2013 Investment Climate Statement
Bureau of Economic and Business Affairs
March 2013
Report

Openness To, and Restrictions Upon, Foreign Investment

Switzerland welcomes foreign investment and accords it national treatment. Foreign investment is not hampered by significant barriers. The Swiss Federal Government adopts a relaxed attitude of benevolent noninterference towards foreign investment, allowing the 26 cantons to set major policy, and confining itself to creating and maintaining general conditions favorable to both Swiss and foreign investors. Such factors include economic and political stability, a transparent legal system, reliable and extensive infrastructure, efficient capital markets and excellent quality of life in general. Many US firms base their European or regional headquarters in Switzerland, drawn to the country's low corporate tax rates, exceptional infrastructure, and productive and multilingual work force.

Switzerland was ranked as the world's most competitive economy according to the World Economic Forum's Global Competitiveness Report in 2012. The high ranking reflects the country’s sound institutional environment, excellent infrastructure, efficient markets and high levels of technological innovation. Switzerland has a developed infrastructure for scientific research; companies spend generously on R&D; intellectual property protection is generally strong; and the country’s public institutions are transparent and stable.

The Heritage Foundation, a public policy research institute that promotes free enterprise and limited government, said in 2012 that Switzerland's economic freedom score is 81.1 (out of 100), making its economy the 5th freest in the world in 2012, down by 0.8 points since the previous year. The report noted that Switzerland excelled in trade freedom, property rights and freedom from corruption.

Many of Switzerland's cantons make significant use of fiscal 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 but this practice has been criticized by the European Union that requests to abolish this custom. Individual income tax rates vary widely across the 26 cantons. Corporate taxes vary depending upon the many different tax incentives. Zurich, which is sometimes used as a reference point for corporate location tax calculations, has a rate of around 25%, which includes municipal, cantonal, and federal tax. The World Bank in its “Doing Business” ranks Switzerland as the 28th most attractive destination for doing business in the world and 3rd on the IMD World Competitiveness Scoreboard.

Further information on Swiss taxes is available on: http://www.bfs.admin.ch/

The major laws governing foreign investment in Switzerland are the Swiss Code of Obligations, the Lex Friedrich/Koller, the Securities Law, and the Cartel Law. There is no screening of foreign investment. 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 can find it difficult to enter these markets due to high entry costs and the relatively small size of the Swiss market.

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.

Measure

Year

Index/Ranking

TI Corruption Index

2012

6

Heritage Economic Freedom

2012

5

World Bank Doing Business

2013

28

Former Monopolies

Telecoms

The 1998 Telecommunications Act brought liberalization and privatization to the Swiss telecommunications sector, opening the market to investment and competition from foreign firms. More than 50 Swiss and foreign companies now offer fixed line services. Three different operators -- Swisscom, Sunrise (TeleDanmark), and Orange (France Telecom) -- share the mobile telephone market, with each company reportedly also holding a third-generation mobile telephone license (UMTS). US investments in the Swiss telecommunications market are limited to the US Liberty Global’s 100% share of Cablecom/UPC, a competitor of Swisscom. Stiff competition between the operators has led to a drop in fixed line rates as well as so-called “triple play” rates for telephony/internet/television. Although the overall figure on Swisscom’s market share in the communication business is difficult to estimate, the company holds an approximate market share of 62% in the mobile phone market and 55% in the broadband market.

The Swiss parliament's decision in 2006 to open the “last mile” was a key event in the evolution of the Swiss telecoms market. It granted Swisscom's competitors full unbundled access to the copper-wire subscriber connection, cabling for leased lines, and high-speed bit-stream internet access (within 4 years). Unbundling the last mile was an important step towards the full liberalization of the Swiss telecoms market and did intensify competition among providers. As a result, the sector continued to see declining prices. However, the incumbent state-owned Swisscom has sought court intervention several times to block the Swiss government’s efforts to open the market to competition and a long series of legal wrangling between Swisscom and its competitors on different price issues continues until today as shown below and led to price reductions for the consumers. Between 2008 and 2011, Swisscom was forced by the regulatory authorities (ComCom) to reduce its monthly interconnection charge to competitors by 34% from CHF 23.50 to CHF 15.50.

On November 26, 2009, both Orange and Sunrise publicly announced their intention to merge their operations. Orange offered Sunrise 1.5 billion Euros for the purchase of three quarters of the new telecom company. In August 2010, however, the Competition Commission prohibited the merger while arguing that the newly established company would be in a dominant market position, together with Swisscom. In December 2011, France Telecom announced that it sold its Swiss unit (Orange Suisse) to Apax.

Postal Services

The Postal Act divides the Swiss postal market into two segments: universal services and competitive services. Universal services are divided into reserved and non-reserved services. Competitive services, including express delivery, are unrestricted. Swiss Post is the exclusive provider of reserved services, while it competes with private postal operators for the provision of non-reserved services and competitive services. The regulatory authority exercises market supervision, ensures the functioning and fair competition in the postal market, and enables the proper implementation of applicable regulations.

The Swiss Government reduced Swiss Post’s monopoly from a 350-gram threshold to 100 grams in 2006 and to 50 grams in July 2009. However, the Lower House stopped the full liberalization in September 2010 and letters below the 50 grams remain a monopoly of the Swiss Post. On December 17, 2010, the Swiss parliament voted in favor of a revised Law on Postal Services. The law describes the dispositions for the universal service. It also modifies the organizational structure of the Swiss Post; the PostReg, the postal regulation authority was abolished and it will be replaced by the Federal Postal Commission (PostCom). The PostCom will act as the overall watch dog for postal services. The Federal Council oversees the work of the Swiss Post and PostCom. The Federal Council will evaluate the consequences of a liberalization of the market for letters below 50 grams and will deliver a report with suggestions to Parliament by 2014.

