SWITZERLAND GUIDE

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Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.

Expanding to countries such as Switzerland – which is characterized by a highly productive and qualified workforce, admirable employment and tax laws, a strong infrastructure network linking to the res leading sectors in machinery, chemicals, textiles, tourism, banking insurance, and pharmaceuticals – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved. Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

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Switzerland – The Economy

Switzerland’s economy is one of the world’s most advanced and highly developed free-market economies. The economy of Switzerland ranked third in the 2020 Global Competitiveness Report, as was also ranked first in the world in the 2020 Global Innovation Index.

Switzerland also boasts one of the world’s highest GDPs per capita and a highly skilled labor force. The economy relies on financial services, precision manufacturing, metals, pharmaceuticals, chemicals, and electronics.

About two third of the area of Switzerland is covered with forests, lakes, and mountains. Since Switzerland has no mineral resources, it must import, process, and resell them as products.

Farming is also an important part of the economy. But the production of the Swiss farmers does not fulfill the needs of all people, so Switzerland must rely on imported goods from other countries. The country is a federal republic that is composed of 26 cantons, with federal authorities based in Bern. Switzerland is completely landlocked, and is bordered by Italy, France, Germany, Austria, and Liechtenstein. It is geographically divided into 3 regions – the Swiss Plateau, the Alps, and the Jura – spanning a total area of 41,285 km2 (15,940 sq mi) and land area of 39,997 km2 (15,443 sq mi).

The Swiss population of approximately 8.5 million is concentrated mostly on the plateau, where the largest cities and economic centres are, among them Zürich, Geneva, Basel, and Lausanne.

These cities are home to several offices of international organizations such as the WTO, the WHO, the ILO, the seat of the International Olympic Committee, the headquarters of FIFA, the UN’s second-largest office, as well as the main building of the Bank for International Settlements. The main international airports of Switzerland are also located in these cities.

Small and Medium-Sized Companies

Small and medium-sized enterprises play a fundamental role in the Swiss economy. SMEs form the huge majority of enterprises and account for two-thirds of the jobs in the country. They make a major contribution to national creativity, growth, and prosperity. SMEs are dominant, representing more than 99 % of the country’s economy, with approximately 330,000 companies in Switzerland employing fewer than 250 employees. 

CountrySwitzerland
CapitalBern/Berne
No. of States/Provinces26 cantons
Principal CitiesZurich, Geneva, Basel, Lausanne, Bern, Winterthur, Lucerne, Saint Gallen, Lugano, Biel/Bienne, Thun, Koniz
Language(s)German, French, Italian, and Romansh
Local CurrencyFranc (CHF)
Major ReligionCatholicism, Swiss Protestantism
Date Formatdd/mm/yyyy
Time ZoneGMT+1 (Central European Standard Time)
Country Dial Code+41
Population8,773,637
Border CountriesItaly, France, Germany, Austria, and the Principality of Liechtenstein
Tax YearJan – December (calendar year)
VAT %7.7%
Minimum WageCHF 6,500 per month (US$ 6,951)
Taxpayer Identification NumbersUID-number (“Unternehmens-Identifikationsnummer “)
VAT Number
OASI Number (Social Security Insurance)
Leading Sectorsmachinery, chemicals, textiles, tourism, banking insurance, pharmaceuticals
Main importsGold, Packaged Medicaments, Jewelry, Cars, and blood, antisera, vaccines, toxins, and cultures
Main exportsGold, Blood, antisera, vaccines, toxins and cultures, Base Metal Watches, Precious Metal Watches, and Hydrazine or Hydroxylamine Derivatives
Main trading partnersGermany, United States, United Kingdom, China, France, India, Hong Kong, Italy
Government TypeFederal assembly-independent directorial republic under a semi-direct democracy
Current Prime MinisterIgnazio Cassis (President of Federal Council), and Walter Thurnherr (Federal Chancellor)

The Main Sectors of the Swiss Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

  1. Agriculture – The agricultural sector contributes an average of 0.7% of the GDP of Switzerland. The sector does not contribute much to the country’s economy, but the Swiss government is very protective of it.

    There are many government subsidies for farmers as well as high tariffs to encourage domestic agricultural practices, so about 60% of the food consumed in Switzerland is locally grown and produced and meets about 65% of the country’s food demand.

    A large portion of the country’s budget (about 5.5% of annual budget) is used for boosting production of food.

  2. Manufacturing – The economy of Switzerland is driven by the manufacturing industry which contributed 25.6% of its GDP in 2017. Switzerland is one of the world’s largest exporters.

    The country contains one of the most competitive pharmaceutical industries in the world, is also involved in the manufacture of food products (like Nestle) and chemicals used in the construction sector and is also famous for the manufacturing of high-end clocks and watches.

  3. Tourism – Regarding tourism, Switzerland enjoys revenues of up to CHF 16.8 billion every year. Many tourists are drawn to Switzerland annually. Some of the top-rated places for tourist visits in the country are Matterhorn (one of the highest mountains in the Alps), the Jungfraujoch (or the “Top of Europe”) Rhine Falls, Lake Geneva, the Chillon Castle, Bern City, and the Swiss National Park.

  4. Banking – The banking sector in Switzerland is known for its policies of protection of foreign accounts. It is a criminal offense to reveal client information just as it is in the case of doctors and priests.

