Is there a reason why world-renowned companies such as Google, Stryker, Uber, Amgen and many others chose GZA (Greater Zurich Area) to settle their businesses? In our previous Invest In Greater Zurich Area Special Edition, you learned how Greater Zurich Area impressed many investors living and working there, and how businesses can benefit from GZA’s amazingly friendly tax system. In this second edition, we are going to expand more on its business environment as well as assess how the new Sino-Swiss Free Trade Agreement will unlock new opportunities for your investment.
Business Center for All
We all already knew that Switzerland's thriving business environment grants you access to the Swiss and European market with a highly qualified multilingual workforce. You also benefit from the liberal labor laws, state-of-the-art and reliable infrastructure system and a wealth of cutting-edge research institutions. The world-class financial market and stable political environment offer you the ideal framework for your business success.
The Greater Zurich Area is undoubtedly the business center of Switzerland – not least due to its high quality of living, strong innovation and unique culture of precision. The economic region surrounding the world-famous financial metropolis of Zurich employs around 1.5 million multilingual and international workers in 150,000 companies in industries such as life sciences, cleantech, high-tech, ICT and financial services. GDP per person is amongst the highest in the world – CHF 76,000 with highly favorable tax rates.
GZA enables you to grow your business at an unprecedented pace because of its most strategic business competitive location in the heart of Europe, its liberal business and competition regulations, its desirable role as a hub for knowledge and high value-adding industrial sectors, its internationally renowned research and academic institutions and its direct link to the most important trading partners in the region.
The New FTA Creates New Opportunities
The newly signed China-Switzerland Free Trade Agreement has expedited and facilitated ease of doing business in GZA; the achievement was hailed as a "milestone" by political leaders and business communities, while Swiss local media described it as one of the most important international deals in 40 years for Switzerland.
Statistics showed that bilateral trade between China and Switzerland exceeded $30 billion in 2011, a record increase of 50 percent compared with that of 2010. Despite the persistent eurozone sovereign debt crisis and uncertainties in the world economy, bilateral trade volume remained as high as $26.3 billion in 2014.
China is already Switzerland's third major trading partner behind the EU and the United States, while Switzerland is China's seventh largest trading partner in Europe.
Chinese Commerce Minister Gao Hucheng said the completion of free trade talks is a historic event in bilateral economic and trade cooperation. He said the FTA would be one of the most comprehensive and high-level accords China has signed with a foreign country in recent years. Experts also said that the Swiss pharmaceutical and chemical industry, tourism, engineering and watch-making sectors, as well as food producers, would benefit from the deal.
Switzerland has been always at the forefront of economic relations with China. Back in 2007, it became the first European country to recognize China's full market economy status, which later facilitated the signing of the FTA.
Under the agreement, Switzerland and its competitive industries, including medicine, machinery, watch making and tourism, will undoubtedly benefit more from a large and free Chinese market.
China, which differs from Switzerland both geographically and economically, will also benefit from the highly complementary cooperation modes. Zero tariffs and free import channels for cutting-edge technology from Switzerland will satisfy the growing needs of Chinese consumers and help accelerate the country's industrial transformation and upgrading.
So far, almost 100 Chinese enterprises have expanded their business in the European market by setting up branches in Switzerland. The number is expected to grow substantially following the FTA.
While the Chinese-Swiss agreement offers a great chance for the two sides to unlock their enormous potential and bring more concrete benefits to their peoples, the same opportunity exists for the broader EU. With the debt-ridden continent still trying to get back on its feet and the world economy burdened with uncertainties, closer China-EU collaboration has taken on a new urgency.
If an agreement weren’t reached between the EU and China, the duties on Chinese solar panels, which will rise up to 47.6 percent, could severely damage the European solar value chain and put more than 600,000 jobs at risk. The Chinese-Swiss FTA comes just in time to calm the disputing parties and serves as a model for a win-win trade relationship.
China and Europe vary in many aspects, and bilateral trade in large volume cannot be friction-free. However, a healthy partnership should be based on the fact that both parties abandon protectionism and offer a fair environment for all of their trade partners.
Attractive Corporate Tax Rates in Switzerland
Actual tax rates of lower than 8% are possible in the Greater Zurich Area. The criteria to achieve this include a well-considered choice of location combined with careful planning of the corporate structure. The Greater Zurich Area boasts an extremely attractive tax system compared to the rest of Europe.
The cantonal taxes on profits for companies range between 8% and 12%. The Confederation (state) levies a nominal 8.5% (or 7.83% in real terms) tax on corporate earnings throughout Switzerland.
Taxes in Switzerland are levied on three federal levels – state, canton and municipal – whereby the individual levels can set the tax rates independently to a great degree.
Tax rates in Switzerland depend on what corporate structure you choose for your company. In the Greater Zurich Area, you have the option of requesting a tax ruling – which is an agreement regarding the levying of the tax burden – from the authorities.
In Switzerland in general, the liberal principle of equality is manifested in the tax system as well: A uniform, relatively low tax rate by international standards is contrasted with an almost complete forgoing of direct subsidies.
Founding Your Company Quickly and Easily
Found your company in the Greater Zurich Area – quickly and easily. As a rule, any resident of Switzerland can found a company in Switzerland.
The entire founding process, including preparatory work, usually takes less than a month. The company registration itself can be completed in around seven business days. The basic costs for founding a company in Switzerland average around CHF 4,000.00. The entire founding costs (also depending on possible stamp duties) are based on the amount of the founding capital and the expenditures for additional (tax) consulting.
Switzerland does not differentiate between residential and work visas, but does have different types of visas based on length of validity. There is a dual system for admitting foreign workers: EU and EFTA citizens are allowed to work without a visa within the Swiss job market thanks to the Agreement on the Free Movement of Persons; non-EU citizens require authorization.
Low Financing Costs
The effective interest rates for outside capital vary from 2%–7%, depending on the customer. Compared to the rest of the world, the capital costs in Switzerland have remained extraordinarily low for years.
Switzerland enjoys an excellent reputation among foreign investors. Based on this reputation and a high savings rate, GZA offers low interest rates, resulting in reduced financing costs.
In addition to low interest rates, Switzerland's traditionally low inflation rate is another advantage. It has remained under one per cent in the past few years. With the Swiss franc, Switzerland also offers an independent and extremely stable currency.
GZA as the Swiss financial center is known to be a magnet for investors and major international companies, particularly in the technology sector: The SIX Swiss stock exchange in Zurich specializes in "Initial Public Offerings" (IPOs) for technology companies and has proven to be very attractive for forward-looking technology investment funds in areas such as nanotechnology.
Greater Zurich Area is not only a pearl in the center of Europe, as the most important business hub in Switzerland and probably the most important in the world, it has unapproachable advantages that investors from the globe can enjoy, with its friendly, helpful and highly effective government, varieties of industries, cost benefits and speed of company establishment, Greater Zurich Area is undoubtedly your one-stop-shop for all you need to succeed your business.