Electricity

The local public monopolies that used to dominate electricity transmission and distribution in Switzerland have been merged substantially into a few private sector utility companies (Romande Energie, Groupe E, FMB, Axpo, Atel, and BKW). Several cantons attempted to prevent other providers from serving their areas, but those efforts were ruled illegal by the Federal Supreme Court under the Cartel Law. Some local communities have tried to bypass the court ruling by cementing their dominant position through cantonal legislative changes or “gentlemen’s agreements” with large customers. In December 2006, the Swiss national grid operator “Swissgrid” started operations as a national transmission system operator, taking full responsibility for running Switzerland’s 6,700 kilometer-long high-voltage grid, which was formerly in the hands of private operators. In addition to the shareholders – ALPIQ, AXPO, BKW, CKW, EGL, EWZ, NOK, and RE – the new company’s board of directors also includes two representatives of the cantons and three neutral members.

According to the Federal Law on Energy Supply approved in 2007 by parliament, the electricity market was set to be opened in two phases: Business-only market liberalization which started in 2009 and full consumer access to energy competitors to follow in 2014. Under the provisions of the implementing ordinance, energy prices will be capped by the Electricity Commission (ElCom). In September 2008, the Swiss government expressed concerns that electricity prices could increase by 20% and warned energy providers that further liberalization could be halted. The government amended the Federal Ordinance on Electricity Supply to reduce price hikes by 45% on December 5, 2008. Retail electricity prices increased on average by approximately 2% in 2010, by 2 to 4% in 2011 and are expected to drop by 1% in 2013. In March 2009, Elcom forced electricity providers to cut wholesale prices by 42%, setting a cap on both Swissgrid’s transportation costs and on the return on capital investments of the various energy providers.

In November 2009, the government mandated the Federal Department of Energy to prepare a draft revision of the law on the energy supply. Due to the complexity of the matter, the revised law shall not enter in force until January 1, 2015. Whether the second step of liberalization (free choice of energy supplier by private costumers) will also be delayed to 2015 remains open. In the meantime, price transparency was not achieved, and only a few large business customers (above 100,000 kWh) changed their source of energy supply.

Insurance

Foreign insurers attempting to do business in Switzerland are required to establish a subsidiary or a branch in Switzerland and are not allowed to sell their entire product line cross-border or through a representative office. Foreign insurers operating in Switzerland are limited to those types of insurance for which they are licensed in their home countries. The manager of a foreign-owned branch must be resident in Switzerland, and the majority of the board of directors of the Swiss subsidiary must have citizenship in the EU or the European Free Trade Association (Switzerland, Norway, Iceland, and Liechtenstein). Public monopolies exist for fire and natural damage insurance in 19 cantons and for the insurance of workplace accidents in certain industries. Private insurance firms must establish a fund – amounting to between 20% and 50% of their minimum capital requirement – available at short notice to cover potential losses.

Public Procurement

Switzerland is a signatory to the WTO Agreement on Government Procurement (GPA), which includes cantonal as well as federal procurements. In July 2010, an amendment to the Swiss procurement law entered into force, in which Switzerland unilaterally at both the federal and cantonal levels implemented revisions to the WTO GPA. In contrast to cantonal and communal practice, federal authorities are not required to inform unsuccessful bidders of the selected tender or reasons for the award. Under the federal law on public procurement, a revised ordinance entered into force on January 1, 2010, tender procedures apply where the value of the procurement exceeds CHF 230,000 and CHF 700,000 if it is a public or quasi-public actor in the field of water, energy or traffic. Furthermore, a tender procedure applies to construction projects that exceed CHF 8.7 million. The above stated values are valid until the end of 2013. Total procurement expenses are valued at approximately CHF 34 billion, and are split between the federal government (19%), the cantons (38%) and municipalities (43%); this is about 25% of all public expenses and 7.5% of GDP.

The revised ordinance requires the publication of public bids on the Swiss public procurement website (www.simap.ch –French, German, and Italian versions only). The goal was to implement new information technology tools, speed up and simplify the bidding procedures, and harmonize the federal and cantonal practices. This legislative amendment takes into account the latest changes in the WTO GPA and enforces its provisions both at the federal and cantonal levels. In general, quality and technical criteria are as important as price in Swiss procurements. Tender documents can be obtained for free from the procurement website.

While there is no requirement to have a local agent to bid, it may be advantageous when procurement requirements for equipment include training, service or parts. Foreign firms may be required to guarantee technical support and after-sale service if they have no local office or representation. In contrast to cantonal and communal practice, federal authorities are not required to inform unsuccessful bidders of the selected tender or reasons for the award.

Cantonal and communal governments carry out many of the public projects. Their procurement is two to three times that of the federal government. On the cantonal and local levels, a 1995 law provides for nondiscriminatory access to government procurement. However, since cantons are allowed to implement the GPA independent of federal intervention, disparities in procedures may be found among the cantons. Cantons and communities usually prefer local suppliers because they can recover part of their outlays through income tax. Also, access to public tenders by foreign bidders may be hampered by different cantonal requirements in bidding applications.

Due to the current economic and financial instability in the eurozone and elsewhere, the Swiss franc has once more become a safe haven currency which led to its appreciation against the euro and the US dollar. To help safeguard Swiss exports, the Swiss National Bank took an exceptional measure on September 6, 2011, declaring that it would defend an exchange-rate “ceiling” that will prevent the franc from appreciating beyond a 1.20 CHF/EUR rate.

Conversion and Transfer Policies

There is freedom of transfer for investment income, royalties, and repatriation of capital. There are no Swiss government policies or laws that would regulate or limit the inflow or outflow of capital. Foreign exchange markets are free, and access to foreign exchange is uncontrolled. Swiss foreign exchange markets are highly developed and efficient. A parallel system to repatriate capital or profits has not been developed.

Expropriation and Compensation

Property rights are assured by the Swiss constitution. Within the framework of their constitutional powers, the federal and cantonal governments can nevertheless, through a legal process, expropriate or restrict property for reasons of public interest. In the event of expropriation or property restriction, full compensation must be made. An independent court, as required by the European Human Rights Convention, settles disputes. As a general rule, recourse to expropriation is taken only in cases involving major public construction projects, such as highways, railroads or airports. The Embassy is unaware of any major expropriations or restrictions in the recent past affecting US investments.

Dispute Settlement

The Embassy is not aware of any significant investment disputes in recent years. Swiss legal provisions, which include the Code of Commercial Obligations and the 1994 revised bankruptcy law, provide extensive protection of secured interests in property.

