HomeReportsBureau of Economic and Business Affairs2017 Investment Climate Statements...Switzerland and Liechtenstein

# 					2017 Investment Climate Statements: Switzerland and Liechtenstein			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

The Swiss federal system grants Switzerland’s 26 cantons (i.e., states) significant independence to shape investment policies and set incentives to attract investment. At the national level, the Swiss government enacts laws and regulations governing corporate structure, the financial system, and immigration, and concludes international trade and investment treaties. This federal approach to governance has helped the Swiss maintain long-term economic and political stability, a transparent legal system, an extensive and reliable infrastructure, efficient capital markets, and an excellent quality of life for the country’s 8 million inhabitants. Many U.S. firms base their European or regional headquarters in Switzerland, drawn to the country’s low corporate tax rates, productive and multilingual work force, and famously well maintained infrastructure and transportation networks. U.S. companies also choose Switzerland as a gateway to service markets in Eastern Europe, the Middle East, and beyond. Furthermore, U.S. companies select Switzerland due to its lenient labor laws when compared with other European locations.

In 2016, the World Economic Forum once again rated Switzerland the world’s most competitive economy – the country’s eighth consecutive #1 ranking. That high ranking not only reflects the country’s sound institutional environment, but also Switzerland’s ubiquitously high levels of technological and scientific research and investment. With very few exceptions, Switzerland welcomes foreign investment, accords it national treatment, and does not impose, facilitate, or allow barriers to trade. According to the OECD, Swiss general public administration ranks #1 globally in output efficiency, while Switzerland’s public administration enjoys the highest public confidence of any national government in the OECD. Switzerland’s judiciary system is equally effective and efficient, posting the shortest trial length of any of the OECD’s 35 member countries. Its competitive economy and openness to investment brought Switzerland’s cumulative inward direct investment to USD 863 billion in 2015.

Many of Switzerland’s cantons make significant use of financial incentives to attract investment to their jurisdictions. Some of the more aggressive cantons have occasionally waived taxes for new firms for up to ten years. However, this practice has been criticized by the European Union, –Switzerland’s top trading partner, with which Switzerland has many bilateral treaties–and is consequently likely to be phased out between 2018 and 2020. The first attempt to introduce legislation that would have abolished tax privileges for foreign companies was rejected by Swiss voters in a February 12, 2017 referendum. New draft legislation to bring Switzerland’s corporate tax system in line with OECD standards is expected later in 2017. Individual income tax rates vary widely across Switzerland’s 26 cantons. Corporate taxes also vary depending upon the country’s many different tax incentives. Zurich, which is sometimes used as a reference point for corporate location tax calculations within Switzerland, has a combined corporate tax rate of roughly 25%, which includes municipal, cantonal, and federal tax.

There are no “forced localization” laws designed to require foreign investors to use domestic content in goods or technology (e.g., data storage within Switzerland). Nevertheless, the Swiss Federal Council decided on February 5, 2014, to exclude foreign-held companies from working with the Swiss government or related entities when the work was related to critical infrastructure. A legal interpretation of this decision is still pending in the Swiss court system. Businesses also need to be aware that Switzerland follows strict privacy laws and certain data may not be collected in Switzerland, as it is deemed personal and particularly “worthy of protection.”

While Switzerland effectively enforces intellectual property rights linked to patents and trademarks, Swiss authorities are less rigorous in enforcing copyright laws on the internet. Switzerland has subsequently become a base for global online piracy, with a number of online piracy platforms managing their operations in and from Switzerland. In 2016, USTR placed Switzerland on its Special 301 Watch List due to continuing shortcomings in protecting copyrighted material online.

Some formerly public Swiss monopolies continue to retain market dominance despite partial or full privatization. As a result, foreign investors sometimes find it difficult to enter these markets. Additionally, the OECD ranks Switzerland’s educational, healthcare and agriculture costs and subsidies as relatively “high” when rated against output. The Swiss agricultural sector remains one of the most protected and heavily subsidized markets in the world. Despite heavy government support (direct payments comprise two thirds of an average farm’s income), Switzerland’s agricultural sector has the second lowest productivity among OECD members.

**Liechtenstein**

Liechtenstein’s investment conditions are identical in most key aspects to those in Switzerland, due to its dependence on the Swiss economy. The two countries form a customs union and Swiss authorities are responsible for implementing import and export regulations. Both countries are members of the European Free Trade Association (EFTA, including Iceland and Norway), an intergovernmental trade organization and free trade area that operates in parallel with the European Union (EU) and participates in the EU’s single market. Liechtenstein has a stable and open economy employing 36,755 people – more than the domestic population of 36,680 – and requiring a substantial number of foreign workers (mainly Swiss and Austrians). Some 53% of the Liechtenstein workforce are foreigners commuting daily to Liechtenstein, as an exception to the Free Movement of People allows Liechtenstein not to grant residence permits to its workers. Liechtenstein is one of the world’s wealthiest countries. Adjusted for purchasing power parity, its USD 157,040 per capita gross domestic product (GDP) is the highest in the world. According to the Liechtenstein Statistical Yearbook, the tertiary [services] sector accounts for 61% of Liechtenstein’s jobs, particularly in finance, followed by the secondary sector (particularly machine tools, precision instruments, and dental products), which employs 38% of the work force. Agriculture accounts for less than 1% of the country’s employment.

