Switzerland is recognized worldwide as a leading country in many respects. It offers an extremely high quality of life (ranked first in the United Nations Development Programme 2021 Human Development Index), international credibility, political and social stability, a transparent legal system, a liberal and highly competitive economy, a strategic geographical position and a multicultural society. It is no wonder, then, that Switzerland is becoming a destination for many people, companies and investors every year.
Switzerland’s conditions for doing business are extremely attractive, but it is nonetheless important for businesses to become familiar with its local laws and regulations, as well as the main features of the country’s social and economic structure.
Business environment
One of Switzerland’s notable advantages is its political stability, which provides a secure foundation for businesses to thrive. This stability, combined with its strong economy boasting a high GDP per capita and low unemployment rate, creates an attractive environment for both domestic and foreign investors.
In terms of business structures, Switzerland offers several options, including sole proprietorships, partnerships, limited liability companies (GmbH) and stock corporations (AG). Each structure provides different levels of liability and flexibility, allowing entrepreneurs to choose the most suitable option for their business.
Investing in Switzerland can take various forms, from establishing a business entity, such as a subsidiary or branch, to participating in joint ventures or mergers and acquisitions. Additionally, investments in Swiss real estate and financial markets offer attractive opportunities for investors seeking diversification and growth. It is important to seek guidance from legal and financial professionals who are familiar with Swiss regulations and business practices. Staying informed about any changes in laws or regulations ensures compliance and maximizes one’s potential for success in the Swiss market.
Switzerland is a safe haven and a land of opportunity for both people and companies.
Economy
Switzerland’s formula for success is partly based on its highly liberal economic system. In 2023, Switzerland ranked second worldwide in the Heritage Foundation’s Index of Economic Freedom, which recognizes Switzerland has having the freest economy in Europe. The country has high productivity and few price regulations; its liberal labour laws, with no general federal minimum wage, are balanced by a strong welfare system to prevent people from falling into poverty. Switzerland is also party to several international trade agreements and offers a transparent and efficient investment structure. This combination of factors helps Switzerland to be competitive at the highest level. Regarding the inflation rate, it should be noted that Switzerland has historically had a low inflation rate, and the Swiss National Bank (SNB) aims for an annual inflation rate of around 2%.
Additionally, Switzerland has a diverse and well-developed economy, with several key sectors. The main trading sectors in Switzerland are finance and banking, pharmaceuticals and life sciences, machinery and engineering, watchmaking and luxury goods, chemicals, information technology and telecommunications, food and beverage, and precision instruments and optics. These sectors contribute significantly to Switzerland’s export-oriented economy.
Current opportunities & future prospects
Strong social and political stability
Switzerland is a federal state based on the principles of cooperation and concordance. Its political system disperses power both horizontally (between the different branches) and vertically (between the state and federal levels). Even within the different branches, power is shared and exercised through compromise. A good example is the Federal Council (i.e., the federal government): none of its seven members has more power than another, and internal discussions end with a vote, with the decision presented to the people as the will of the whole council. This continual search for agreement leads to robust political stability and acceptance. The Swiss people also have massive participation rights. They can intervene directly by voting to amend the constitution or to prescribe a course of action to the federal (or state) government. This participatory freedom helps to achieve political acceptance and ultimately stability. Riots and turmoil are very rare in Switzerland. In addition, the country’s excellent social welfare system ensures that no one facing poverty is left behind—everyone enjoys the means to lead a decent life.
Very high average quality of life, high purchasing power and strong currency
Switzerland is known for its very high average wages and extremely good quality of life. In general, the Swiss have a high purchasing power, which makes the country a profitable market. The strength of the Swiss franc also makes Switzerland a safe place for investment and business in general.
Shifting demographic
Switzerland’s ageing population, declining birth rate, urbanization, rural depopulation and migration are challenges that need to be overcome through proactive strategies and policies to ensure sustainable development and quality of life for all residents. These demographic shifts in Switzerland have wide-ranging implications for various aspects of society, including healthcare, education, labour markets and social welfare policies.
Skilled workforce
According to the World Economic Forum’s Global Competitiveness Report 2020, Switzerland’s tertiary education system is rated the best for meeting the needs of global employers. This distinction is due in part to the country’s excellent public education system. Switzerland is home to the Swiss Federal Institute of Technology in Zurich (ranked seventh in the QS World University Rankings® 2024 after MIT, Stanford, Harvard, Cambridge, Imperial College and Oxford), the Swiss Federal Institute of Technology in Lausanne (ranked thirty-sixth) and the University of Zurich (ranked ninety-first). In addition to the strength of its university education, Switzerland offers excellent professional educational opportunities underpinned by a robust economic and industrial fabric. In fact, many apprentices who choose vocational training instead of an academic path have better job opportunities and earn higher salaries than university graduates (a perfect example is Sergio Ermotti, former CEO of UBS Bank, who started his career as an apprentice in a local bank).
International prestige
Internationally and diplomatically, Switzerland boasts a high level of prestige and credibility, being home to some of the world’s most important international organisations, such as the International Committee of the Red Cross, and is the European headquarters of the UN, FIFA, UEFA, the IOC and over 500 NGOs. Switzerland acts internationally as a neutral and trusted mediator.
