland 
52. Switzerland has established general conditions favourable to investor s.  It is one of the most 
competitive economies in the world.46  As a general rule, freedom of  trade and industry and the right 
to own property are protected by the Constitution.  The Code des Obligations  is the main legal basis 
for investment. 
53. As a general rule, no approval from the Govern ment, chambers of commerce or professional 
associations is required to establish a business.  A wo rk and residence permit is nevertheless required 
to conduct a business personally on a permanent basis;   foreigners without a residence permit may 
employ Swiss nationals to operate their business.47  Swiss nationals do not need to hold a certain 
percentage of the equity.  There are no exchange restrictions on capital flows.  Most economic sectors 
are open to investment by Swiss nationals and foreigne rs.  However, investment restrictions continue 
to apply to areas under state monopolies, including rail transport, some postal services and certain 
insurance services and commercial activities (e.g. trade in  salt).  Restrictions (in the form of domicile 
requirements) are also applied in air and maritime transport48, hydroelectric and nuclear power, 
operation of oil pipelines, and trans portation of explosive materials. 
54. Licensing provisions and diploma requirements may apply to some activities, such as 
banking, insurance, and investment brokerage;  hotels and restaurants;  physicians, dentists, 
pharmacists, and attorneys;  and certain mercan tile and services businesses (e.g. wine merchants, 
private employment agencies, and temporary employment services).49  Foreigners may perform these 
activities in Switzerland if they have the required permits.  In certain cases, approval (for foreigners, 
as well as Swiss) is subject to "demonstration of need" clauses (Chapter IV(5)(vii)).  Residence qualifications for nationals of the EC and EEA are expected to be completely liberalized by 2014, under 
the bilateral agreement with th e EC on free movement of persons  (section (4)(ii)(c) above).  
According to the Foreign Nationals Act, entry of  nationals of third countries (non-EC and non-EFTA 
residents) is subject to a quota system, labour market needs tests, and prior controls on wages and employment conditions.  In 2007, the annual quota was 4,000 residency permit s and 7,000 short-term 
permits.  The country-wide quotas are allocated pe r canton.  No permission is required to buy 
commercial or industrial real estate, or principal residences.  
                                                     
 
45 Any dispute arising from the EF TA Convention would be dealt with  according to the provisions of 
Chapter XVII of the Convention, which provides for consultations among member states, and dispute settlement 
through arbitration.  Specific provisions on the establishm ent and functioning of the arbitral tribunal and the 
implementation of arbitral awards are prov ided in Annex T of the EFTA Convention. 
46 Switzerland was ranked second most competitive economy (after the United States) by the World 
Economic Forum (WEF, 2008).   
47 Switzerland Trade and Investment Promotion online information, "Setting up a Business".  Viewed 
at:  http://www.locationswitzerland.c h/internet/osec/en/home/invest/fact ors/banking/legal/setting_up.html. 
48 Two thirds of the partners of a shipping company must be Swiss nationals. 
49 Switzerland Trade and Investment Promotion online information, "Setting up a Business".  Viewed 
at:  http://www.locationswitzerland.c h/internet/osec/en/home/invest/fact ors/banking/legal/setting_up.html. Switzerland and Liechtenstein WT/TPR/S/208 
 Page 33 
 
 
55. Swiss company law recognizes nine main form s of business ownership:  joint-stock 
corporations (AG/SA), including real estate companies ( sociétés immobilières , SI);  limited liability 
companies (GmbH/Sarl);  sole proprietorships;  gene ral partnerships;  limited partnerships;  ordinary 
partnerships;  cooperatives;  foundations;  and bran ches of foreign companies.   The major change to 
Swiss company law since its last TPR concerns the modification of the Code des obligations , through 
the introduction of new legislation on limited lia bility companies, which entered into force on 
1 January 2008.50 
56. The most widespread form of company is the jo int-stock corporation.  A stock corporation (as 
well as a limited liability company, partnership, or branch) must be entered in the commercial register.  