Liechtenstein reformed its tax system in 2011. Its corporate tax rate, at 12.5%, is one of the lowest in Europe. Capital gains, inheritance, and gift taxes have been abolished. The Embassy has no recorded complaints from U.S. investors stemming from market restrictions in Liechtenstein.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

With the exception of a heavily protected agricultural sector, foreign investment into Switzerland is generally not hampered by significant barriers, with no discrimination against foreign investors or foreign-owned investments being reported. Incidents of trade discrimination do exist, for example with regards to the importation of luxury low-volume vehicles and carbon dioxide targets and for bovine genetics products.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

Foreign and domestic enterprises may engage in various forms of remunerative activities in Switzerland and may freely establish, acquire, and dispose of interests in business enterprises in Switzerland. There are, however, some investment restrictions in areas under state monopolies, including certain rail transport services, some postal services, and certain insurance services and commercial activities (e.g. trade in salt). Restrictions (in the form of domicile requirements) also exist in air and maritime transport, hydroelectric and nuclear power, operation of oil and gas pipelines, and the transportation of explosive materials. Additionally, the following legal restrictions apply within Switzerland:

Corporate boards: There are no laws authorizing private firms to limit or prohibit foreign investment or participation. The board of directors of a company registered in Switzerland must consist of a majority of Swiss citizens residing in Switzerland; at least one member of the board of directors who is authorized to represent the company (i.e., to sign legal documents) must be domiciled in Switzerland. If the board of directors consists of a single person, this person must have Swiss citizenship and be domiciled in Switzerland. Foreign controlled companies usually meet these requirements by nominating Swiss directors who hold shares and perform functions on a fiduciary basis. Mitigating these requirements is the fact that the manager of a company need not be a Swiss citizen and company shares can be controlled by foreigners (with the exception of banks). The establishment of a commercial presence by persons or enterprises without legal status under Swiss law requires an establishment authorization, according to cantonal law. The aforementioned requirements do not generally pose a major hardship or impediment for U.S. investors.

Hostile takeovers: Swiss corporate shares can be issued both as registered shares (in the name of the holder) or bearer shares. Provided the shares are not listed on a stock exchange, Swiss companies may, in their articles of incorporation, impose certain restrictions on the transfer of registered shares to prevent hostile takeovers by foreign or domestic companies (article 685a of the Code of Obligations). Hostile takeovers can also be annulled by public companies; however, legislation introduced in 1992 made this practice more difficult. Public companies must now cite in their statutes significant justification (relevant to the survival, conduct, and purpose of their business) to prevent or hinder a takeover by a foreign entity. Furthermore, public corporations may limit the number of registered shares that can be held by any shareholder to a percentage of the issued registered stock. In practice, many corporations limit the number of shares to 2-5% of the relevant stock. Under the public takeover provisions of the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (2015), a formal notification is required when an investor purchases more than 3% of a Swiss company’s shares. An “opt-out” clause is available for firms which do not want to be taken over by a hostile bidder, but such opt-outs must be approved by a super-majority of shareholders and must take place well in advance of any takeover attempt.

Banking: Those wishing to establish banking operations in Switzerland must obtain prior approval from the Swiss Financial Market Supervisory Authority (FINMA), a largely independent agency, administratively under the Swiss Federal Department of Finance. The Swiss Federal Banking Commission, the Federal Office of Private Insurance, and the Anti-Money Laundering Control Authority were merged in January 2009 to form FINMA. This body aims to promote confidence in financial markets and protect customers, creditors, and investors. FINMA approval of bank operations is generally granted if the following conditions are met: reciprocity on the part of the foreign state; the foreign bank’s name must not give the impression that the bank is Swiss; the bank must adhere to Swiss monetary and credit policy; and a majority of the bank’s management must have their permanent residence in Switzerland. Otherwise, foreign banks are subject to the same regulatory requirements as domestic banks.

Banks organized under Swiss law have to inform FINMA before they open a branch, subsidiary, or representation abroad. Foreign or domestic investors have to inform FINMA before acquiring or disposing of a qualified majority of shares of a bank organized under Swiss law. If exceptional temporary capital outflows threaten Swiss monetary policy, the Swiss National Bank, the country’s independent central bank, may force other institutions to seek approval before selling foreign bonds or other financial instruments. On December 20, 2008, government protection of current accounts held in Swiss banks was raised from CHF 30,000 to CHF 100,000.

