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Executive Summary

Switzerland is welcoming to international investors, with a positive overall investment climate. The Swiss federal government enacts laws and regulations governing corporate structure, the financial system, and immigration, and concludes international trade and investment treaties. However, Switzerland’s 26 cantons (analogous to U.S. states) and largest municipalities have significant independence to shape investment policies locally, including incentives to attract investment. This federal approach has helped the Swiss maintain long-term economic and political stability, a transparent legal system, extensive and reliable infrastructure, efficient capital markets, and an excellent quality of life for the country’s 8.6 million inhabitants. Many U.S. firms base their European or regional headquarters in Switzerland, drawn to the country’s modest corporate tax rates, productive and multilingual workforce, and well-maintained infrastructure and transportation networks. U.S. companies also choose Switzerland as a gateway to markets in Eastern Europe, the Middle East, and beyond. Furthermore, U.S. companies select Switzerland because of favorable and less restrictive labor laws compared to other European locations as well as availability of a skilled workforce.

In 2019, the World Economic Forum rated Switzerland the world’s fifth most competitive economy. This high ranking reflects the country’s sound institutional environment and high levels of technological and scientific research and development. With very few exceptions, Switzerland welcomes foreign investment, accords national treatment, and does not impose, facilitate, or allow barriers to trade. According to the OECD, Swiss public administration ranks high globally in output efficiency and enjoys the highest public confidence of any national government in the OECD. The country’s competitive economy and openness to investment brought Switzerland’s cumulative inward direct investment to USD 1.4 trillion in 2020 (latest available figures) according to the Swiss National Bank, although nearly half of this amount is invested in regional hubs or headquarters that further invest in other countries.

In order to address international criticism of tax incentives provided by Swiss cantons, the Federal Act on Tax Reform and Swiss Pension System Financing (TRAF) entered into force on January 1, 2020. TRAF obliges cantons to offer the same corporate tax rates to both Swiss and foreign companies, while allowing cantons to continue to set their own cantonal tax rates and offer incentives for corporate investment. These can be deductions or preferential tax treatment for certain types of income (such as for patents), or expenses (such as for research and development). Switzerland joined the Statement of the OECD/G20 Inclusive Framework on Base Erosion and Profit Sharing (BEPS) in July 2021. It intends to implement the BEPS effective minimum corporate tax rate of 15 percent by January 2024, after a referendum to amend the Swiss constitution.

Personal income and corporate tax rates vary widely across Switzerland’s cantons. Effective corporate tax rates ranged between 11.85 and 21.04 percent in 2021, according to KPMG. In Zurich, for example, the combined effective corporate tax rate (including municipal, cantonal, and federal taxes),was 19.7 percent in 2021. The United States and Switzerland have a bilateral tax treaty.

Key sectors that have attracted significant investments in Switzerland include information technology, precision engineering, scientific instruments, pharmaceuticals, medical technology, and machine building. Switzerland hosts a significant number of startups. A new “blockchain act” came fully into force in August 2021, which is expected to benefit Switzerland’s already sizeable ecosystem for companies in blockchain and distributed ledger technologies.

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). Switzerland follows strict privacy laws and certain personal data may not be collected in Switzerland.

Switzerland is a highly innovative economy with strong overall intellectual property protection. Switzerland enforces intellectual property rights linked to patents and trademarks effectively, and new amendments to the country’s Copyright Act to strengthen copyright enforcement on the internet came into force in April 2020.

There are some investment restrictions in areas under state monopolies, including certain types of public transportation, telecommunications, postal services, alcohol and spirits, aerospace and defense, certain types of insurance and banking services, and the trade in salt. The Swiss agricultural sector remains protected and heavily subsidized.

Liechtenstein

Liechtenstein’s investment conditions are identical in most key aspects to those in Switzerland, due to its integration into the Swiss economy. The two countries form a customs union, and Swiss authorities are responsible for implementing import and export regulations.

Both Liechtenstein and Switzerland are members of the European Free Trade Association (EFTA, which also includes Iceland and Norway). EFTA is an intergovernmental trade organization and  free trade area  that operates in parallel with the  European Union  (EU). Liechtenstein participates in the EU single market through the European Economic Area (EEA), unlike Switzerland, which has opted for a set of bilateral agreements with the EU instead.