Where American citizens are involved in disputes (with private individuals or business enterprises) and the controversy cannot be settled amicably, the normal recourse is to seek remedies provided by the law of the appropriate cantonal jurisdiction. Foreign lawyers may not act as "attorneys at law" unless they are admitted to a Swiss bar. There are, however, no restrictions on practicing as a "legal consultant." A US attorney who is not admitted to a Swiss bar may also join a Swiss law firm as an "of counsel" member. American diplomatic or consular officers may not act as attorney, agent, or representative in a fiduciary capacity in such matters. If legal action is to be undertaken in Switzerland, a local lawyer should be involved (either directly or via an American attorney). There are differences in the legal systems in Switzerland and America, and ignorance of those differences could jeopardize a case. For example, in the United States a lawyer can serve papers on another person directly, but in Switzerland, lawyers must first file a complaint with the court. The court then decides whether to serve or not. The Martindale-Hubbell Law Directory contains an extensive list of lawyers licensed to practice in Switzerland. The Embassy's Consular Section, American Citizens’ Services, also maintains a list of local English-speaking attorneys. The phone number is (41-31) 357-7011 fax number is (41-31) 357-7280. Please specify the canton for which the list is required when calling.

The only methods for a non-Swiss court or lawyer to obtain testimony or to serve process in civil matters in Switzerland are through the Hague Convention on taking of Evidence Abroad in Civil or Commercial Matters, the Hague Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil and Commercial Matters, and through a letter interrogatory. For information on this legal process, contact either the Embassy Bern Consular Section or the Office of Citizens Consular Services in the Department of State (202) 647-5226. Switzerland has been a member of the International Center for the Settlement of Investment Disputes (ICSID) from its inception in 1966.

The effects of bankruptcy on creditors' rights are set out in articles 208 to 220 of the Swiss Federal Debt Prosecution and Bankruptcy Statute. Initiating bankruptcy proceedings results in all obligations of the debtor becoming due, with the exception of those secured by mortgages on real estate. The creditor can claim the amount of the debt and interest up until the date of the opening of bankruptcy proceedings, and the costs of enforcement (article 208 paragraph 1). Claims that do not have as their object a sum of money are converted into a monetary claim of corresponding value (article 211, paragraph 1). The order of distribution to the creditors is prescribed by article 219. Enforcement is handled by the canton with jurisdiction. Shareholders have the right to request information from the board of directors about the matters of the company if they fail to publish adequate information of the financial situation of the company, a court may force the company to disclose this information (article 697 paragraph 4 of the Code of Commercial Obligations).

Bankruptcies of private individuals and companies amounted to 11,725 in 2010 and increased to 11,924 in 2011.

The full version of the Federal Debt Prosecution and Bankruptcy Statute (in German, French and Italian) can otherwise be downloaded from the Swiss government's website at: http://www.admin.ch/ch/d/sr/c281_1.html

An English summary to www.wenger-plattner.ch/files/downloads/files/13a8e928f489ce82ee6fa1146b9a52cf

All monetary judgments are made in Swiss Francs.

Performance Requirements/Incentives

The Swiss Government offers few large-scale incentives to prospective investors, and those that exist are open to foreign and domestic investors alike.

Switzerland applies a decentralized and complex system of investment promotion on different levels in order to attract foreign companies. First, a government authority coordinates the country wide approach, second sub-regional bodies such as the Greater Geneva Bern area or the Greater Zurich area and third, an important cantonal structure is in place amounting to 25 different promotion agencies using incentives which may include loan guarantees, tax breaks and interest subsidies. The cantonal government must match federal government commitments for each project. Interest subsidies are granted for a maximum of five years and cannot exceed one quarter of the usual commercial interest payments. Another federal program encourages entrepreneurship by granting tax breaks and incentives to both venture capital funds and individuals that invest in start-ups.

Some cantons offer investment incentive programs for domestic as well as foreign investment, in particular in rural areas. Indeed, priority is often given to foreign businesses that bring new high technology product lines. The most common incentives are: subsidies or loans by cantons for the development of industrial sites; cantonal guarantees on bank loans; capital loans at below-market interest rates; grants for facilities conducting research and development projects; subsidies to defray certain investment costs and to finance staff training; exemptions from taxes on profits and capital gains for specific periods; and liberal depreciation allowances.

However, increasing pressure from the European Union has led to more criticism on preferential treatment by the cantons for foreign companies and continued to do so in 2012. Several cantons are discussing the abatement of these preferential treatments; the canton of Zurich instituted abatement as of January 1, 2011.

Performance requirements, whether linked to incentives or to other investment-related conditions, are few. There are generally no requirements to source locally, export production, or derive foreign exchange from production. There is no requirement that nationals own equity in foreign investments or that the share of foreign equity be reduced over time, or that technology be transferred on certain terms.

There are no conditions on permission to invest related to geographical area (with the exception of investment incentives noted above), percentage of local content or equity, import substitution, export requirements or targets, employment of nationals, technology transfer, or local financing.

Government financed or subsidized research and development programs are open to foreign companies with operations in Switzerland. US companies have participated in research projects funded by the Swiss government in past years.

Visas and residence and work permits are strictly controlled in Switzerland. As a result of the 2002 Swiss-EU agreement on the free movement of persons, the country changed from a three-tier system for issuing work permits to a two-tier system. The US citizens are part of the second tier. Swiss officials stress that US work permit applicants working for international companies are generally among the most highly qualified of all national groups, a category of applicants to which preferential treatment is given. US companies have reported that the process for obtaining working permits for accompanying spouses in Switzerland can be cumbersome. As of December 12, 2008, Switzerland joined the EU-Schengen area, which will require US citizens entering Switzerland to work to apply for a Schengen visa. A separate permit to work in Switzerland will still be required.

In the past, foreigners who did not have a residence permit for Switzerland, or companies based outside of the country, could find it difficult to acquire property for the purpose of establishing a business (or for purchase of a residence) due to the so-called "Lex Friedrich." This situation has eased with the enactment of the "Lex Koller" which means that special permits are generally not required for foreign entities wishing to acquire property for the purpose of operating an economic activity.