The register is maintained at the cantonal level a nd coordinated by the Federa l Department of Justice.51  
The requirement for the majority of the board of di rectors (except for holding companies) to be Swiss 
citizens with domicile in Switzerl and, or EC or EFTA countries c itizens residing in an EC or EFTA 
country was eliminated in January 2008.  Curr ently, a person domiciled in Switzerland must  be able to 
represent the legal entity;  a member of its governing body, or any person with the right to represent the 
legal entity, may fulfil this obligation.  Further re quirements on domicile in Switzerland may exist at the 
sectoral (see above) or cantonal level.  A branch of  a foreign company is treated as a Swiss company for 
registration, taxation,  and accounts.   
57. Minimum capital requirements range from Sw  F 20,000 to Sw F 100,000 depending on the 
form of business.  Establishment costs for a corporation include:  a stamp duty (Table II.4);  and fees such as company registration, notary, or land regist ry fees.  Registration fees for a legal entity are up 
to Sw F 600, plus fees for other registration-related services.
52  Fees for registration of a branch are 
50% lower than for the headquarters (maximum of Sw  F 2,500).  If the headquarters is located outside 
Switzerland, registration of the first Swiss branch pays the fee for an establishment of a principal 
business;  subsequent branches are treated as such .  Excluding the stamp duty, the fixed costs of 
establishing a corporation have been estimated to be  around Sw F 7,000;  the total costs (including 
consulting fees) vary according to the nominal capital.53   
58. The time required for setting up a company has been estimated to vary between two and 
four weeks.54  According to the World Bank, the medi an duration of the procedures required is 
20 days;  the World Bank ranks Switzerland 35th (out of 178 countries) for ease of starting business.55 
59. Due to the federal structure of Switzerland,  taxes levied on businesses may be federal, 
cantonal and/or communal.  While federal tax es are the same across the country, cantonal and 
communal taxes vary considerably (Table II.4).  Nevertheless, as only cantonal administrations are 
responsible for assessing taxes, businesses need to file a single annual tax declaration. 
 
                                                      
50 The modifications concern, among other things, introduction of th e possibility to set up a limited 
liability company by one person;  removal of the upper limit of the nominal capital (previously Sw F 2 million);  
reduction of the minimum value of ordinary shares from Sw F 1,000 to Sw F 100;  as well as a new obligation to 
pay-up the nominal capital in full on incorporation of a company. 
51 The Federal Commercial Registry Office "ZEFIX" website (http://zefix.admin.ch/) permits direct 
access to the commercial registers of a ll cantons.  Online registration is possible for small and medium-sized 
enterprises (except SA or Sarl, which require prio r registration in the commercial register) at the Guichet des 
créateurs d'entreprise (https://www.kmuadmin.ch/kmucms/index_fr/). 
52 Registration fees are detailed in RS 221.411.1 
53 Osec (2008). 
54 Osec (2008). 
55 International Bank for Reconstruction and Development/World Bank (2007). WT/TPR/S/208 Trade Policy Review 
Page 34 
 
 
Table II.4 
Swiss corporate taxes for resident comp anies, and other se lected taxes, 2008 
Tax base Collection through T ype of rate Tax rates (%) 
Corporate income tax-statutory rates 
(annual)a:  balance of profit/loss account 
(using Code des Obligations  rules), 
including income and capital tax deductions  Federation and all 
cantons Flat/progressive  Cantonal/communal:  6 to 24.5 (6 in AR + 
OW;  24.5 in BS;  and 18.36 in ZHb) 
Federal:  8.5 
Corporate income tax-effective rates 
(adjusted for deductions of taxes as 
expenses)    Cantonal/communal:  5.24 to 18.42 (5.24 in 
AR + OW;  18.42 in BS;  and 14.47 in ZHb) 
Federal:  6.39 to 7.42 (6.39 in BS;  7.42 in AR + OW;  and 6.7 in ZH
b) 
Capital tax (annual):  paid-in capital plus 
reserves in accordance with the commercial 
balance sheet  All cantons Flat, except LU 
(regressive), and GR + VS (progressive) Cantonal/communal:  0.067 to 0.74, except 
for holding companies (0.01 to 0.18)
c 
Real estate capital gains tax (per transaction):  upon sale Cantons (BE, BL, 
BS, JU, NW, SZ, TG, TI, UR, and 
ZH)
d Flat/progressive  Cantonal/communal:  0 to 60e 
Real estate transfer tax (per transaction):  
sale price Cantons and 
communes, except 
AG, GL, SH, UR, 
ZG, and ZH Flat  Cantonal/communal:  1 to 4 
Stamp duties (per transaction):  issuance Federation   
Capital duty   Flat  
Contributed capital/participation rights    Federal:  1f  
Issued nominal value of bonds   Federal:  0.12 
Money market papers   Federal:  0.06 
Securities turnover tax (per transaction):  
sale price (sales or exchange of securities through registered securities dealer)  Federation Flat  Federal:  0.15 (Swiss issued);  and 0.3 
(foreign issued) 
Withholding tax  Federation   
Dividends (per transaction)  Flat Federal:  35 
Interests, but only on bank interests and 
on interest from publicly offered bonds  Flat Federal:  35 
Royalties, management fees, and rents   Federal:  0 
Branch remittance tax (per transaction)   Federal:  0 
Personal income tax:  annual income 
(assumptions:  single person, gross labour income of Sw F 1,000,000
g, including 
church taxes, 2007) All cantons Progressive, except 
OW (flat) Cantonal/communal:  10.76 to 28.5 (10.76 in 
ZG;  28.5 in JU;  and 24.97 in ZHb)c 
Federal:  10.27 (maximum rate – as set in the 
Constitution – is 11.5) 
a Loss carryback:  TG one year, other cantons zero years;  federation, none. 