Liechtenstein has a stable and open economy employing 40,328 people in 2020 (latest figures available), exceeding its domestic population of 39,055 and requiring a substantial number of foreign workers. In 2020, 70.6 percent of the Liechtenstein workforce were foreigners, mainly Swiss, Austrians and Germans, most of whom commute daily to Liechtenstein. Liechtenstein was granted an exception to the EU’s Free Movement of People Agreement, enabling the country not to grant residence permits to its workers.

Liechtenstein is one of the world’s wealthiest countries. Liechtenstein’s gross domestic product per capita amounted to USD 162,558 in 2019 (latest data available). According to the  Liechtenstein Statistical Yearbook , the services sector, particularly in finance, accounts for 63 percent of Liechtenstein’s jobs, followed by the manufacturing sector (particularly mechanical engineering, machine tools, precision instruments, and dental products), which employs 36 percent of the workforce. Agriculture accounts for less than one percent of the country’s employment.

Liechtenstein’s corporate tax rate, at 12.5 percent, 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. The United States and Liechtenstein do not have a bilateral income tax treaty.

Table 1: Key Metrics and Rankings – Switzerland
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 7 of 180 http://www.transparency.org/
research/cpi/overview
Global Innovation Index 2021 1 of 129 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 211,936 https://apps.bea.gov/international/
factsheet
/
World Bank GNI per capita 2020 USD 82,620 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

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

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

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic enterprises may freely establish, acquire, and dispose of interests in business enterprises in Switzerland. In August 2021, the Swiss government released a broad framework for a future foreign direct investment (FDI) screening regime. A draft bill is expected to be issued for public consultation in 2022. The bill is expected to focus on any mergers or acquisitions by foreign interests, but with a particular focus on foreign state-owned or state-related investors, regardless of the sector involved. For foreign private-sector investors, no list has been published indicating any specific sectors that would be subject to mandatory reporting and approval.

There are some investment restrictions in areas under state monopolies, including certain types of public transportation, postal services, alcohol and spirits, aerospace and defense, certain types of insurance and banking services, and the trade in salt. Restrictions (in the form of domicile requirements) also exist in air and maritime transport, hydroelectric and nuclear power, operation of oil and gas pipelines, and the transportation of explosive materials. Additionally, the following legal restrictions apply within Switzerland:

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

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

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

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

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

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

The World Trade Organization’s (WTO) September 2017 Trade Policy Review of Switzerland and Liechtenstein includes investment information. Other reports containing elements referring to the investment climate in Switzerland include the OECD Economic Survey of January 2022.

Link to the WTO report: https://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm#bycountry 

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

Business Facilitation

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

References:

The Swiss government’s online portal (“easygov”) is Switzerland’s online registration website and includes links to the main local interlocutors for business related questions:  https://www.easygov.swiss/easygov/#/ 

Switzerland Global Enterprise connects companies with potential host regions:  https://www.s-ge.com/en/investment-promotion 

Some of the larger promotion offices are:

Greater Geneva-Bern Area:  https://www.ggba-switzerland.ch/en/ 
Greater Zürich Area:  https://www.greaterzuricharea.com/en 
Basel Area:  https://www.baselarea.swiss/ 

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

The Federal Act on Foreign Nationals and Integration (unofficial English translation):  https://www.admin.ch/opc/en/classified-compilation/20020232/index.html 

Decree on Admittance, Residence and Employment (VZAE) (available in German, French, Italian):  https://www.admin.ch/opc/de/classified-compilation/20070993/index.html 

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

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

Outward Investment

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

2. Bilateral Investment and Taxation Treaties

The United States and Switzerland do not have a bilateral investment agreement (BIT) but signed a bilateral Trade and Investment Cooperation Forum Agreement on May 25, 2006. This agreement is the primary mechanism for discussions on trade and investment issues between the United States and Switzerland. Switzerland has concluded numerous investment protection treaties with developing and emerging market economies. A total of 127 BITs and 37 relevant Free Trade Agreements (FTAs) with investment commitments are in force. See the UNCTAD Investment Policy Hub for a full listing of BITs: https://investmentpolicy.unctad.org/international-investment-agreements 

Currently, Switzerland (or the EFTA) is in various stages of discussions regarding FTAs with India, Malaysia, MERCOSUR, Moldova, and Vietnam. Negotiations with Algeria, Belarus, Kazakhstan, the Russia-Belarus-Kazakhstan customs unions, and Thailand are currently suspended.