On March 11, 2012, Swiss voters accepted the so-called “Second Home” initiative that restricts the future construction of vacation homes and other housing not used as homes for local residents. Entering into force on January 1, 2013, this measure restricts the proportion of “second homes” to 20% in a given locality, a constraint most likely to affect mainly towns and villages in popular tourist destinations. The restriction applies to both Swiss and foreigners alike, and may constitute an obstacle to investment for people seeking to invest in Swiss real estate.

Following the implementation of the Swiss-EU bilateral agreement on the free movement of persons on June 1, 2002, property restrictions against EU and EFTA citizens living in Switzerland with a working permit were removed. Other nationals with a permanent residency permit (C permit) also enjoy the same benefits. Foreign workers with annual working permit (B permit) can only buy property as long as it is used as their principal residence. According to the federal law regulating the purchase of property by foreigners living abroad, the federal government has limited the total number of foreign purchases to 1500 per year. Some cantons had seized some of their decision power to the federal level as the “second-home” initiative but remain principally decision-making authority when granting purchasing permits to foreigners. In June 2008, the parliament refused a government bill aimed at abolishing all foreign ownership restrictions, because of fears it could spur foreign speculation. Nevertheless, foreigners are allowed to buy stocks of Swiss listed real estate companies. Real estate prices for business premises and hotels have increased by 10-25% as a result of foreign investment.

There are no restrictive export and import policies which discriminate against foreign investors. All drugs (prescription and over-the-counter) must be approved and registered by Swissmedic, the Swiss Agency for Therapeutic Products. Products produced in Switzerland must be labeled in all three official languages (German, French, and Italian). However, the unilateral implementation of the EU-Cassis-de-Dijon principle went into force in July 1, 2010. As a result, products imported from the EU will no longer be subject to Swiss certifications and Swiss language requirements.

Right to Private Ownership and Establishment

Foreign and domestic enterprises may engage in various forms of remunerative activities and may freely establish, acquire and dispose of interests in business enterprises. However, the following legal restrictions apply:

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 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 (except for banks). The establishment of commercial presence by persons or enterprises without legal personality under Swiss law requires an establishment authorization according to cantonal law. The aforementioned requirements do not generally pose a major hardship or impediment for US 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 quoted on the stock exchange, Swiss companies may in their articles of incorporation impose certain restrictions on the transfer of registered shares to prevent unfriendly takeovers by domestic or foreign companies (article 685a of the Code of Obligations). Unwelcome takeovers can also be warded off by public companies, but legislation introduced in 1992 has made this practice more difficult. Public companies must now cite in their statutes significant reasons, relevant for the survival, conduct and purpose of their business, to prevent or hinder a takeover by an outsider. As a further measure, public corporations may limit the number of registered shares that can be held by any one shareholder to a certain 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 Stock Exchange and Securities Law (for which the implementing decree entered into effect in 1997), 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 well in advance of any takeover attempt (i.e., not to thwart an attempt already launched).

A reform of the corporation tax – implemented in early 2009- reduces levies on dividends to investors with a stake of at least 10%. They are no longer taxed in full, but only at the rate of 50% for commercial investments and 60% for the private sector.

Banking: The Swiss Federal Banking Commission (EBK), the Federal Office of Private Insurance and the Anti-Money Laundering Control Authority were merged in January 2009 to form the Swiss Financial Market Supervisory Authority (FINMA). This body aims to restore confidence in the financial markets and protect customers, creditors and investors.

Those wishing to establish banking operations in Switzerland must obtain prior approval from FINMA. This is 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; 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 up 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. In case of exceptional temporary capital outflows threatening Swiss monetary policy, banks can be obliged to seek approval from the Swiss national bank to issue foreign bonds or other financial instruments that would cause capital outflow. 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.

With the exception of those few sectors in which Swiss-owned enterprises have been granted a legally established monopoly (i.e., railways, fire insurance, and certain utilities), non-discriminatory competition between foreign and domestic commercial entities prevails.

Cartels and Monopolies: Foreign investments are subject to review by the Federal Competition Commission if the value of the investing firm's sales reaches a certain worldwide or Swiss-market threshold. An investment or joint venture by a foreign firm can be disapproved on the grounds of competition policy, although there is no evidence that regulators have applied these rules in a discriminatory manner.

Protection of Property Rights

Secured interests in property are recognized and enforced, and mortgages are widely used. The legal system protects and facilitates the acquisition and disposition of all property rights with the exception of works available on the internet. Switzerland is a member of the major international intellectual property rights conventions and was an active supporter of a strong IPR text in the GATT Uruguay round negotiations. Switzerland remains one of the best regimes in Europe for the protection of intellectual property and protection is afforded equally to both foreign and domestic rights-holders.

Patent protection is broad, and Swiss law provides rights to inventors that are generally similar to those available in the United States. Switzerland is a member of both the European Patent Convention and the Patent Cooperation Treaty (PCT), making it possible for inventors to file a patent application in the United States (or other Patent Cooperation Treaty country, or any member of the European Patent Convention) followed by an application with either the PCT office or the Swiss patent office to receive harmonized protection in Switzerland. If filed in Switzerland, patent applications must be made in one of the country's three official languages (German, French, Italian), and must be accompanied by detailed specifications and, if necessary, by technical drawings. The duration of a patent is 20 years. Patents are not renewable beyond the original 20-year term, but patent term restoration is possible for products, such as pharmaceuticals, that require an extensive testing period prior to marketing. According to the Swiss Patent Law of 1954, as amended, the following items cannot be covered by patent protection: surgical, therapeutic and diagnostic processes for application on humans and animals; inventions liable to disturb law and order and offend "good morals", and biological processes for breeding species of plants and animals. In most other areas, coverage is similar to that in the United States. Should an American firm have concerns about possible patent infringement in Switzerland, access to the courts is readily available and there is a well-established and highly regarded patent bar. On June 22, 2007, the parliament adopted a revision of the Swiss patent law that provides for the protection of patents on bio-technologies and is EU compatible. This revision on biotechnical inventions entered into force on July 1, 2008.

While most “parallel imports” of products covered by copyright and trademark protection are subject to ‘international exhaustion’ treatment, patents until 2009 were subject to national protection, with exceptions for parallel imports of generic drugs under specific registration and safety guidelines and fertilizers and tractors from third countries.