    The banks’ regulation authorities in Switzerland are the Swiss Financial Market Supervisory Authority and the Swiss National bank.

    In 2018, the Swiss Bankers Association estimated that the value of the assets held by the Swiss Banks was about US$6.5 trillion.

  5. Chemicals – The chemicals and pharmaceuticals industry is Switzerland’s leading exporter, generating roughly 50% of total annual exports and 5% of GDP. There are approximately 1,000 industry operators, including two major multinationals.

    The chemicals and pharmaceuticals industry generated 6.3% of Switzerland’s GDP in 2020, coming in second behind machinery.

    However, it is the top performer in terms of exports. Over CHF 116 billion in chemical and pharmaceutical products are sold abroad every year, accounting for almost 52% of total exports. In 2020, the sector employed around 74,000 people in Switzerland and over 338,000 internationally. 

  6. Machinery – The machine, electrical engineering, and metals industry (or MEM, for short) has a total workforce of 320,000. 99% of the companies are SMEs with less than 250 employees.


    The sector employs over 500,000 people internationally and is Switzerland’s second largest exporter, worth CHF 63 billion in 2015, 31% of total Swiss exports. Almost 60% of MEM industry exports go to the EU. 

Compliance Highlights

  • The Federal Tax Administration (FTA) – is responsible for value added tax, direct federal tax, withholding tax and other federal levies. It implements double taxation agreements, provides international administrative assistance in tax matters, collects withholding taxes for other states in accordance with treaties and compiles tax statistics.

  • Ch.Ch – The online government portal for the Swiss Federal Government, which has a whole section on employment and workers’ rights.

Payroll – Tax Contributions and Benefits

Tax liability is based on residency and with different classes depending on marital and family status. Liability is at federal, cantonal, and municipal levels with the addition of church taxes where applicable. Residents are taxed on their worldwide income in a tax year running from January 1 until December 31, while non-residents are taxed on certain categories of their Switzerland-sourced income, or income derived from Swiss investments.

Income Tax:

Social Insurance Taxes: Employers and employees equally share 10.6% of salary towards old age, survivors, and disability insurance; 2.2% towards unemployment insurance capped at CHF 148,200 (€143,061, US$161,676); 1% towards supplementary unemployment insurance above CHF 148,200.

Additionally, employers contribute between 1% and 3% towards family compensation fund, uncapped; 0.17% and 13.5% to occupational insurance, capped at CHF 148,200. Employees contribute between 1% and 4% to non-occupational insurance.

Sick Leave: Under the Code of Obligations, employees unable to work through illness are entitled to sick leave payments, generally dependent on length of service. The entitlement is three weeks during the first year once four months’ work has been completed, with proportionately longer periods for longer service. Employers can take out sick leave insurance with insurance providers to indemnify them against the payments to their employees, who are also able to take out individual sickness insurance. Employees generally are paid 80% of their salary. Parameters vary between the 26 cantons.


Paid Vacations: Full and part-time workers are entitled to a minimum of four weeks paid vacation each year. Employees up to the age of 20 are entitled to five weeks, while those over 50 can also receive more than the statutory minimum. CBAs or individual contracts can allow for more. Vacation days can be postponed if they fall during illness or having suffered injury. Outstanding entitlement can be taken during notice periods unless it is agreed to take payment in lieu.

Public Holidays: In Switzerland, public holidays are both national and regional as per the 26 cantons. Any public holiday that falls on a Saturday or Sunday will not be moved to a weekday. In principle, any public holidays officially recognized and equal to Sunday are not allowed to employ workers.

Employees who work on a public holiday are entitled to a 50 percent premium in addition to their regular rate of pay. Employers may only select employees who consent to work on holidays.

In cases where the work lasts for 5 hours, the employee must be compensated with an equivalent amount of free time within 4 weeks. In cases where the work lasts for more than 5 hours, the employee shall be granted a substitute rest period of 24 hours in the preceding or the following week.


National Holidays:

  • New Year’s Day – January 1
  • Good Friday – March / April
  • Easter Sunday – March / April
  • Ascension Day – May
  • National Day – August 1
  • Christmas Day – December 25


Regional Holidays:

There are more than 20 regional holidays in Switzerland, observed by individual cantons or several cantons at the same time.

Maternity Leave and Benefit: Entitlement is 14 weeks’ leave with six before birth and a minimum of eight post-natal. In Geneva, the total allowance is 16 weeks. Benefit is 80% of the average salary capped at CHF 196 (€190, US$213) per day and mothers must have worked for at least the previous five months and be insured via the AVS fund. Allowances and benefits can be enhanced by cantonal regulations, individual contracts, or collective agreements. As benefit is considered to be salary, contributions are deducted to various social insurance funds. Employees are paid by their employer, while self-employed and unemployed access benefit through the AVS.

Paternity Leave and Benefit: As of January 1, 2021, fathers are entitled to two weeks’ paid leave within six months of the birth of their child. Paternity leave is funded through the earnings compensation scheme (EO). Leave can be taken in one block or in separate days, including weekends; therefore, the total allowance of 14 days comprises 10 workdays. Paternity leave is in addition to annual leave and any notice period must be extended to allow the full quota of paternity leave. Compensation is 80% of average salary prior to the birth to a maximum of CHF 2,744 (€2,645, US$2,987) over the 14 days.

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