 Loss carryforward:  all cantons and federation, seven years. 
 Other topics:  debt/equity restrictions ;  no controlled foreign company rules. 
b Representative canton. 
c Rates for 2007. 
d Other cantons and the Confederation add r eal estate gains by legal entities to othe r taxable revenues subject to the corporat e 
 income tax. 
e Depending upon duration of ownership. 
f For amounts over Sw F 250,000.  g For the average wage income (Sw F 73,503), the rate in ZH (i.e . representative canton) is 9.63% and 1.15% at the federal leve l.   
Note: AI:  Appenzell Innerrhoden;  AG:  Aargau;  AR:  Appenzell Au sserrhoden;  BE:  Bern;  BL:  Basel-Landschaft;            
BS:  Basel-Stradt;  FR:  Fribourg;  GE:  Geneva;  GL:  Glarus;  GR:  Graubünden;  JU:  Jura;  LU:  Lucerne;  NE:  Neuchâtel;  
NW:  Nidwalden;  OW;  Obwalden;  SG:  St. Gallen;  SH:  Scha ffhausen;  SO:  Solothurn;  SZ:  Schwyz;  TG:  Thurgau;  
TI:  Ticino;  UR:  Uri;  VD:  Vaud;  VS:  Valais;  ZG:  Zug;  and ZH:  Zurich.  
Source:  BDO Visura International online information, "Corpor ate taxes in Switzerland".  Viewed at http://www.bdo.at/
 index.php?download=1389.pdf;  KPMG In ternational online information, "Swi ss Corporate Income Tax System".  
 Viewed at:  http://www.kpmg. ch/library/pdf/20071201_KPMG_Tax_Swiss_ Income_Tax_System.pdf;  and 
 information provided by the Swiss authorities. Switzerland and Liechtenstein WT/TPR/S/208 
 Page 35 
 
 
60. The federal corporate income tax rate is 8.5% flat.56  The cantonal rates are, in general, flat 
too, but certain cantons apply pr ogressive rates.  Communal tax rates are generally set as a small 
proportion of the cantonal rates and vary across comm unes.  While corporate income taxes are low by 
European standards, the federal withho lding tax on dividends is relatively high.57  However, in the 
case of Swiss-resident stock corporations, the w ithholding tax is credited against regular taxation, 
while for entities domiciled abroad the taxation may depend on any releva nt double-taxation treaty 
(see below).  All taxes due by corporate taxpayers are deductible as expenses (during the same fiscal year), and therefore, the applied effective rates are lower than nominal ones (for example, 6.70% in 
the case of federal corporate tax for Zurich City  (i.e. the representative sub-central city of 
Switzerland) and canton of Zurich).
58  The combined corporate income tax rate (federal, cantonal, and 
municipal taxes) for Zurich City and canton of Zurich is 21.17%.  According to the authorities, the lowest total (effective) tax burden is 12.66% ( cantons of Appenzell Ausserrhoden and Obwalden) and 
the highest 24.81% (Basel Stadt).   