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

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

**Other Investment Policy Reviews**

The World Trade Organization (WTO) published a Trade Policy Review of Switzerland and Liechtenstein in April 2017 that includes investment information. Other reports containing elements referring to the investment climate in Switzerland include the OECD Economic Survey of November 2015.

- Link to the OECD reports / papers:  http://www.oecd-ilibrary.org/economics/oecd-economic-surveys-switzerland-2015_eco_surveys-che-2015-en 
- Link to the WTO report:  https://www.wto.org/english/tratop_e/tpr_e/tp380_e.htm 

**Business Facilitation**

The Swiss government-affiliated non-profit organization Switzerland Global Enterprise (SGE) has a nationwide mandate to attract foreign business to Switzerland on behalf of the Swiss Confederation. SGE promotes Switzerland as an economic hub and fosters exports, imports, and investments. Larger regional offices include the Greater Geneva-Berne Area (that covers large parts of Western Switzerland), the Greater Zurich Area, and the Basel Area. Each district has business promotion office dedicated to helping facilitate real estate location, beneficial tax arrangements, and employee recruitment plans. There is no minimum threshold–in terms of the number of jobs created or initial investment amount–for foreign companies to qualify for help to establish in Switzerland. Nevertheless, Swiss promotion offices generally focus on attracting medium-sized entities (creating between 50 and 249 jobs in their region).

References:

- Micro companies (less than 10 persons) and other companies can seek support for starting a company:  https://startbiz.easygov.swiss/ 
- Switzerland Global Enterprise plays a role in connecting companies with potential host regions:  https://www.s-ge.com/en/investment-promotion 
- Some of the larger promotion offices are:   - Invest Western Switzerland Area:  http://ggba-switzerland.ch/ 
  - Greater Zurich Area:  https://www.greaterzuricharea.com 
  - Basel Area:  http://www.baselarea.ch/  

Switzerland has a dual system for granting work permits and allowing foreigners to create their own companies in Switzerland. Employees from the EU/EFTA area can benefit from the Free Movement of Persons Agreement. Entrepreneurs from third states who are not citizens of an EU/EFTA country and want to become self-employed in Switzerland must meet Swiss labor market requirements. The criteria for admittance are contained in the Federal Act on Foreign Nationals (FNA), the Decree on Admittance, Residence and Employment (VZAE) and the provisions of the FNA and the VZAE.

- The Federal Act on Foreign Nationals (FNA) (unofficial English translation):  https://www.admin.ch/opc/en/classified-compilation/20020232/index.html 
- Decree on Admittance, Residence and Employment (VZAE) (not available in English):  https://www.admin.ch/opc/de/classified-compilation/20070993/index.html 
- Provisions of the FNA and the VZAE (not available in English):  http://www.ejpd.admin.ch/dam/data/bfm/rechtsgrundlagen/weisungen/auslaender/weisungen-aug-d.pdf 

Once preliminary questions regarding the nationality of a company’s founder or employees have been addressed, company registration is outlined on https://www.ch.ch/en/becoming-self-employed/ 

Setting up a company in Switzerland requires registration at the relevant regional Commercial Registry. The cost for registering a company is typically $1,300 – $15,200, depending on the company type. These costs mainly cover the Public Notary and entry into the Commercial Registry.

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

The World Bank Doing Business Report ranks Switzerland 71st in starting a business, because of the six-step registration process, the 10 days it takes to set up a company, and the relatively high initial capital requirements.

**Outward Investment**

Switzerland does not explicitly promote outward investment, but due to the importance of Swiss exports for the country (in 2015, goods and services exports totaled 63% of GDP) and the presence of large Swiss multinationals and export oriented, innovative SMEs, outward investment is positively stimulated through economic activities. In 2015, Switzerland’s cumulative outward FDI totaled $1.1 trillion.

							2. Bilateral Investment Agreements and Taxation Treaties					

While the United States and Switzerland do not share an investment agreement, Switzerland has concluded numerous investment protection treaties with developing and emerging market economies; over 112 BITs and 29 relevant FTAs remain in force.