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

Switzerland is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS). In January 2022, the Swiss Federal Council decided on the basic procedural and material elements for the national implementation of the global minimum tax rate as agreed by 137 of the 141 member jurisdictions in the Inclusive Framework, which include all OECD, G20 and European Union Member States. Due to the ambitious timeline set forth by the OECD, Switzerland plans to introduce these rules by a constitutional amendment, which will require a popular vote expected to take place in June 2023. Based on that vote, the Federal Council intends to then issue a temporary ordinance to implement the minimum tax rate as of January 1, 2024. Thereafter, a law will be prepared through the regular legislative process. This unusual approach is intended to ensure timely implementation and to provide legal certainty to the respective corporations. Swiss cantons will also be permitted to enact policies and incentives designed to ensure that Switzerland remains an attractive business location.

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

International Regulatory Considerations

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

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

Legal System and Judicial Independence

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

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

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

Laws and Regulations on Foreign Direct Investment

The major laws governing foreign investment in Switzerland are the Swiss Code of Obligations, the Lex Friedrich/Koller, Switzerland’s Securities Law, the Cartel Law and the Financial Market Infrastructure Act. There is currently no specific screening of foreign investment beyond a normal anti-trust review. However, Parliament instructed the Federal Council to prepare a foreign investment screening mechanism in March 2020. The Federal Council decided on the basic tenets of Switzerland’s future investment screening mechanism in August 2021, and a draft law is expected to go to Parliament in 2022, with the earliest potential date for entry into force in 2023. There are few sectoral or geographic incentives or restrictions; exceptions are described below in the section on performance requirements and incentives.

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

Useful websites:

The Swiss Code of Obligations, including an unofficial English translation: https://www.admin.ch/opc/en/classified-compilation/19110009/index.html 

Information on the acquisition of property in Switzerland by persons abroad:  https://www.bj.admin.ch/dam/data/bj/wirtschaft/grundstueckerwerb/lex-e.pdf

The Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (Unofficial English translation): https://www.admin.ch/opc/en/classified-compilation/20141779/index.html 

The Federal Act on Cartels and other Restraints of Competition including an unofficial English translation:  https://www.admin.ch/opc/en/classified-compilation/19950278/index.html 

Switzerland Global Enterprise provides a “handbook for investors” with the relevant laws:  https://www.s-ge.com/en/publication/handbook-investors/handbook-investors 

Competition and Antitrust Laws

The Swiss Competition Commission  and the Swiss Takeover Board  review competition-related concerns, and regularly decide on questions concerning mergers, market access, abuse of market position, and other matters affecting competitive advantage. In May and July 2021, the Competition Commission decided on cases involving collusive behavior in public and private tenders in the field of electrical installation and maintenance, and fined Ford Credit Switzerland for unlawful coordination of leasing conditions. The Competition Commission found an amicable conclusion with a German tobacco producer which colluded with several European partners distributors export pans to Switzerland.

Decisions by the Swiss Competition Commission may be appealed to the Federal Administrative Court, those by the Swiss Takeover Board to the Swiss Financial Market Supervisory Authority (FINMA).

A revision to the Swiss Cartel Act came into force in January 2022, regarding the conduct of companies with relative market power, the freedom of powerful companies to set prices, and geo-blocking practices applies. Under the revised law, all Swiss competition law rules against the abuse of a dominant position will apply not only to dominant companies, but also to companies with relative market power. A new category of abusive pricing by dominant companies and companies with relative market power was also introduced. Further, the geo-blocking of Swiss customers in distance selling and e-commerce is now prohibited.

Expropriation and Compensation

There are no known cases of expropriation within Switzerland.

Dispute Settlement

ICSID Convention and New York Convention

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

Investor-State Dispute Settlement

Based on Switzerland’s membership in the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, local courts are entitled to enforce international arbitration awards. According to a database of the United Nations Conference on Trade and Development  (UNCTAD), Switzerland was named as respondent party to an investment dispute in international arbitration for the first time in 2020. The case, Human Rights Defenders v. Switzerland, alleged damages arising from a Swiss decree forbidding the sale of real estate within five years of its purchase and other measures. The case was discontinued in January 2022 on administrative grounds, without substantive finding.