61. Resident companies (i.e. companies incor porated in, or effectively managed from 
Switzerland) are assessed in gene ral on their worldwide income
59, and are subject to federal and 
cantonal/communal corporate income taxes.  Signifi cant relief from corporate income taxes may be 
obtained by holding and administrative corporations.60  A branch of a foreign company pays the same 
rates of corporate income tax as a resident company.  No withholding tax is imposed on branch earnings that are transferred back  to the foreign headquarters. 
62. Non-resident companies may be subject to corporate income tax on income from certain 
Swiss sources if the companies:  are partners of a business in Switzerland;  have a permanent 
establishment in Switzerland
61;  own Swiss real estate;  have claims secured by mortgage on Swiss 
real estate;  or deal with Swiss real estate or act as a broker.62 
63. Except for income from Swiss real estate, whic h is fully taxable, holding companies are 
subject to income tax at the federal level only, at  the applicable statutory tax rate of 8.5%.  The 
cantons grant holding companies relief from all inco me taxes (holding privilege) and a reduction of 
the capital tax.  In general, the requirement for a "hol ding situation" is that two thirds of the assets are 
equity investments or two thirds of th e income is equity investment income.63 
64. All cantons grant a specific tax status to administrative companies.64  Profits (and capital) are 
taxed at a reduced base, on condition that all (or at  least the major part of) the company's commercial 
                                                      
56 Article 68 of RS 642.11. 
57 Beneficiaries of dividends can, however, claim re funding or crediting by the tax authorities if they 
properly declare the dividends received (bas ed on a double taxa tion treaty, if any). 
58 Taxation.ch online information, "Companies".  Viewed at http://www.taxation.ch/index.cfm/ 
fuseaction/show/temp/default/path/1-535.htm. 
59 With the exception of profits generated by enterp rises, permanent establishments, and real estate 
situated abroad. 
60 Article 28 of RS 642.14. 
61 A permanent establishment is a fixed place where the business activity of the en terprise is (wholly or 
partly) carried out, and includes branches, factories, workshops, sales agencies, permanent representations, 
mines and other places of extraction of natural resources.   A building, construction or installation site also 
constitutes a permanent establishment if it lasts at least 12 months. 
62 Taxation.ch online information, "Companies".  Viewed at:  http://www .taxation.ch/index.cfm/ 
fuseaction/show/temp/default/path/1-535.htm. 
63 Osec (2008). 
64 An administrative company is a company (or cooperative or founda tion) that has no commercial 
activity in Switzerland, merely administrative functions. WT/TPR/S/208 Trade Policy Review 
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activities are performed abroad.  The federal tax, however, cannot be reduced .  For detailed discussion 
of developments in the Swiss financial services, see Chapter IV(5)(ii). 
65. Cantons may grant tax breaks (including full tax holidays) for a maximum of ten years to 
newly created enterprises.65  In addition, the Swiss Confederation may grant tax breaks for the federal 
corporate income tax66, to industrial enterprises, or those providing services to them, that create or 
redirect employment;  and to projects that meet  the criteria established under the law for regional 
economy.  In general, the length and extent of the federal tax breaks are directly linked to and 
dependent on the cantonal ones.  Many cantons also offer incentives for investment financing such as 
guarantees;  interest subsidies;  loans at reduced inte rest rates or even interest-free loans;  one-time 
contributions;  and incentives for the purchase of la nd and premises (e.g. favourable conditions;  cost 
contributions for the planning and development of land; and cost contributions for reuse of 
premises).67  Different subsidy programmes for businesses are also available (Chapter III(4)(i)).   
66. Participation exemption (at federal, cantonal, and communal levels) in the form of reduced 
income tax is granted to corporations holding at l east 20% of the shares of another company, or with 
an investment of a market value of at least Sw F 2 million in another company.  In the former case, 
the reduction also covers capital gains on invest ment.  The tax reduction is proportional to the 
relationship between net income from qua lifying participation and total earning. 
67. Switzerland has double-taxation conventions in force with nearly 80 countries.68  A s  a t  
March 2008, it had Investment Promotion and Pr otection Agreements (IPPAs) in force with 
111 trading partners.69  Switzerland ratified the Multilateral Investment Guarantee Agency (MIGA) 
Convention in 1988.  It is also a contracting party to the Conventi on on the Settlement of Investment 
Disputes between States and Nationals of Other States since 1968. 