See the UNCTAD Investment Policy Hub for a full listing: http://investmentpolicyhub.unctad.org/IIA/CountryBits/203#iiaInnerMenu 

*Bilateral Taxation Treaties*

Switzerland concluded an Income Tax Treaty with the United States in 1996. A 2009 Protocol to this Treaty–ratified by Switzerland but not by the U.S. Senate–has not entered into force.

https://www.irs.gov/businesses/international-businesses/switzerland-tax-treaty-documents 

							3. Legal Regime					

**Transparency of the Regulatory System**

The Swiss government uses transparent policies and effective laws to foster a competitive investment climate. Proposed laws and regulations are open for public comment (including interested parties, interest groups, cantons, and cities) then discussed within the bicameral parliamentary system and may be subject to facultative or automatic referenda that allow the Swiss voters to reject or accept the proposals. Only in very rare instances are regulations not reviewed on the basis of scientific analysis, rather than political preferences, such as the case of the extension of a moratorium on planting GMO crops until 2021.

**International Regulatory Considerations**

Switzerland is not part of the European Union. However, with rare exceptions, Switzerland adopts most EU standards.

In 2006, the OECD concluded that Switzerland was in line with its obligations under the WTO to provide its trading partners with information and an opportunity to comment on draft technical regulations

**Legal System and Judicial Independence**

Switzerland’s civil legal system is divided into public and private law. Public law governs the organization of the state, as well as the relationships between the state and private individuals (or between the state and other entities, such as companies). Constitutional law, administrative law, tax law, criminal law, criminal procedure, public international law, civil procedure, debt enforcement, and bankruptcy law are sub-divisions of public law.

Private law governs relationships between individuals or entities. Swiss civil law is mainly contained in the Swiss Civil Code (which governs the status of individuals, family law, inheritance law, and property law) and in the Swiss Code of Obligations (which governs contracts, torts, commercial law, company law, law of checks and other payment instruments). Intellectual property law (copyright, patents, trademarks, etc.) is also an area of private law. Labor is governed by both private and public law.

Judiciary organization differs by canton. Smaller cantons have only one court, while larger cantons have multiple courts. All of the cantons have established a high court, but in only four cantons (Zurich, Bern, St. Gallen and Aargau) does the high court include a specialized commercial court. There are no specialized courts on matters related exclusively to intellectual property rights. Cantonal high court decisions can be appealed to the Swiss Supreme Court. The court system is independent, competent, and fair.

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

**Laws and Regulations on Foreign Direct Investment**

The major laws governing foreign investment in Switzerland are the Swiss Code of Obligations, the Lex Friedrich/Koller, Switzerland’s Securities Law, and the Cartel Law. There is no screening of foreign investment beyond a normal anti-trust review. There are few sectoral or geographic preferences or restrictions. Several exceptions are described below in the section on performance requirements and incentives.

Some former public monopolies retain their historical market dominance despite partial or full privatization. Foreign investors sometimes find it difficult to enter these markets due to high entry costs and the relatively small size and linguistic divisions of the Swiss market.

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

Useful websites:

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

**Competition and Anti-Trust Laws**

The World Trade Organization (WTO) published a Trade Policy Review of Switzerland and Liechtenstein in August, 2013, that includes investment information. Other reports containing elements referring to the investment climate in Switzerland include the OECD Economic Survey of November 2015.

- Link to the OECD reports / papers:  http://www.oecd-ilibrary.org/economics/oecd-economic-surveys-switzerland-2015_eco_surveys-che-2015-en 
- Link to the WTO report:  https://www.wto.org/english/tratop_e/tpr_e/g280_e.pdf 

**Expropriation and Compensation**

There are no known cases of expropriation within Switzerland.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Switzerland has been a member of the International Center for Settlement of Investment Disputes (ICSID) since June 14, 1968, and a member of the New York Convention on Recognition and Enforcement of Foreign Arbitral Law since June 1, 1965. Thus, local courts must enforce international arbitration awards under certain circumstances.

*International Commercial Arbitration and Foreign Courts*

The Chambers of Commerce and Industry, business associations organized at the cantonal level, of Basel, Bern, Geneva, Lausanne, Lugano, Neuchâtel, and Zurich have established the Swiss Chambers’ Arbitration Institution. This entity offers dispute resolution based on Swiss Rules of International Arbitration and Swiss Rules of Commercial Mediation. According to the Swiss Chambers’ Arbitration Institution, 100 cases were submitted in 2015, and 89% of the cases involved foreign parties. 96 of these cases were accepted under Swiss rules; 36% of the cases were Swiss, 24% included parties from Western Europe, and 6% included parties from North America.

**Bankruptcy Regulations**

The World Bank’s 2017 “Doing Business” survey ranks Switzerland 45th out of 190 countries in resolving insolvency. The average time to close a business in Switzerland is three years (compared to 1.7 years average across the OECD), with an average of 46.6 cents on the dollar recovered by claimants from insolvent firms (compared to 73.0 cents OECD average).

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

Federal Statute on Debt Enforcement and Bankruptcy of 11 April 1889 (see www.admin.ch/ch/d/sr/c281_1.html  for full text in German, French or Italian).