International Commercial Arbitration and Foreign Courts

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

As business associations organized at the cantonal level, the Chambers of Commerce and Industry, of Basel, Bern, Geneva, Lausanne, Lugano, Neuchâtel, and Zurich have established the Swiss Arbitration Centre. This entity offers dispute resolution based on Swiss Rules of International Arbitration and Swiss Rules of Commercial Mediation. According to the Swiss Arbitration Centre, 83 cases were submitted in 2020 (latest available data). In 2020, 80 percent of new cases involved international disputes, and 20 percent were Swiss domestic cases.

Bankruptcy Regulations

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

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

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

In its latest locational quality survey in 2021, Credit Suisse noted that many cantons offer attractive tax rates, and that the relative advantage of low corporate tax rates between cantons has declined. Under TRAF, effective tax rates of between 12 and 15 percent including municipal, cantonal and federal tax can be expected in most cantons, according to PricewaterhouseCoopers. In Zurich, which is sometimes used as a reference point for corporate location tax calculations within Switzerland due to its role as a prominent business center, the combined effective corporate tax rate stood at 19.7% in 2021. The implementation of the OECD/G20 corporate global minimum tax rate of 15%, planned to come in force in Switzerland in January 2024, would decrease Switzerland’s relative tax advantage even further. The Swiss government estimates that 3,000-4,000 companies based in Switzerland would be affected, including 250 Swiss-owned companies. Although countries are likely to have some differences in how they calculate corporate profits, a number of Swiss cantons could come under pressure to raise their corporate tax rates once the measure comes into force. Personal income tax rates may also vary widely across the 26 cantons.

Producers of renewable electricity (wind, solar, geothermal and biomass) may benefit from various subsidies, e.g. feed-in tariffs for electricity production, or investment subsidies covering a certain percentage of the investment costs. Large-scale hydropower plants may benefit from special subsidies and other support. Further subsidies are available for geothermal exploration projects, and for the improvement of energy efficiency and ecological rehabilitation. Subsidies for large-scale solar plants are under review in Parliament.

Foreign Trade Zones/Free Ports/Trade Facilitation

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

Performance and Data Localization Requirements

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

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

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

On September 8, 2020, the Federal Data Protection and Information Commissioner (FDPIC) of Switzerland issued an  opinion  concluding that the Swiss-U.S. Privacy Shield Framework does not provide an adequate level of protection for data transfers from Switzerland to the United States pursuant to Switzerland’s Federal Act on Data Protection (FADP). Privacy Shield had provided a framework for companies in both countries since 2017 to comply with data protection requirements when transferring personal data from Switzerland to the United States in support of transatlantic commerce. The Swiss action followed a July 2020 judgment by the Court of Justice of the European Union declaring in the Schrems II case as “invalid” the European Commission’s Decision 2016/1250 of 12 July 2016 on the adequacy of the protection provided by the EU-U.S. Privacy Shield. As a result of the FDPIC opinion, organizations wishing to rely on the Swiss-U.S. Privacy Shield to transfer personal data from Switzerland to the United States should seek guidance from the FDPIC or legal counsel. Like the EU decision, the FDPIC left open the possibility of data transfers under the EU’s standard contractual clauses. The United States and the European Union announced in March 2022 that they had agreed in principle on a new Trans-Atlantic Data Privacy Framework to foster trans-Atlantic data flows and address the concerns raised by the Court of Justice of the European Union.  The Trans-Atlantic Data Privacy Framework will have a strong impact on a new U.S.-Swiss data privacy framework as well.

5. Protection of Property Rights

Real Property

Physical property rights are recognized and enforced within Switzerland. Restrictions on the acquisition of real estate by persons  abroad are regulated in the Federal Law on the Acquisition of Real Property by Persons Abroad ( Permit Act ) and the Permit Ordinance. In general, persons abroad require a permit from the competent cantonal authority to acquire real estate. However, not all foreign nationals require a permit; the decisive factor is the nationality, and in some circumstances also the residence status of the foreign person. EU/EFTA nationals and cross-border commuters do not need a permit. Third-country nationals with a residence permit in Switzerland only need a permit for the purchase of second homes or properties for rent.