In 2008, consumer and retail industry supporters in parliament pushed hard for regional exhaustion on patented products sold in the EU/EEA area, which are often cheaper since they bypass expensive Swiss distribution channels. This proposal met a lukewarm reception from the Federal Council and conservative political parties sympathetic to the Swiss pharmaceutical industry on the grounds regional exhaustion would weaken R&D investments in Switzerland. In December 2008, the parliament adopted the principle of regional exhaustion for patents, with an exception for pharmaceuticals, which are still subject to national exhaustion. While retail prices were expected to drop by 3.5-7.5% as a result of this measure, 2009 statistics indicate that prices remained static.

The Swiss copyright law explicitly recognizes computer software as literary works and establishes a remuneration scheme for private copying of audio and video works, which distributes proceeds on the basis of national treatment. Owners of television programming enjoy significant protection and are remunerated for rebroadcast and satellite retransmission of their works. Rights holders do not have exclusive rental rights. Collecting societies are well established. Infringement is considered a criminal offense. The term of protection is life plus 70 years. In order to comply with the WCT and WPPT WIPO treaties Switzerland has already signed, the government proposed new amendments to the existing copyright law, which were adopted by parliament on October 5, 2007 and put into force on July 1, 2008. The audiovisual industry expressed reservations against the scope of the exception for private copying, but also commented that the revised legislation at least prohibits the circumvention of technological protection measures.

However, the downloading of films and music from the internet – regardless of the legality of the source – and the provision of that content to family members or friends for personal use are not prohibited. The industry is particularly concerned that there is little willingness among consumer groups and the government to narrow the scope of personal use to avoid blatant abuse. The audiovisual industry also expressed concerns that public libraries and broadcast libraries are also allowed to sell or lend the works they possess, which may contain multimedia content, to their patrons, but Swiss law states that only “insubstantial parts” can be copied without infringing copyrights. Industry is concerned that in practice this law is unenforceable as private users can easily make illegal copies from the library copy.

More troubling are complaints from industry that rights holders are unable to resort to Swiss courts to protect their property even from illegal uploading of protected works. On September 8, 2010, the Federal Supreme Court ruled in the “Logistep Case” that private companies are not allowed to gather information used to identify possible copyright infringers. The Court ruled that first, IP addresses constitute “personal data” and needed to be protected for privacy reasons and second, that there was no overriding public interest that would justify the infringement of privacy rights. The verdict was in line with the arguments of the Federal Data Protection and Information Commissioner (FDPIC) who filed the case against Logistep. Subsequent lower court decisions have broadened the effect of this ruling, effectively discouraging Swiss prosecutors from wasting resources filing cases that they know judges will throw out. A Federal Council report published in November 2011 in response to a request from parliament stated that Switzerland was not willing to prosecute alleged copyright infringements on the internet. As a reaction to this report, different copyright holder protection associations have created the “alliance against internet piracy” as an umbrella association calling for the parliament to oppose the Federal Council’s lack of decisive action against internet piracy. The United States continues to monitor the situation closely and encourage possible solutions.

Under Swiss law, anyone found guilty of infringing the copyright laws can be fined up to several thousand francs and, in extreme cases, face imprisonment. Making an illegal copy with the aim of selling or sharing it without authorization is against the law. Internet providers or joint patent holders can also be considered as accomplices if they fail to carry out the required measures to prevent such illegal sales. Switzerland has not adopted a “Graduate Response” law to enable internet providers to issue warnings to internet users in case of a repeated illegal use of the internet and reduce their internet bandwidth if necessary. According to the Swiss Federal Institute of Intellectual Property, private users are not able to determine whether an internet content provider possesses the necessary license to make it available.

In 2005, the IIP and the International Chamber of Commerce created the Swiss anti-counterfeiting and piracy platform “Stop Piracy”. This public-private partnership promotes cooperation between industry and government and raises public awareness about the dangerous consequences of counterfeiting and piracy. Once a lawsuit is filed and, if the Swiss investigating judge determines there is a copyright violation, a legal assistance request is forwarded to the Special Tasks Unit of the Swiss Federal Department of Justice and Police, which forces the internet access provider to provide the full details of the fraudulent customer in case of internet piracy. Due to the Logistep verdict (see above) the ability of copyright holder associations to defend their property in terms of combating internet piracy seems severely limited.

Industry sources contend that Switzerland could become a hub for notorious websites due to the virtual legal immunity granted by current interpretations of the Logistep verdict and that CD/DVD piracy in Switzerland could be on the rise. Different actors associated with internet piracy, such as the Swiss Pirate Party, have noted publicly that Switzerland will not prosecute copyright infringers on the internet.

Trademarks are protected. Switzerland recognizes well-known trademarks and has established simple procedures to register and renew all marks. The initial period of protection is 10 years, renewable indefinitely for an additional 10 years. Service marks also enjoy protection. Trademark infringement is relatively rare in Switzerland, since there are few street vendors and those tend to avoid illegitimate or gray market products.

Switzerland offers significant protection for layout designs of semiconductor integrated circuits, trade secrets, and industrial designs. Protection for integrated circuits and trade secrets is generally similar to that available in the United States, and protection for designs is somewhat broader. Because of the complexities involved in ensuring protection in each of these areas, individuals and corporations seeking protection are advised to engage the services of a lawyer specialized in these fields.

Protected Designation of Origin - Switzerland and the EU both recognize Protected Designation of Origin (PDO labels) as an "essential element" in the liberalization of agricultural products, and are currently negotiating a bilateral recognition agreement on designations of origin. Currently, labels awarded to wines and spirits are recognized under WTO rules. To date, 28 products are benefitting from the PDO label.

Transparency of the Regulatory System

Regulations affecting both local and foreign investors are generally transparent and applied in a nondiscriminatory manner.

In the past, cartels were endemic to the Swiss economy. Companies in a number of industrial and service branches organized themselves, through trade and industry associations, into horizontal and vertical cartels. Such arrangements existed in the market for prescribed medicines, sanitary ware, kitchen equipment, optical products, books, beverages, food retailing, dietary products, and many other sectors of the economy.