							4. Industrial Policies					

**Investment Incentives**

Many of Switzerland’s cantons make significant use of financial incentives to attract investment to their jurisdictions. Some of the more aggressive cantons have occasionally waived taxes for new firms for up to ten years. However, this practice has been criticized by the European Union. Individual income tax rates vary widely across the 26 cantons. Corporate taxes also vary depending upon the country’s many different tax incentives. Zurich, which is sometimes used as a reference point for corporate location tax calculations within Switzerland, has a combined corporate tax rate of roughly 25%, which includes municipal, cantonal, and federal tax. In its 2017 “Doing Business” survey, the World Bank ranks Switzerland as the 31st most attractive destination for doing business in the world. The Swiss-based International Institute for Management Development (IMD) World Competitiveness Scoreboard ranks Switzerland second.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

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

**Performance and Data Localization Requirements**

There are no “forced localization” laws designed to require foreign investors to use domestic content in goods or technology (e.g., data storage within Switzerland). Nevertheless, the Swiss Federal Council decided on February 5, 2014, to exclude foreign-held companies from working with the Swiss government or related entities when the work was related to critical infrastructure. A legal interpretation of this decision is still pending in the Swiss court system. Businesses also need to be aware that Switzerland follows strict privacy laws and certain data may not be collected in Switzerland, as it is deemed personal and particularly “worthy of protection.” The collection of certain data may need to be registered at the office of the Federal Data Protection and Information Commissioner.

							5. Protection of Property Rights					

**Real Property**

Physical property rights are recognized and enforced within Switzerland, which currently ranks 16th out of 190 countries in the ease of transferring and registering property, according to the World Bank’s Doing Business Report.

**Intellectual Property Rights**

Federal customs authorities in Switzerland have the authority to seize counterfeit goods upon request from owners of intellectual property (i.e., patent, trademark or copyright) or related interest groups (e.g., professional associations). Goods can be seized for 10 days if there is reasonable suspicion that they are counterfeit. Provisional measures can also be obtained from a Swiss court to ensure evidence is not destroyed. If the destruction of goods is requested by an intellectual property owner, the owner of the goods can dispute that claim in writing within 10 days. The owner of the intellectual property covers the costs for the destruction of the goods. In 2015 Swiss customs intervened 3,621 times and seized counterfeit goods valued at $24 million (not including pharmaceuticals). Of the goods seized at the Swiss border, 76% were clothing and handbags.

While Switzerland effectively enforces intellectual property rights linked to patents and trademarks, Swiss authorities are less rigorous in enforcing copyright laws on the internet. This issue stems from the interpretation of a September 2010 Swiss court verdict (the “Logistep” case), in which the Swiss Supreme Court ruled that internet protocol addresses required protection, and subsequently could not be used to identify violators of copyright on the internet.

Although uploading of copyright-protected material remains illegal within Switzerland, in practice downloads have become widespread. Swiss prosecutors continue to refuse to engage in legal proceedings against alleged violators or service providers. Switzerland has subsequently become a base for global online piracy, with a number of online piracy platforms managing their operations in and from Switzerland. In 2014, the U.S. House of Representative’s “Creativity and Theft-Prevention Caucus” included Switzerland, alongside Russia, China, and India, as one of the world’s worst environments for protecting copyrights. An amendment of the copyright law that would allow copyright holders to more effectively engage with internet access providers to identify and prosecute illegal uploaders of protected works is currently being debated by stakeholders and experts within the Federal Ministry of Justice. The decision whether to present the draft law to parliament is expected in summer 2017. In 2016, USTR placed Switzerland on its Special 301 Watch List due to continuing shortcomings in protecting copyrighted material online.

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

*Resources for Rights Holders*

Thomas (Toby) Wolf, Economic/Commercial OfficerRaphael Vogel, Economic SpecialistU.S. Embassy in Bern, Sulgeneckstrasse 17, 3003 Bern, Switzerland+41 31 357 7319Business-bern@state.gov

Country / Economy resources

Swiss American Chamber of CommerceTalacker 418001 Zurich+41 43 443 72 00info@amcham.ch

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

The Swiss government’s attitude toward foreign portfolio investment and market structures are positive, as demonstrated through frequent high global rankings.

**Money and Banking System**

Switzerland is home to a sophisticated banking system that provides a high degree of service to both foreign and domestic entities. Switzerland also has an effective regulatory system that encourages and facilitates portfolio investment. Domestic and foreign bidders are treated equally when it comes to hostile takeovers within Switzerland. The Swiss Bankers Association (SBA), a trade association of 296 member financial institutions, estimated that Switzerland’s banks held assets of more than USD 6.5 trillion in 2015, with 25% growth since 2011. The largest banks, UBS and Credit Suisse, each hold about USD 1 trillion in assets, while Raiffeisen Switzerland holds about USD 220 billion and Zurich Cantonal Bank holds roughly USD 150 billion. Swiss banks maintain a high ratio of deposit assets when compared with the country’s GDP (172%), a measure of the strength of the financial system. Switzerland also maintains an independent central bank – the Swiss National Bank (SNB).