U.S. citizens resident in Switzerland can face obstacles opening obtaining a mortgage. In Switzerland, mortgages may be contingent on whether or not the applicant can obtain a life insurance policy, but U.S. citizens have reported that insurance companies scrutinize applications involving U.S. citizens in great detail due to potential liabilities. This creates additional burdens on mortgage lenders, which may as a result refuse mortgages services to U.S. citizens or offer them at significantly higher rates.

Squatting is considered trespassing according to Art. 186 of the Swiss Criminal Code. A partial revision of the Civil Code and the Code of Civil Procedure with the aim of improving the protection of property owners and facilitating expulsions in cases of unlawful squatting is ongoing. Substantial and procedural amendments to the law are pending Parliamentary review and approval.

Intellectual Property Rights

Switzerland is one of the world’s top countries for intellectual property rights (IPR) protection overall. It is ranked second in the world in the 2021 International Property Rights Index , and ninth in the U.S. Chamber of Commerce’s 2021 Global Innovation Policy Center (GIPC) report . The country’s strong protection for patents, trademarks, and trade secrets also helps Switzerland maintain high rankings in global competitiveness and innovation indices. Switzerland was again ranked first worldwide for innovation  by the World Intellectual Property Organization (WIPO) in 2021.

A revision of the Swiss Copyright Act came into force on April 1, 2020, intending to address specific difficulties in Switzerland’s system of online copyright protection and provisions to facilitate civil and criminal enforcement, particularly regarding online infringement. It is now allowed to collect internet protocol (IP) addresses, and the revision also implemented a “take down and stay down” provision. The United States is monitoring the implementation, interpretation, and effectiveness of the newly enacted legislation. In addition, cable TV operators and broadcasters reached an agreement in May 2021 on a tariff for time-shifting services, which came into force on January 1, 2022.

Federal customs authorities in Switzerland have the authority to seize counterfeit goods, upon request from the IPR holder or from related interest groups (e.g. professional associations). Goods can be seized for 10 days if there is reasonable suspicion that they are counterfeit. Provisional measures can also be obtained from a Swiss court to ensure evidence is not destroyed. If the destruction of goods is requested by an IPR holder, the owner of the goods can dispute that claim in writing within 10 days. The boom in online trade and tighter border controls during the health crisis have led to a major increase in the number of counterfeit goods seized by federal customs. In 2021, Swiss Customs conducted 5,959 interventions to seize counterfeit commercial goods, up 34 percent from the number of cases in 2020. After travel restrictions eased again, the number of items seized increased again to 33,285 in 2021 from 18,788 in 2020 , most of which were counterfeit bags and watches. In 2021, a total of 11,263 consignments of unauthorized pharmaceuticals were seized, the large majority of which were unauthorized erectile dysfunction medications.

Detailed information is available on Swiss Customs website: https://www.bazg.admin.ch/dam/bazg/en/dokumente/stab/jahreszahlen_2021.pdf.download.pdf/BAZG_Jahreszahlen_F_Z_2021_e.pdf

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

6. Financial Sector

Capital Markets and Portfolio Investment

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

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

Money and Banking System

Switzerland is home to a sophisticated banking system that provides a high degree of service to both foreign and domestic entities. Switzerland also has an effective regulatory system that encourages and facilitates portfolio investment. The Swiss Bankers Association, which has nearly 300-member financial institutions, estimated that Switzerland’s banking sector managed assets amounting to approximately USD 8.4 trillion in 2020. Switzerland is the global market leader in cross-border private banking, accounting for a quarter of all cross-border assets under management worldwide. The largest banks, UBS and Credit Suisse, have total assets of approximately USD 1 trillion and USD 826 million, respectively, while Raiffeisen Switzerland holds about USD 260 billion and Zurich Cantonal Bank holds roughly USD 209 billion. Switzerland’s independent central bank is the Swiss National Bank (SNB).

U.S. citizens who are resident in Switzerland may face difficulties in opening bank accounts at Swiss banks, as some banks seek to avoid the administrative costs of complying with additional regulatory and administrative procedures required for the accounts of U.S. persons under accepted disclosure rules. Many banks, especially smaller ones, assess that the additional compliance costs involved with U.S. citizens exceed the potential benefit they would receive from U.S. accountholder business. As a result, these banks offer limited or no services to U.S. citizens.