The Swiss cartel law specifically allows cartels unless the government concludes that they are harmful to society or the economy. A revised competition bill, which entered into force in 2004, grants the authority to sanction anti-competitive behavior without prior warning, with a maximum fine of ten % of a firm's total combined revenue for the past three years. Whistle-blowing companies that cooperate with regulators are eligible for a reduced fine (leniency program). The transition period for adapting to the new law ended on April 1, 2005. According to the Swiss government estimates, Switzerland's gross domestic product could grow by an extra 0.5-0.8% a year if all cartels were eliminated.

In general, the Competition Commission considers vertical agreements with less than 20% of market share as insignificant, whereas others potentially face a fine. Cartels with over 50% of market share will be fined. Restrictions on the sale of components or spare parts are generally unlawful.

A number of administrative requirements restrict retail operations in the domestic market. These include planning regulations, local building codes, advertising restrictions, standards for equipment, approval procedures, and opening hours for shops. Although such measures are not intended to be discriminatory, their practical effect can be to limit market access for large discount retailers. Bureaucratic procedures are numerous, but generally transparent and nondiscriminatory.

Efficient Capital Markets and Portfolio Investment

The efficiency of the Swiss capital market has helped make Switzerland a leading financial center. The Swiss franc denominated foreign bond market is one of the largest markets for foreign borrowers, and Zurich is one of the largest gold trading centers in the world. There are generally no restrictions on the purchase or sale of foreign currencies and equities. Residents and non-residents may conclude foreign exchange contracts, whether of a commercial or financial nature, in all currencies. Foreigners and Swiss nationals can make "forward transactions" at prevailing market rates. Payments for imports from all sources may be made freely, and exporters can freely transfer their proceeds. No legal impediments apply to payments for or receipts from invisibles. The repatriation of invested capital is unrestricted. The Swiss credit market is open to foreign investors on the same terms and conditions as for Swiss investors. A variety of credit instruments are available to the private sector. Several Swiss banks have cut ties to clients with US citizenship or residency or announced to do so in the near future due to the increasing attention paid by US tax and legal authorities to possible tax fraud committed by US taxpayers. Therefore, it can be difficult for a US citizen or resident to open or maintain a bank account in Switzerland.

To prevent the misuse of Switzerland’s liberal market framework for money-laundering or criminal activity, provisions to regulate certain aspects of portfolio investment are regularly updated. One important firewall established by the Swiss banking industry is the 1997 Due Diligence Convention, under which member banks must identify the beneficial owner of the invested funds. The Due Diligence Guidelines to which banks can sign up are updated on average every five years. The latest set of amendments entered into force on July 1, 2008 and is available on www.swissbanking.org/en/20080410-vsb-cwe.pdf. The legally binding Anti-Money Laundering Act can be found http://www.admin.ch/ch/e/rs/9/955.0.en.pdf.

Nevertheless, widely used investment techniques still permit customers to hedge their investments against tax exposure. The EBK guidelines also increased the banks' awareness of Personally Exposed Persons (PEPs), such as well-known foreign political figures. The guidelines are designed to deter corruption through the application of several risk assessment criteria (customer name, nationality, country of residence, and business activity). The EBK guidelines apply to domestic and foreign banks based in Switzerland and to Swiss banks' subsidiaries abroad. The Swiss penal code explicitly recognizes money laundering as a criminal offense, as is membership in, or support of a criminal organization. The change in the law facilitates confiscation of illicitly acquired assets without having to establish an exact linkage between a given asset and a specific crime. Money laundering regulations extend to non-banking financial institutions and require reporting suspicious transactions. Switzerland has signed and ratified all of the 12 UN anti-terrorism conventions and protocols.

Foreign investment is not restricted by "cross-shareholding" or "stable shareholder" arrangements. There is generally little discrimination against foreign investors, the areas of chief complaint being the type of limitations cited under the section "right to private ownership and establishment." Special measures available to Swiss firms to defend against hostile takeovers are covered under the above section as well.

The government does not restrict foreign participation in industry standard-setting. The Swiss private sector generally does not support efforts to restrict foreign investment, participation, or control of domestic enterprises

Competition from State-Owned Enterprises (SOEs)

The federal government is currently the main shareholder of the air navigation service Skyguide (99.9%), the telecom company Swisscom AG (with at least 50%) and unique shareholder of the Swiss Post, the Swiss Federal Railways and the defense company Ruag. The federal government is directly responsible for the nomination of the managing director of the Swiss Post, Swiss Railways and Ruag and maintains overall control of their management policies. While both Swiss Post and Swiss Railways operate in an increasingly competitive market, both receive federal subsidies to finance their monopoly in the letter and passenger segments. The government does not, however, produce sovereign wealth funds to invest in the private sector.

Corporate Social Responsibility (CSR)

There is a general awareness of corporate social responsibility among both producers and consumers. Most Swiss companies implement CSR programs in the fields of development aid, CO2 reduction, energy, and environment, but the companies do not generally advertise their programs. Swiss CSR principles are mostly in line with OECD Guidelines for Multinational Enterprises.

Political Violence

Politically motivated violence is very rare in Switzerland. During 2012 no such actions were reported.

Corruption

Switzerland has an effective legal and policy framework to combat domestic corruption. Laws are enforced effectively. US firms investing in Switzerland have not complained of corruption to the Embassy in recent years. Corruption is reportedly not pervasive in any area or sector of the Swiss economy. Switzerland maintains effective investigative and enforcement procedures to combat domestic corruption. The giving or accepting of bribes in Switzerland is subject to criminal and civil penalties, including imprisonment up to five years.

Switzerland signed the OECD Anti-Bribery Convention in 1997 and it entered into force in the country on May 1, 2000. In February 2001, Switzerland signed the Council of Europe's Criminal Law Convention on Corruption and in December 2003 it signed the UN Convention against Corruption. In order to implement the Convention, the Parliament amended the Penal Code to make bribery of foreign public officials an offense (Title Nineteen "Bribery", Articles). The amendments entered into force on May 1, 2000. In accordance with the revised 1997 recommendation, Parliament amended the legislation on direct taxes of the Confederation, cantons and townships so as to prohibit the tax deductibility of bribes. The amendment of the Tax Code became effective on January 1, 2001.