(ii) Liechtenstein 
68. Liechtenstein's investment regime is based on a stable business environment, coupled with an 
attractive taxation system.  No restrictions on investments are applied, except for some controls on the purchase of real estate and restrictions applied to a certain number of financial services (i.e. asset 
management, investment consulting, and assuming trusteeships) in case these are provided on a 
professional basis by trustees or trust companies (Chapter IV(5)(ii)). 
69. Liechtenstein corporate bodies are regulated by the Persons and Companies Act 1926 as 
updated
70 (the PGR Code), that is supplemented by th e Law on Trust Enterprises 1928.  A wide range 
of legal entities can be formed under the PGR C ode, the most common being Company Limited by 
Shares;  Limited Liability Company;  the Estab lishment (Anstalt);  the Foundation (Stiftung)71;  the 
Trust Enterprise;  and the Trust.  Other types incl ude the limited partnership with a share capital, the 
company limited by quota shares, the association,  the cooperative association, and the company 
without juridical personality.  Banks and finance co mpanies can only take the legal form of a public 
                                                      
65 Article 23 of RS 642.14. 
66 Article 12 of the Federal Law on regional policy of 6 October 2006, that entered in force on 
1 January 2008. 
67 Osec (2008). 
68 For the full list of countries, see Swiss Confeder ation online information, "Conventions suisses de 
double imposition", 1 January 2008.  Viewed at:  h ttp://www.estv.admin.ch/f/dba/themen/dok/gen-ii.pdf. 
69 The full list was viewed at SECO's online inform ation.  Viewed at:  http://www.seco.admin.ch/ 
themen/00513/00594/index.html?lang=fr. 
70 Last updated in 2008. 
71 A new Foundation Law has been adopted and will enter into force in April 2009. Switzerland and Liechtenstein WT/TPR/S/208 
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company limited by shares or of a Societas Europae  (SE)72;  exceptions may be granted by the 
Financial Market Authority.73  All corporate forms can also be either holding or domiciliary 
companies.   
70. A foreign corporation may operate in Liechtens tein either as a branch or by forming a 
separate legal entity;  if administered in the majority  by foreigners, the branch or the legal entity must 
nominate an EEA citizen domiciled in the EEA to re present it in administrative affairs.  The minimum 
capital requirements vary from Sw F 30,000 for establis hments, trust corporati ons and foundations to 
Sw F 50,000 for joint-stock companies.  All cor porate bodies formed under the PGR Code have to be 
registered with the Public Register.  Processing by the Public Registrar usually takes two to three 
days.  The registration fee depends on the capital endowment and the form of company:  it varies 
between Sw F 350 for trusts and around Sw F 1,00 0 for corporations;  formation fees are around 
Sw F 3000. 
71. Enterprises wishing to operate commercially in Li echtenstein must submit an application for a 
commercial licence to the Office of Economic Affairs.  In order to be granted the licence:  a manager 
must be appointed;  and in the case of legal entities owned by non-EEA states (third states), the 
majority of the persons mandated for the admini stration of the legal entity must reside in 
Liechtenstein.74  Financial services and professional services companies are subject to specific 
licensing requirements (Chapter IV(5)(ii) and (vii)).   
72. The establishment of a commercial entity by a natural person is subject to prior residence 
during 12 years for citizens of non-EEA member states  (other than Switzerland).  Permanent domicile 
in Liechtenstein is also required.  For citizen s of EEA member states and Switzerland, the only 
obligation is to register a domestic postal delivery address in the public register.  In all cases,     
sector-specific government-recognized professional qualifications are required. 
73. For a commercial presence by a legal pers on from a non-EEA country, the manager must 
meet the prior residence and professional qualifi cation requirements.  For non-EEA or non-Swiss 
citizens, the majority of the administrators author ized to manage and represent the legal entity must 
have been resident in Liechtenstein for 12 years.   These requirements also apply to associates.  All 
entities (of natural or legal persons) must have an o ffice in Liechtenstein that is suitable to carry out 
the business. 