U.S.-owned companies have also reported that Swiss banks treat them unequally as compared to companies owned by shareholders of other nationalities. One multinational corporation reported that its Swiss subsidiary has long held a corporate account in Switzerland, but the bank was unwilling to set up a business account for its U.S. parent company. In another case, a consortium of international citizens resident in Switzerland, including U.S. citizens, purchased a Swiss company, but reported that the Swiss company’s bank refused to maintain its corporate account as long as there were U.S. citizen shareholders.

Several associations provide information about Swiss banks that offer services to U.S. clients. For more information, see the following page at the U.S. Embassy Bern website: https://ch.usembassy.gov/u-s-citizen-services/local-resources-of-u-s-citizens/living-in-ch/banking-resources/.

In 2018, the Swiss government created a blockchain task force and endorsed a report on the legal framework for blockchain and distributed ledger technology (DLT) in the financial sector, with the goal of creating favorable conditions for Switzerland to evolve as a leading location for fintech and DLT companies while maintaining anti-money laundering controls. The new “blockchain act,” consisting of company law reforms came into force in February 2021, while legislation on financial market infrastructure upgrades came into force in August 2021. This opens the doors to a fully regulated cryptocurrency and digital securities industry in Switzerland. There are now a wide range of companies in Switzerland that can create and list DLT-compatible digital securities. . In September 2021, for the first time a license was issued in Switzerland for infrastructure to facilitate the trading of digital securities in the form of tokens and their integrated settlement. SIX Digital Exchange AG was authorized to act as a central securities depository, and the associated company SDX Trading AG to act as a stock exchange.

Foreign Exchange and Remittances

Foreign Exchange

In 2015, the Swiss National Bank (SNB) abandoned the Swiss franc’s euro peg (CHF 1.20 / EUR), starting a period of strengthening of the franc over time. Perceived as a “safe haven” currency, the franc often strengthens during times of economic downturn or crisis. As of March 2022, the franc traded at just over CHF 1.03 / EUR, and just over CHF 0.94 / USD.

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

In December 2020, the U.S. Treasury Department concluded in its semi-annual Foreign Exchange Policies report that Switzerland had manipulated its currency under the terms of the Omnibus Trade and Competitiveness Act of 1988 and the Trade Facilitation and Trade Enforcement Act of 2015. However, subsequent U.S. Treasury reports in April and December 2021 did not find that Switzerland met all criteria used to determine currency manipulation. The SNB has assessed that the franc is “highly valued,” and has said it would maintain its current monetary and foreign exchanges policies as needed to stabilize the economy and prices. The strength of the franc lowers effective prices of imports to Switzerland, but also harms Swiss competitiveness as an export-oriented economy.

Remittance Policies

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

Sovereign Wealth Funds

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

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 (RUAG, which was divided into two companies in January 2020 – see below), and aviation / air traffic control (Skyguide). These companies are typically responsible for “public function mandates,” but may also cover commercial activities (e.g., Swisscom in the area of telecommunications).

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

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

Privatization Program

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

8. Responsible Business Conduct

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

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

In November 2020, a referendum known as the “Responsible Business Initiative,” which would have placed new obligations on Swiss companies to protect human rights and the environment internationally, was narrowly rejected by Swiss voters. Instead, a proposal of Parliament came into force in January 2022, obliging covered companies to report on environmental and labor issues, human rights and the fight against corruption and to exercise due diligence with regard to conflict minerals and child labor. After a one-year transition period, the new reporting obligations will apply as of 2023, and companies will submit their first reports in2024. Also, Swiss companies involved in minerals extraction abroad are required to source all minerals in compliance with international labor standards and applicable environmental laws, and must report on measures to ensure their international activities do not involve or support child labor.

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

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

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

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

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

Additional Resources

Department of State

Department of the Treasury

Department of Labor

Climate Issues

In 2019, Switzerland set a 2050 target for net-zero emissions, and in January 2021 it adopted a corresponding Long-Term Climate Strategy, which sets out climate policy guidelines up to 2050 and establishes strategic targets for key sectors. The strategy presents development scenarios and strategic targets up to 2050 for the buildings, industry, transport, agricultural and food sectors, financial markets, aviation, and the waste industry. Additionally, in February 2020, Switzerland updated and enhanced its nationally determined contribution (NDC) to reflect the latest findings by the IPCC indicating a need to reduce global CO2 emissions by about 45 percent from 2010 levels by 2030, and to achieve full carbon neutrality by 2050 in order to limit warming to 1.5 degrees Celsius.