U.S. citizens resident in Switzerland may face discrimination from smaller Swiss banks as a result of ongoing tax evasion investigations being conducted by the U.S. Department of Justice and additional regulatory and administrative procedures required for U.S. related person accounts under accepted disclosure rules.

Several associations provide information about Swiss banks that offer services to U.S. clients:

- http://www.amcham.ch/publications/p_publications.asp?publication=Other%20Chamber%20Publications 
- http://www.amclub.ch/bank-services-for-us-citizens/ 
- http://americanswelcome-expats.swiss/list-of-swiss-banks.php 

**Foreign Exchange and Remittances**

*Foreign Exchange*

On January 15, 2015 the Swiss National Bank (SNB) made the largely unanticipated move of abandoning the Swiss franc’s euro peg (1.20 CHF/EUR), roiling global currency markets. In the wake of the SNB’s announcement, the franc increased over 30% in value against the euro, before settling to a roughly 8% appreciation around 1.10 CHF/EUR. The Swiss franc currently trades around parity with the dollar, with one Swiss franc equaling 1.01 USD (as of 03/26/2017). The strength of the franc has lowered effective prices of imports to Switzerland, but it also has harmed Swiss export competitiveness. For more than two years, the SNB has attempted to ease the pressure on the Swiss franc with a negative interest rate for commercial banks, amounting to -0.75%.

*Remittance Policies*

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

**Sovereign Wealth Funds**

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

							7. State-Owned Enterprises					

The Swiss Confederation is the largest or sole shareholder in Switzerland’s five State-Owned Enterprises (SOEs), active in the areas of ground transportation (SBB), information and communication (Swiss Post, Swisscom), defense (Skyguide), and aerospace (Ruag). These companies are typically involved in “public function mandates,” but may also cover commercial activities (e.g., Swisscom in the area of telecommunications). SOEs typically interact with private industry, and two, Swisscom and Ruag, are also active in foreign markets. Private sector competitors can compete with SOEs under the same terms and conditions with respect to access to markets, credit, and other business operations. Additional SOEs controlled by the cantons are active in the areas of energy, water supply, and a number of subsectors. SOEs may benefit from exclusive rights and privileges (some of which are listed in the WTO Trade Policy Review in Table A 3.1).

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

**Privatization Program**

Switzerland has no current plans to privatize any of its state-owned enterprises.

							8. Responsible Business Conduct					

The Swiss Confederation and Swiss companies are generally aware of the importance of pursuing the due diligence approach to responsible business conduct (RBC) and of demonstrating corporate social responsibility (CSR). In response to criticism from civil society about the business practices of Swiss companies abroad, the Swiss government has commissioned a series of reports on the government’s role in ensuring CSR, particularly in the commodities sector. In April 2015, the Swiss government announced a national action plan on CSR: https://www.seco.admin.ch/seco/en/home/Aussenwirtschaftspolitik_Wirtschaftliche_Zusammenarbeit/Wirtschaftsbeziehungen/Gesellschaftliche_Verantwortung_der_Unternehmen.html 

The Swiss government takes an active role in developing and promoting global RBC standards within multilateral organizations. As an OECD member, Switzerland adheres to the OECD Guidelines for Multinational Enterprises. Switzerland is currently drafting a national action plan in conjunction with its commitments under the UN Guiding Principles on Business and Human Rights. The Swiss government also participated in the drafting and implementation of the OECD Due Diligence Guide for Responsible Supply Chains of Minerals from Conflict and High Risk Areas. Switzerland is a member of the Extractive Industries Transparency Initiative and supports the Better Gold Initiative, which promotes responsible gold mining in Peru, with plans to expand to Bolivia and Colombia. The State Secretariat for Economic Affairs (SECO), under the Federal Department of Economic Affairs, Education, and Research, houses Switzerland’s National Contact Point for the OECD Guidelines and can be contacted at: http://mneguidelines.oecd.org/ncps/switzerland.htm 

Switzerland has signed onto a number of nonbinding agreements outlining best practices for corporations, including the Voluntary Principles on Security and Human Rights and the International Code of Conduct for Private Security Service Providers. An ongoing political debate exists over whether Swiss courts should exercise jurisdiction to hear cases of alleged harm (human rights and environmental) done by Swiss companies in foreign countries.

Of additional note, Switzerland ranked 16th out 180 countries in the 2016 Yale University-based Environmental Performance Index (EPI). In 2013, Swiss voters approved a referendum allowing shareholders to curb excessive executive pay. The “Thun Group,” a Switzerland-based grouping of banks examining human rights issues, is a global leader in translating the responsible business conduct (RBC) approach into voluntary guidelines for the financial sector.