74. Under the PGR Code, at least one member of the administration authorized to manage and 
represent a legal entity must be an EEA citizen  or a person holding equivalent status under 
international agreements, and must have a professiona l licence issued in Liechtenstein pursuant to the 
Professional Trustee Act or hold a government-rec ognized business qualification (so called qualified 
administrator).  The requirement for a qualified administrator is not applicable where a professional qualified manager is required (e.g. under the Law on Trade).  Nationality requir ements also apply to 
professional services (Chapter IV(5)(vii)). 
75. The purchase of real estate is subject to author ization, which is grante d in particular if the 
property is needed for personal housing or busines s purposes.  For non-EEA citizens, except Swiss 
citizens, ten years of residence are required for acqui sition of personal housing.  EEA and Swiss citizens 
are allowed to buy real estate as soon as they beco me residents.  Non-residents are not permitted to 
                                                     
 
72 The European Company Statute Societas Europaea  (SE) of October 2001 was integrated into 
Liechtenstein's national law in 2005. 
73 Article 18, paragraph 1, of the Banking Act. 
74 Amt für Volkswirtschaft online information, "Factsheet  for establishing businesses in Liechtenstein".  
Viewed at:  http://www.llv. li/pdf-llv-avw-wirtschaft-firmengruendung-englisch.pdf. WT/TPR/S/208 Trade Policy Review 
Page 38 
 
 
purchase real estate.  Liechtenstein nationals living abroad are allowed to purchase property in 
Liechtenstein only for personal housing needs in the "near future". 
76. The main fiscal statute is the Tax Act 1961 ( as amended).  Resident companies carrying on 
business or commercial activities in Liechtenstein ar e subject to corporate income tax on their 
worldwide income (Table II.5).  Income from a pe rmanent establishment loca ted abroad or income 
from foreign immovable property located abroad is exempt.  Corporate income tax and net worth tax 
are deductible from income.  Foreign dividends, inte rest, and royalties may be exempt if they have 
borne a foreign withholding tax.  There is no capital gains tax per se ;  capital gains are treated as part 
of taxable ordinary corporate income unless they are from domestic real estate, in which case they are 
subject to the real estate gains tax.  Non-resi dent companies carrying on business or commercial 
activities in Liechtenstein are generally subject to  net worth tax, which is assessed together with 
corporate income tax.     
Table II.5 
Liechtenstein corporate taxes for resident companies, and other selected taxes, 2008 
Tax base Standard tax rates (%) 
Corporate income tax (annual)a:  annual net income (i.e. revenues minus business expenses 
including depreciation and reserves plus cap ital gains and liquidation surplus/profit) 7.5 to 15b 
Net worth tax (annual):  paid-in capital plus open and hidden reserves, excluding capital allocated 
to foreign permanent establishments 0.2 
Net worth tax under Special Tax Regime:   paid-up capital or invested capital including reserves  0.1c 
Formation or revenue stamp duty (per transaction):  formation of  share capital (applicable only 
when the Swiss provisions on stamp duties do not apply)  Capital > Sw F 1,000,000:  1 
Capital > Sw F 5,000,000:  0.5 
Capital > Sw F 10,000,0000: 0.3 
Real estate gains tax (per transaction):  capital gain on sa le of real estate located in Liechtenstein 3.24 to 34.02d 
Withholding (coupon) tax:  distribu tion of dividends or profit shares (including in the form of 
shares) (per transaction);  l oan interest paid by  a resident company on loans over Sw F 50,000 of a 
duration exceeding two years;  and interest  on bonds issued by a resident company (per transaction)  4 
Personal income tax:  worldwide income 3.24 to 17.01 
Net wealth tax: worldwide net assets 0.162 to 0.80505 
a No loss carry-back.  Loss carry-forward for five years. 
b Depending on ratio of taxable net income to taxable net worth of  the company.  If the amount of dividends distributed by the 
 company for the relevant tax year exceeds 8% of its taxable ne t worth, the tax rate is increased by 1-5% (with the maximum 
 increase applicable to dividend distributions ex ceeding 24% of the company's taxable net worth). 
c Minimum Sw F 1,000.00. d Depending on the duration of ownership. 
Source:  Information provided by the Liechtenstein authorities. 