In June 2021, the Swiss population rejected a revision of the country’s CO2 Act in a referendum. The revised Act aimed to further reduce CO2 output in Switzerland by at least 50% by 2030 in line with the commitments made under the Paris Climate Agreement. However, observers believe the Act was rejected because it relied strongly on new taxes on fossil fuels, which were argued to disproportionately affect residents of rural areas. The Federal Council introduced a new revision of the CO2 Act to parliament in December 2021, relying more on incentives investments rather than taxes.

In August 2021, the Federal Council set the parameters for future binding disclosure requirements in line with the Task Force on Climate-related Financial Disclosures (TCFD). Public companies, banks, and insurance companies with 500 or more employees more than CHF 20 million (USD 2.13 million) in total assets, or more than CHF 40 million ($4.25 million) in turnover will be required to publicly report on all climate issues. A draft law should be prepared by mid-2022. The Swiss government also issued guidance that asset managers should publish their methodology and strategy for weighing climate and environmental risks when managing clients’ assets.

Switzerland currently ranks 5 out of 34 countries in ITIF’s Global Energy Innovation Index, and 19 out of 76 countries in MIT’s Technology Review’s Green Future Index. Switzerland currently ranks 8 out of 29 European countries in the Global Green Growth Index of the Global Green Growth Institute.

9. Corruption

Switzerland is ranked 7th of 180 countries in Transparency International’s Corruption Perceptions Index 2021, reflecting low perceptions of corruption in society. Under Swiss law, officials are not to accept anything that would “challenge their independence and capacity to act.” In case of non-compliance the law foresees criminal penalties, including imprisonment for up to five years, for official corruption, and the government generally implements these laws effectively. The bribery of public officials is governed by the Swiss Criminal Code (Art. 322), while the bribery of private individuals is governed by the Federal Law Against Unfair Competition. The law defines as granting an “undue advantage” either in exchange for a specific act, or in some cases for future behavior not related to a specific act. Some officials may receive small gifts valued at no more than CHF 200 or CHF 300 for an entire year, which are not seen as “undue.” However, officials in some fields, such as financial regulators, may receive no advantages at all. Transparency International has recommended that a maximum sum should be set at the federal level.

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

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

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

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

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

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

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

Resources to Report Corruption

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

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

10. Political and Security Environment

There is minimal risk from civil unrest in Switzerland. Protests do occur in Switzerland, but authorities carefully monitor protest activities. Urban areas regularly experience demonstrations, mostly on global trade and political issues, and some occasionally sparked by U.S. foreign policy. Protests held during the annual World Economic Forum (WEF) occasionally draw participants from several countries in Europe. Historically, demonstrations have been peaceful, with protestors registering for police permits. Protestors have blocked traffic; spray-painted areas with graffiti, and on rare occasions, clashed with police. Political extremist or anarchist groups sometimes instigate civil unrest. Right-wing activists have targeted refugees/asylum seekers/foreigners, and more recently have organized protests against COVID-19 restrictions. Meanwhile, left-wing activists (who historically have demonstrated a greater propensity toward violence) usually target organizations involved with globalization, alleged fascism, and alleged police repression. Swiss police have at their disposal tear gas and water cannons, which are rarely used.

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 2021, 77.2 percent of the workforce was employed in services, 20.4 percent in manufacturing, and 2.4 percent in agriculture. Full-time work compared to part-time work is more prevalent among foreign workers than among Swiss workers: 40.4 percent of the Swiss population works part-time, compared to 27.8 percent of the foreign working population. Part-time work is three times more common among women than men. Wages in Switzerland are among the highest in the world. Switzerland continues to observe International Labor Organization (ILO) core conventions. Government regulations cover maximum work hours, minimum length of holidays, sick leave, compulsory military service, contract termination, and other requirements. There is no federal minimum wage law.