Latest update to the Background report on Commodities: http://www.news.admin.ch/NSBSubscriber/message/attachments/40643.pdf 

Information about the Swiss Better Gold Association: http://www.swissbettergold.ch/en/about 

							9. Corruption					

Under Swiss law, officials are not to accept anything that would “challenge their independence and capacity to act.” According to the law, the range of permissible receipt of “individual advantages” is a sliding scale, depending on the role of the official. Some officials may receive advantages up to several hundred Swiss francs, while others may receive no advantages at all (e.g., those working for financial regulators). The upper limit value for gifts, such as champagne or watches, is a grey area that varies according to department and canton. Transparency International has recommended that at the federal level a maximum sum should be set. Some multinationals have assisted with the fight against corruption by setting up internal hotlines to enable staff to report problems anonymously.

The law provides criminal penalties for official corruption, and the government generally implements these laws effectively. Investigating and prosecuting government corruption is a federal responsibility. A majority of cantons require members of cantonal parliaments to disclose their interests. A joint working group comprising representatives of various federal government agencies works under the leadership of the Federal Department of Foreign Affairs to combat corruption.

On September 24, 2009, Switzerland ratified the United Nations Convention against Corruption. Government experts believe this ratification did not result in significant changes, since passive and active corruption of public servants was already considered a crime under the Swiss Criminal Code (Art. 322).

In October 2013, the Group of States against Corruption (GRECO, Council of Europe) concluded “that the current low level of compliance with the recommendations is ‘globally unsatisfactory’.” Areas which needed particular attention were: transparency of party funding; criminalization of trading in influence; and the dual criminality requirement. Switzerland maintains its official reservations on the relevant articles in the Criminal Law Convention on Corruption.

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

*UN Anticorruption Convention, OECD Convention on Combatting Bribery*

Switzerland ratified the UN Anticorruption Convention on September 24, 2009 and in 1997 signed the OECD Anti-Bribery Convention, which entered into force on May 1, 2000.

Switzerland maintains an effective legal and policy framework to combat domestic corruption. U.S. firms investing in Switzerland have not complained of corruption to the Embassy in recent years, and laws appear to be enforced effectively. Offering or accepting bribes in Switzerland is subject to criminal and civil penalties, including imprisonment for up to five years.

In February 2001, Switzerland signed the Council of Europe’s Criminal Law Convention on Corruption. It signed the UN Convention against Corruption in December 2003. In order to implement the Council of Europe’s convention, the Swiss parliament amended the Penal Code to make bribery of foreign public officials a federal offense (Title Nineteen “Bribery”); these amendments entered into force on May 1, 2000. In accordance with the revised 1997 OECD Anti-Bribery Convention, the Swiss parliament amended legislation on direct taxes of the Confederation, cantons, and townships to prohibit the tax deductibility of bribes; these amendments became effective on January 1, 2001.

*Resources to Report Corruption*

Contact at government agencies:

Michel HuissoudDirectorSwiss Federal Audit OfficeMonbijoustrasse 453003 Bern / SwitzerlandPh. +41 31 323 10 35E-mail: whistleblowing@efk.admin.ch

Contact at “watchdog” organizations:

Martin HiltiExecutive DirectorTransparency International SwitzerlandSchanzeneckstrasse 25P.O. Box 85093001 Bern / SwitzerlandPh. +41 31 382 3550E-Mail: info@transparency.ch

							10. Political and Security Environment					

Political violence is rare in Switzerland but is perpetrated by representatives of both left- and right-wing groups, including nuclear power opponents and neo-Nazi groups. The most relevant act in recent years occurred in April 2011, when a letter bomb exploded targeting employees of a nuclear power lobbying organization. A group of Turkish nationalists clashed with a group of Kurdish independence supporters on the streets of Bern (the nation’s political capital) in 2015. During the resulting violence, two protestors were killed and a number of people were injured. Lower-level clashes between left-wing demonstrators and the police happen several times a year in Bern, but violence is virtually always directed at police officers rather than businesses or members of the public.

							11. Labor Policies and Practices					

The Swiss labor force is highly educated and highly skilled. The Swiss economy is capital intensive and geared toward high value-added products and services. In 2015, 75.3% of the workforce was employed in services, 21.4% in manufacturing, and 3.3% in agriculture. Full-time work is more prevalent among foreign workers than among Swiss workers: 74% of the foreign working population works full-time, while only 60% of their Swiss peers work full-time. Wages in Switzerland are among the highest in the world. Switzerland continues to observe International Labor Organization (ILO) core conventions. Government regulations cover maximum work hours, minimum length of holidays, sick leave, compulsory military service, contract termination, and other requirements. There is no minimum wage law.