77. Dividends are generally taxable.  However, relief may be granted in  case of substantial 
participation75 in a resident or non-resident company (par ticipation exemption) that has lasted more 
than one year.  Participation exemption is not gr anted if the dividend is derived from a non-resident 
company that lacks substance (in terms of its activitie s) and is not subject to regular corporate income 
tax in its jurisdiction. 
78. In general, no withholding tax is levied on interest (for exceptions, see Table II.5) or on 
royalty payments.  Nevertheless, as a result of th e Savings Agreement between Liechtenstein and the 
EC, Liechtenstein has been imposing, since 1 Ju ly 2005, a withholding tax on interest and other 
                                                      
75 Substantial participation exists if a company holds at least 20% of the capital of the distributing 
company or if the value of the participation is at least Sw F 2 million.   Switzerland and Liechtenstein WT/TPR/S/208 
 Page 39 
 
 
savings returns paid to beneficial owners resident in EC countries.76  The applicable rate of 20% will 
be increased to 35% on 30 June 2011.  The Swis s Federal Law on stamp duty (Table II.4) applies 
under the Customs Union Treaty.     
79. A special tax regime is applied to resident  legal entities not engaging in commercial or 
business activities in Liechtenstein, foreign insura nce companies, and investment undertakings.  
Holding and domiciliary companies, as well as cap tive insurance compani es, are exempt from 
corporate income tax.  These companies are subject to a net worth tax of 0.1%, with a minimum of Sw F 1,000 (Table II.5).  The tax rate is reduced  to 0.075% for foundations organized as holding or 
domiciliary companies, whose assets plus reserves ex ceed Sw F 2 million, and to 0.05% if the assets 
plus reserves exceed Sw F 10 million.  The rate is reduced to 0.075% for captive insurance companies 
if the equity capital exceeds Sw F 50 million, and to 0.05% if the equity capital exceeds 
Sw F 100 million (an alternative option for ordina ry taxation is possible).  Captive insurance 
companies are exempt from withholding (coupon) tax.   Foreign insurance companies that have no 
domicile in Liechtenstein but engage in business in the country are subject to the payment of 1% of 
the premium revenues from life or annuity insurances, and 2% of all other premium revenues.  In the 
case of investment undertakings, the fund assets are ta x exempt, and distributions to the holders of 
fund units are not subject to withholding (coupon) tax.  However, the management company (in the 
case of an investment fund) or the company's own funds and proceeds (in the case of an investment company) are subject to the ordinary taxation.  Distributions of dividends from the management 
company (in the case of an investment fund) ar e subject to the withholding (coupon) tax, if the 
company's capital is divided into shares.  Dist ributions on founder's shares (in the case of an 
investment company) are subject to the withholding (coupon) tax. 
80. In November 2006, a working group was set up by the government to prepare proposals for a 
revision of Liechtenstein's tax laws.  The resulti ng "Future Liechtenstein Tax Roadmap" was adopted 
in February 2007.  Building on this , the working group is preparing a tax reform to be discussed with 
business associations and other stakeholders;  the cons ultation is expected to be finalized by the end 
of 2008.  Among the changes planned for the ta xation of commercially operating legal entities is 
elimination of the capital tax and coupon tax;  these entities would be subject only to a tax on earnings 
and a supplementary real estate gains tax.  The taxability with respect to earnings would be based on the criteria of Liechtenstein domicile or head of fice (unrestricted taxability) or a Liechtenstein 
operational site (restricted taxability).  Irrespective of any distributions of profit, the envisaged tax 
rate is to be at a uniform rate (15%).  Taking into account the equity capital interest deduction, the 
effective tax rate will therefore be lower than the no minal rate.  Overall, the tax burden would thus be 
lower than the current one, taking into account the capital, earnings, and coupon taxes.
77 
81. Liechtenstein has a double-taxation convention with Austria, effective since 1970.  In 
addition, it has a limited double taxation conventio n (i.e. covering commuters) with Switzerland. 
                                                      
76 Liechtenstein allows beneficial owners to avoid the withholding tax by expressly authorizing their 
Liechtenstein paying agents to report the interest payments to the competent authorities in their countries of 
residence. 
77 Portal of the Principality of Liechtenstein online information, "Parameters for a Liechtenstein Tax 
Reform".  Viewed at:  http://www.liechtenstein. li/en/pdf-fl-staat-regierung-pm-tax-eckpunkte.pdf.