Under Swiss law, Staff members are urged not to accept anything that would "challenge their independence and capacity to act." According to the law, the range of the possibility to receive “individual advantages” reaches from no advantages at all (i.e. Financial Market Authority) to several hundred Swiss Francs. The upper-limit value of presents such as bottles of champagne and watches is a grey area that poses a problem because it varies according to department and canton. Transparency International believes a maximum sum valid at the federal level should be fixed. 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 also require members of cantonal parliament 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.

Corruption is generally regarded to have decreased in the public sector over time. After several visa abuses in 2005 and 2006 in Swiss consulates abroad, a government audit highlighted 33 embassies and consulates with potential problems. The problematic cases identified occurred in Morocco, Turkey, Peru, Russia, Oman, Nigeria, Serbia, Macedonia and the Democratic Republic of Congo. The Swiss Federal Foreign Affairs Department also confirmed around 100 cases of visa fraud at the Swiss Embassy in Pakistan.

In January 2012, the head of the Swiss central bank stepped down, accused of having benefited from inappropriate currency trading due to insider knowledge of central bank activities. This episode has led for calls for stricter regulations of the private activities of members of the Swiss central bank.

Switzerland ratified the Council of Europe's Criminal Law Convention on Corruption on July 1, 2006. Switzerland’s penal code was amended so that foreign diplomatic staff and members of international organizations can be brought to court if they accept bribes.

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

In June 2008, the Group of States against Corruption (GRECO, Council of Europe) welcomed Switzerland's efforts. Switzerland is among the top ten European countries in effectiveness for fighting corruption. For its first evaluation of Switzerland, the GRECO expressed satisfaction with the 2000 and 2006 revisions to the criminal law on corruption. The implementation of the criminal responsibility of the person (2003) was well perceived, as was the prohibition on tax breaks on bribes (2001). GRECO also recommended that Switzerland consider the introduction of additional penalties and examine the possibility of a criminal record for legal persons previously convicted. However, some of these recommendations were not taken into account in current version of the law of public procurement (in force since July 1, 2010). The draft federal law on public procurement’s plans to exclude from public bids any company previously sentenced for corruption was not included in the final version. Nevertheless, in March 2010, in the Joint First and Second Evaluation rounds, GRECO stated that Switzerland had implemented almost all recommendations.

The full GRECO report is available online on:
http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2009)2_Switzerland_EN.pdf

An announced change of the Swiss Obligation Code in 2009 to ensure better protection for “whistle-blowers” against unfair dismissals by an employer has not been realized. Currently, employees who report wrongdoing in the workplace can be fired although they may receive compensation up to 12 months of salary. The Federal Law on Federal Personnel obliges government staff to report wrongdoings. In the draft Federal Law on the Organization of Federal Criminal Authorities, the Swiss government proposes a new article requiring employees to report any crimes or offenses. The cantons remain however competent to resolve the whistleblower issues of their cantonal employees.

Members of parliament must also disclose their interests, professional activities, supervisory board or executive body memberships, and expert or consulting activities every year.

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

Bilateral Investment Agreements

To date, Switzerland has concluded numerous investment protection treaties with developing and emerging market economies. Around 114 remain in force. Switzerland has not signed an investment protection agreement with any Western European country or the US.

OPIC and Other Investment Insurance Programs

OPIC is not active in Switzerland. However, Switzerland is a member of the Multilateral Investment Guarantee Agency.

In 2009, Switzerland has signed and ratified in 2010 a revised Double Tax Agreement with the US. An additional protocol to this Double Taxation Agreement was ratified by Switzerland, but not yet by the US Senate.

Labor

The Swiss labor force is highly educated and skilled. Foreigners not only fill low-skilled, low-wage jobs, but also highly technical positions in the manufacturing and service industries. Roughly 29% of the estimated labor force of approximately 4.8 million people is foreign. Many foreign nationals are long-time Swiss residents who have not applied for or been granted Swiss citizenship. Only 3.4% of the workforce is employed in agriculture, where foreign "seasonal workers" take many low-wage jobs.

The Swiss economy is capital intensive and geared toward high value-added products and services with wages in Switzerland being among the highest in the world.

The prohibition on strikes by federal public servants was repealed in 2000. The Federal council may 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. Civil servants in a few cantons and municipalities are still denied the right to strike.

Switzerland is in compliance with ILO conventions. Government regulations cover maximum work hours, minimum length of holidays, sick leave and compulsory military service, contract termination, and other requirements. However, there is no minimum wage law. Employees in the retail sector and in restaurants, bars, and the like, in cooperation with other interests, have been successful in slowing reform of the restrictive federal and cantonal laws governing opening hours. Shop hour restrictions are nevertheless loosening gradually in centers such as Zurich, Geneva, and Bern.

Swiss voters narrowly accepted in 2005 the revision of the Swiss Federal labor law in order to provide for flexible working hours, such as Sunday openings, in major railway stations and airports. The new regulation entered into force on April 1, 2006. Shopping hours outside of airports and railway stations remain regulated by cantonal laws.

Approximately one fourth of the country's full-time workers are unionized. In general, labor/management relations are good, with a willingness on both sides to settle disputes by negotiations rather than by labor action. About 615 collective agreements exist today in Switzerland (of which 4% concern the agriculture, 32% the secondary sector and 49% the third sector) and are usually renewed without major problems. Since 2002, trade unions have complained that too little of the Swiss labor force is covered by collective agreements. Although days lost to strikes in Switzerland are among the lowest in the OECD, Swiss trade unions have encouraged workers to go on strike on several occasions in recent years.

At a general level, salaries were increased by 1% in 2011.

The unemployment figure rose to 3.3% in December 2012. The average unemployment rate in December 2012 was 6.5% for foreigners and 2.3% for Swiss citizens. All border cantons with neighboring EU countries suffer higher unemployment rates than the rest of Switzerland. Other cantons located at the heart of Switzerland enjoy a much better situation. Young workers aged 15-24 and persons aged between 25 and 49 were hid with the unemployment rate of 3.6% respectively 3.5% in December 2012.

Foreign Trade Zones/Free Ports

Swiss international airports have stores offering duty free shopping. Private companies can utilize duty-free warehouses to import goods tax and duty free into Switzerland as long as the goods are subsequently re-exported to third countries. In each of these examples, foreign-owned companies receive the same treatment as domestic firms.