Strategic geographical position
Due to its strategic geographical position in the centre of Western Europe and the European Union, Switzerland is crossed by the most important north–south continental routes through the Alps. The country’s state-of-the-art railway system forms an essential part of the Rotterdam–Genoa route, including the 57 km Gotthard Base Tunnel, which is the longest and deepest railway tunnel in the world. Although not an EU member state, Switzerland has managed to negotiate a number of mutually beneficial agreements with the EU, giving Swiss citizens and companies many of the same rights and freedoms as EU citizens in terms of movement of people and goods, cross-border trade and more. The massive benefits of these bilateral agreements for trade and for doing business in general are apparent.
Legal system
Switzerland has a civil law system based on a constitution that wisely combines the best parts of the French and German legal traditions. The system reflects the country’s federal structure, with a pyramid system of federal and state regulation, which sometimes leads to significant differences in how issues such as taxation and education are regulated at the state level. The judicial system is generally based on three different levels (two at the state level under the Federal Supreme Court). Proceedings are generally conducted in the state language (German, French or Italian), and they often take into account several international agreements and treaties, as well as parts of EU law.
Very high legal certainty
In general, Switzerland provides very high legal certainty. The coexistence and operation of a functional country in general and business in particular requires the population to have confidence in the institutions and laws of their own state. Changing regulations, uncertainty and government-dependent laws make it difficult to develop long-term plans for doing business. A stable, secure legal system that can be trusted is therefore a crucial consideration when choosing a jurisdiction in which to do business. Switzerland’s political system, based on concord, discussion and dispersion of power, makes it difficult for a singular political force to change the law, and public participation rights play an important supervisory role. Thus, one can count on the complete stability of the country’s legal system.
Foreign investment restrictions
The regulatory environment for foreign investment in Switzerland is generally characterized by openness and transparency. Switzerland encourages foreign investment and maintains a liberal market economy that welcomes foreign capital. The main regulatory frameworks, the Swiss Federal Act on Foreign Nationals and Integration (FNIA) and the Swiss Federal Act on the Acquisition of Real Estate by Persons Abroad (i.e., Lex Koller) aim to provide a clear and predictable legal framework for foreign investors, ensuring equal treatment and non-discrimination in investment opportunities. Additionally, Switzerland commits to international standards and bilateral investment treaties, which further enhances investor confidence in the regulatory environment.
Switzerland welcomes direct investment from abroad and offers a stable and attractive business environment characterized by political stability, a strong legal system, respect for property rights and a skilled workforce. Although Switzerland has an open and liberal investment regime, there are some restrictions on foreign capital in certain sectors that are considered sensitive to national interests or security concerns. For example, foreign investment in the defence sector may require government approval. Additionally, there are regulations in place to limit foreign ownership of real estate, particularly in tourist regions, as stated in the aforementioned Lex Koller. However, Switzerland remains highly open to foreign capital for the most sectors of the economy.
The following points regarding foreign exchange controls should be mentioned. The Swiss franc (CHF) is freely convertible, but the Swiss National Bank occasionally intervenes in the foreign exchange market to manage currency fluctuations and prevent excessive appreciation of the Swiss franc, which can adversely affect Swiss exporters. Switzerland’s approach to exchange rates focuses on ensuring monetary stability and supporting the competitiveness of the Swiss economy on the global stage.
Overall, Switzerland remains highly attractive to foreign investors seeking opportunities for direct investment and long-term growth.
Top tips to take away: “What to know before investing”
To sum up, Switzerland is a small country in the middle of Europe—a melting pot of European cultures, languages and religions—with an extremely complex structure comprised of different cantons and layered political and legal systems. Despite having very few natural resources, the country manages to compete internationally at the highest level. Cultural differences within Switzerland are characteristic of its social fabric. When doing business, this must be taken into account. While in Geneva and the Italian-speaking southern region business is more informal, Mediterranean and emotional, in the northern region of Zurich, business follows more structured and formal rituals. Overall, Switzerland is a land of opportunity, where people can enjoy an excellent quality of life, high purchasing power and outstanding educational opportunities and job prospects.
Switzerland’s legal and bureaucratic system is customer friendly, uncomplicated and fast, providing an optimal framework for doing business. However, before starting a new business, it is essential to seek professional legal advice on Swiss company law, taxation, compliance regulations and asset protection planning. However, even if accurate planning fails to prevent a legal dispute from arising, and a settlement cannot be reached by agreement, the Swiss court system is generally considered to be fast and efficient.
Teichmann International (Schweiz) AG
Teichmann International (Schweiz) AG is a law firm and notary with offices in Zurich, St. Gallen and Frauenfeld. Through a process of self-critical and ambitious reflection over many years, Teichmann International (Schweiz) AG has created an exceptional concept for a law firm. The firm assists both individuals and companies in a wide variety of legal matters and areas, supporting them from the beginning to the end of a dispute. In addition, Teichmann International (Schweiz) AG assists its clients in many other types of legal matters, such as succession planning, asset protection planning, corporate governance and compliance, as well as mergers and takeovers.
Teichmann International (Schweiz) AG employs professionals from several cultural and professional backgrounds, creating a multilingual team that speaks and understands more than 10 different languages. The firm’s employees specialize in many different areas, including business and company law, antitrust, money laundering, white collar crime, family office, family law, contract law, criminal law and more.