Foreigners fill not only low-skilled, low-wage jobs, but also highly technical positions in the manufacturing and service industries. Foreigners account for 31.5 % of Switzerland’s labor force estimated at about 4.9 million people; foreigners comprise significant portions of the industrial (38.9%) and services sectors (28%). Many foreign nationals are long-time Swiss residents who have not applied for or been granted Swiss citizenship. Foreign seasonal workers take many low-wage jobs in agriculture.

In a February 9, 2014 national initiative, Swiss voters decided to impose limits on immigration, via parliamentary action, which could have negated the Swiss-EU Free Movement of Persons Agreement and carried potentially significant implications for the immigrant-dependent labor market. In the wake of the 2014 immigration referendum, the government introduced a series of measures aimed at bringing into the labor market traditionally underemployed groups – namely women, older job seekers, refugees, and temporarily accepted asylum seekers. In December 2016, after a nearly three-year delay, the parliament chose to respond to the 2014 initiative not by restricting immigration, but by legislating a requirement that companies in high-unemployment sectors in high-unemployment regions (both criteria left undefined) provide information on job openings to government-run employment centers. These centers would provide employers with suitable candidates, which employers would be required to interview before filling a job. However, registration at the employment centers would be open to cross-border commuters and EU residents at large, thus blunting the effect of the legislation, which, as of March 2017, had not been implemented by the Federal Council.

Switzerland generally prohibits commerce on Sunday. Swiss voters narrowly accepted a 2005 revision of the Swiss Federal labor law in order to provide flexible working hours, such as Sunday openings, in major railway stations and airports. Shopping hours outside of airports and railway stations remain regulated by cantonal laws. Employees in the retail sector and in restaurants and bars, in cooperation with other interests, have been successful in resisting the easing of the federal and cantonal laws governing opening hours. Shop-hour restrictions are nevertheless loosening gradually in cities such as Zurich, Geneva, and Bern.

Approximately a quarter of Switzerland’s full-time workers are unionized. Labor-management relations are generally constructive, with a willingness on both sides to settle disputes by negotiation rather than by labor action. Some 606 collective agreements exist today in Switzerland (of which approximately 60% concern the tertiary [services] sector, 39% the secondary [manufacturing] sector, and 1% the agricultural sector) and are usually renewed without major problems. Since 2002, trade unions have complained collective agreements cover too small a portion of the Swiss labor force. Although the number of workdays lost to strikes in Switzerland is among the lowest in the OECD, Swiss trade unions have encouraged workers to strike on several occasions in recent years. In difficult economic times, employers may temporarily shift their full-time employees to part-time by registering with cantonal authorities and justifying reductions as necessary to business activities. Employees can reject the shift to part-time work, but risk dismissal. Responsibility for establishing and enforcing rules for part-time work ultimately belongs to the Federal Council, the seven-member executive of the Swiss government.

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

Switzerland’s average unemployment rate was 4.7% in 2015 (according to the ILO), or 3.2% in 2016 according to the State Secretariat for Economic Affairs (SECO), using a different methodology. The average unemployment rate was 6.6% for foreigners and 2.5% for Swiss citizens in 2016, according to SECO. All cantons bordering EU countries suffer higher unemployment rates than Switzerland as a whole. Young workers aged 15-24 face a slightly higher unemployment rate (3.4%), while the unemployment rate for elderly employees (50+ years) remains low (2.8%). According to labor statistics, 84.1% of unemployed workers found a new position within 12 months.

							12. OPIC and Other Investment Insurance Programs					

Switzerland is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA), but it has not signed a political risk insurance agreement with any Western European country or the United States. Switzerland’s economy exceeds the cap for U.S. Overseas Private Investment Corporation (OPIC) activity.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

*Source: Swiss National Bank (www.snb.ch )

Significant statistical discrepancies are due to methodological differences in measuring foreign direct investment.

As the OECD Benchmark Definition of Foreign Investment concludes, there “are two possible approaches to identify the home country (of the direct investor) for inward FDI and the host country (of the direct investment enterprise) for outward FDI:

- by immediate host country/investing country (IHC/IIC)
- by ultimate host country/ultimate investing country (UHC/UIC)

Switzerland uses the immediate investing country approach (IIC) and the United States uses the more complex ultimate investing country approach (UIC). The OECD  report explains in detail how the two different approaches generate different figures.*Table 3: Sources and Destination of FDI*

*Table 4: Sources of Portfolio Investment*

							14. Contact for More Information					

Thomas (Toby) Wolf, Economic/Commercial OfficerRaphael Vogel, Economic SpecialistU.S. Embassy in Bern, Sulgeneckstrasse 17, 3003 Bern+41 31 357 7319Business-bern@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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