Switzerland: Investing in Switzerland
According to UNCTAD's World Investment Report 2022, FDI inflows to Switzerland returned positive after three years in 2021 (at USD 1 billion), compared to a negative inflow of USD -162.7 billion one year earlier. In the same year, the total stock of FDIs stood at USD 1.36 trillion, around 168.6% of the country’s GDP. Of this total, 93% was equity capital and 7% was intragroup loans. In 2021, income from direct investment in Switzerland increased year-on-year by CHF 13 billion to CHF 86 billion (+18%) but remained below its pre-pandemic level (Swiss Central Bank). Broken down by country of immediate investor, a large proportion of domestic capital stocks was held by EU-domiciled entities: CHF 699 billion, or 66% of total foreign capital stocks in Switzerland. Of this total, CHF 544 billion was attributable to investors from the three largest European holding company locations – the Netherlands, Luxembourg and Ireland. The sectors holding most of the FDI stock are finance and holding (41.4%), wholesale and retail trade (19%), professional, scientific and technical activities (18.9%), and manufacturing (13.1% - OECD). According to the latest data from OECD, in the first half of 2022, FDI flows to Switzerland stood at USD 9.5 billion, compared to investments worth USD 19.4 billion recorded in the same period one year earlier.
Switzerland is an attractive destination for foreign investors because of its economic and political stability, transparent and fair legal system, reliable and extensive infrastructure and efficient capital markets. Despite its attractiveness, FDI flows to Switzerland remain highly volatile due to the country's large exposure to international trade dynamics and political stability. Several Swiss cantons have used tax incentives to attract investment into their jurisdictions, including tax exemptions for new companies for up to ten years in some cases. After criticism from the European Union, this practice was severely restricted: the Federal Act on Tax Reform and Swiss Pension System Financing (TRAF) now obliges cantons to offer the same corporate tax rates to both Swiss and foreign companies. Nevertheless, the law allows cantons to continue setting their own rates and to offer incentives for corporate investment through deductions and preferential tax treatment. The major laws regulating foreign investment in Switzerland are the Code of Obligations, the Lex Friedrich/Koller, and the Cartel Law. There is no screening of foreign investment; however, FDI controls do apply to certain industries and sectors (i.e banking, securities and real estate). Furthermore, in 2022, the Swiss Federal Council initiated the consultation procedure on new legislation to screen foreign direct investment in Switzerland. The country ranks 3rd out of 82 in the Economist Business Environment ranking. In the AT Kearney Foreign Direct Investment Confidence Index, Switzerland is ranked 9th in 2022.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | -50,252 | -88,169 | 13,311 |
FDI Stock (million USD) | 1,183,255 | 1,038,359 | 1,036,890 |
Number of Greenfield Investments* | 128 | 147 | 151 |
Value of Greenfield Investments (million USD) | 3,114 | 3,247 | 8,354 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Switzerland | OECD | United States | Germany |
Index of Manager’s Responsibility** | 5.0 | 5.3 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 5.0 | 7.3 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Switzerland is the 36th country in terms of the ease of doing business according to the World Bank's annual report (Doing Business 2020). The main strengths of the Swiss economy include:
Disadvantages for FDI in Switzerland:
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Latest Update: November 2023