Foreign Direct Investment Statistics

The figures below are originating from the Swiss National Bank (http://www.snb.ch/en/iabout/stat/statpub/fdi/stats/fdi)

Foreign direct investments in Switzerland (2011) – capital inflows by country in CHF millions and USD millions ()

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Region / Country

In CHF millions, USD millions* ()

US

-1,201 (-1,355)

EU

-9,128 (-10,301)

Other European countries

5,314 (5,997)

Central and South America

4,023 (4,540)

Japan

2,222 (2,508)

Israel

1,299 (1,466)

Total

10,494 (11,843)

*The average exchange rate in 2011 amounted to CHF 0.8861/USD 1 and is applied throughout this section.

**A minus sign (–) indicates an outflow of capital from Switzerland (disinvestment).

Foreign direct investment in Switzerland (2011) – capital stock at year-end (book value) in CHF millions, USD millions () and share in % {}

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Region / Country

In CHF millions, USD millions* ()

US

69,479 () {11.4%}

EU

464,978 (524,747) {76.6%}

Other European countries

38,798 (43,785) {6.4%}

Central and South America

17,693 (19,967) {2.9%}

Japan

1,965 (2,217) {0.3%}

Israel

2,442 (2,756) {0.4%}

Total

606,798 (684,796) {100%}

Foreign direct investment in Switzerland (2011) – by economic activity (capital inflows in CHF millions) and USD millions ()

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Type of economic activity

In CHF millions, USD millions* ()

Manufacturing

Chemicals and plastics

2,174 (2,453)

Metals and machinery

-7,724 (-8,717)

Electronics, energy, optical and watchmaking

-580 (-655)

Other manufacturing and construction

-165 (186)

Services

Trade

10,697 (12,072)

Finance of holding companies

7,507 (8,472)

Banks

12 (14)

Insurance companies

-1,365 (-1,540)

Transportation and communications

346 (390)

Total

10,494 (11,843)

*The minus sign (–) indicates an outflow of capital from Switzerland.

Foreign direct investment in Switzerland (2011) – by economic activity (capital stock at year-end (book value) in CHF millions), USD millions () and share in % {}

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Type of economic activity

In CHF millions, USD millions* ()

Manufacturing

Chemicals and plastics

38,765 (43,748) {6.4%}

Metals and machinery

10,326 (11,653) {1.7%}

Electronics, energy, optical and watchmaking

22,446 (25,331) {3.7%}

Other manufacturing and construction

7,515 (8,481){1.2%}

Services

Trade

104,997 (118,493) {17.3%}

Finance of holding companies

340,776 (384,580) {56.2%}

Banks

33,646 (37,971) {5.5%}

Insurance companies

23,455 (26,470) {3.9%}

Transportation and communications

14,925 (16,843) {2.5%}

Total

606,798 (684,796) {100%}

*The minus sign (-) indicates an outflow of capital from Switzerland (disinvestment)

Swiss direct investments abroad

Swiss direct investments abroad (2011) – capital outflows

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Region / Country

In CHF millions, USD millions* ()

US

11,526 (13,008)

EU

5,427 (6,125)

Brazil

1,136 (1,286)

Russian Federation

1,134 (1,280)

India

711 (802)

China

5,293 (5,973)

Total

42,019 (47,420)

Swiss direct investments abroad (2011) – capital stock at year-end (book value)

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Region / Country

In CHF millions, USD millions* ()

US

197,582 (222,979)

EU

404,356 (456,332)

Brazil

22,684 (25,600)

Russian Federation

7,244 (8,175)

India

8,463 (9,551)

China

13,134 (14,822)

Total

1,000,301 (1,128,880)

Swiss direct investment abroad (2011) – by economic activity (capital stock at year-end (book value), {share in percent})

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Type of economic activity

In CHF millions, USD millions* ()

Manufacturing

Chemicals and plastics

132,884 (149,965) {13.3%}

Metals and machinery

36,798 (41,528) {3.7%}

Electronics, energy, optical and watchmaking

52,409 (59,146) {5.2%}

Other manufacturing and construction

82,499 (93,103) {8.2%}

Services

Trade

70,074 (70,074) {7.0%}

Finance of holding companies of which

Swiss controlled

136,996 (154,606) {38.5%}

Foreign-controlled

247,978 (247,978) {24.8%}

Banks

75,135 (84,793) {7.5%}

Insurance companies

132,196 (149,189) {13.2%}

Transportation and communications

10,110 (11,410) {1.0%}

Total

1,000,301 (1,128,880) {100%}

Swiss direct investment abroad (2011) – by economic activity (investment income, the (-) indicates a loss)

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Type of economic activity

In CHF millions, USD millions* ()

Manufacturing

Chemicals and plastics

10,920 (12,324)

Metals and machinery

2,544 (2,871)

Electronics, energy, optical and watchmaking

5,500 (6,207)

Other manufacturing and construction

8,177 (9,228)

Services

Trade

4,497 (5,075)

Finance of holding companies of which

Swiss controlled

-9,865 (-11,133)

Foreign-controlled

9,548 (10,775)

Banks

-166 (187)

Insurance companies

12,627 (14,250)

Transportation and communications

-761 (859)

Total

44,131 (49,803)

Liechtenstein Investment Climate Statement 2013

Liechtenstein’s investment conditions are virtually identical in most key aspects to those in Switzerland, due to its intimate links with the Swiss economy. The two countries have a customs union, for example, and Swiss authorities are responsible for implementing import and export regulations. Liechtenstein has a stable and open economy that has created as many jobs as it has citizens (about 36,000) – requiring a substantial number of foreigners (mainly Swiss and Austrians) to fill many of these jobs. It is also a very wealthy country – when adjusted for purchasing power parity, its per capita gross domestic product (GDP) is the highest in the world. Manufacturing (especially tools, precision instruments, and dental products) compromises the largest share of the economy (36 %), followed by financial services (33%), other services (26%), and agriculture (6%).

The country reformed its tax system in 2011. The 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 US businesses stemming from market restrictions in Liechtenstein.

[This is a mobile copy of Switzerland (Including Lichtenstein)]