Foreigners fill not only low-skilled, low-wage jobs, but also highly technical positions in the manufacturing and service industries. In 2021, foreigners account for 26.4 percent of Switzerland’s labor force estimated at about 4.7 million people. Many foreign nationals are long-time Swiss residents who have not applied for or been granted Swiss citizenship. Foreign seasonal workers take many lower-wage jobs in agriculture. Switzerland has one of the smallest informal economies in Europe, accounting for approximately 6% of GDP since 2016.

In the wake of a 2014 referendum to impose limits on immigration, the government introduced a series of measures aimed at bringing traditionally underemployed groups into the labor market – women, older job seekers, refugees, and temporarily accepted asylum seekers. In 2018 the Federal Council implemented a parliamentary decision that companies in sectors with more than 5 percent unemployment provide information on job openings to government-run employment centers, which make the openings available to cross-border commuters and EU nationals as well.

Trade union density – the percentage of the workforce represented by trade unions – is on the decline in Switzerland, according to OECD data. From over 20 percent in 2000, trade union density had fallen to 14.4 percent by 2018, according to the OECD (latest data available). Labor-management relations are generally constructive, with a general willingness on both sides to settle disputes by negotiation rather than labor action. According to the Federal Office of Statistics, some 581 collective agreements were in force in Switzerland in March 2018 (latest data available). Of these, approximately 64 percent concern the services sector, 34 percent the manufacturing sector, and one percent the agricultural sector; these are usually renewed without major difficulties. Trade unions continue to promote a wider coverage of collective agreements for the Swiss labor force. Although the number of workdays lost to strikes in Switzerland is among the lowest in the OECD, Swiss trade unions have encouraged workers to strike on several occasions in recent years. A general prohibition on strikes by Swiss public servants was repealed in 2000, although restrictions remain in place in a few cantons. The Federal Council may now only restrict or prohibit the right to strike where it affects the security of the state, external relations, or the supply of vital goods to the country.

In difficult economic times, employers may temporarily shift full-time employees to part-time by registering with cantonal authorities and justifying reductions as necessary to business activities. This practice, known as Kurzarbeit (“short-time work”), allows for the government to make partial salary payments through the unemployment insurance fund. Employees can reject the shift to part-time work, but risk dismissal in that case. Kurzarbeit became widespread with the onset of the COVD-19 crisis and the temporary shutdown of wide segments of the Swiss economy in 2020. By October 2021 this was drastically reduced to 48,264 affected employees from 7,917 companies, compared to 1.91 million employees in May and 219,388 in October 2020. . The Swiss government has continued expanded financial support for the Kurzarbeit program throughout the pandemic.

Switzerland’s average unemployment rate was 4.8 percent in 2020 under ILO Labor Force Survey methodology, while according to Swiss authorities registered unemployment in 2021 was 3.0 percent. Cantons bordering EU countries experience higher unemployment rates than Switzerland as a whole.

12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs

Switzerland does not currently have any DFC projects.

13. Foreign Direct Investment Statistics

The U.S. International Development Finance Corporation (DFC – formerly the Overseas Private Investment Corporation, OPIC) has no agreement with Switzerland. Switzerland is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA); the country has not signed a political risk insurance agreement with any Western European country or the United States.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $752,248 2020 $2,953,000 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $212b 2020 N/A BEA data available at
https://apps.bea.gov/international/
factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2020 $300b 2020 N/A BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 205.5 % 51.6 % UNCTAD data available at
https://unctad.org/topic/investment/
world-investment-report
 

Average exchange rate for 2021: 1 USD = 0.912 CHF
Average exchange rate for 2020: 1 USD = 0.939 CHF
* Source: Federal Office of Statistics , Swiss National Bank
**Significant statistical discrepancies are due to methodological differences in measuring foreign direct investment. Data most recent available. Swiss data based on ultimate beneficial ownership.

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (2020) (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 4,626,452 100% Total Outward 6,152,301 100%
Japan 647,718 14% United States 890,086 14.4%
Canada  490,769 10.6% The Netherlands 843,954 13.7%
United Kingdom 486879 10.5% Luxembourg 759,360 12.3%
The Netherlands 483991 10.4% Canada 422,160 6.8%
Germany 411,308 8.8% Ireland 390,274 5.8%
“0” reflects amounts rounded to +/- USD 500,000.

14. Contact for More Information

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

2022 Investment Climate Statements: Switzerland and Liechtenstein
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