Switzerland: Complex yet innovative Switzerland: Complex yet innovative

Switzerland: Complex yet innovative
16 Nov 2017

Switzerland is a mountainous republic, which is renowned for its political neutrality and boasts one of the most competitive economies in the world driven mainly by a top-notch services sector.

While its economy grew at the slowest rate for nearly eight years during the second quarter of 2017, the country’s relatively low drop in performance comes against a backdrop of global volatility. This situation led to tepid public spending and weaker than expected foreign trade, which accounts for two thirds of all Switzerland’s economic activity.

However, its manufacturing, financial services and hotel and catering industries all experienced growth, although public administration and healthcare struggled. The country is also wellknown for its investment in, and reliance on, the lucrative pharmaceuticals, chemicals and electronics sectors.

But there is a general air of innovation in Switzerland at the moment, with a number of intriguing developments taking place. Most notable is the recently announced decision by one of the country’s municipalities, Chiasso, to allow citizens to pay their taxes using the bitcoin cryptocurrency and digital payment system from January 2018 onwards. The municipality will follow in the footsteps of another Swiss pioneer, Zug, which introduced a similar policy last year.

In short then, the country has a lot to offer both employers and their workers. From a professional perspective, the 2017 Expat Insider survey ranks it is as one of the safest places in the world for foreign professionals to live, scoring 18 percentage points higher than the global average for personal safety, peacefulness and political stability. On the latter point, Switzerland actually comes in second out of a total 65 countries.

But from a more personal standpoint, its beauty has also long attracted visitors too. Indeed, renowned authors such as Lord Byron and Sir Arthur Conan Doyle claimed to find inspiration in its mountainous drama.

Benefits at a cost

The country likewise has a long and interesting history and, as such, has participated in the annual European Heritage Days event for the last 24 years, in which it showcases its magnificent castles, cathedrals and other public buildings. Perhaps unsurprisingly then, the Swiss Statistics Office indicated in its 2017 annual report that it had experienced a 2.6% increase in foreign residents over the last year.

But all of these benefits inevitably come at a cost. As the latest Expat Insider survey also revealed, Switzerland’s cost of living remains relatively high in terms of housing, healthcare and childcare. While expensive, the quality of its education, healthcare and transportation services, were given much praise, however.

When considering whether to set up shop in the country, meanwhile, employers are advised to give careful thought to its complexity. The state comprises a multi-layered structure based on 26 cantons and approximately 2,250 municipalities, each of which levy their own taxes. The Swiss government, parliaments and courts also operate on three levels: federal, cantonal and communal.

It is likewise important to note that there have been ongoing challenges for both European and non- European Union (EU) employers alike in obtaining work permits. It is worth bearing in mind here that Switzerland is not a member of the EU and has, therefore, not signed up to its tenets regarding the free movement of people.

Instead its economic and trade relations with the EU are mainly governed by a series of bilateral agreements, whereby Switzerland has agreed to take on certain aspects of EU legislation in exchange for accessing the single market.

Work permit problems

But the problem at the moment is that L-permits, which enable foreign nationals to reside in Switzerland for a limited period, are in short supply. A set number of these permits are issued each year, but availability is currently not matching the demand of many cantons. In fact, cantonspecific permits for 2017 ran out in March, with federal ones not far behind.

While this situation has been the cause of frustration for some time, it now appears to be escalating as employers find themselves unable to take on the international talent they require, putting many projects at risk.

To make matters worse, working restrictions have also recently been imposed on Romanians, Croatians and Bulgarians who previously had the same employment rights as other European Union citizens. Because the number of professionals from these countries has now exceeded allowance limits, however, a temporary cap has been placed on employing them.

The permit issue is certainly one to watch as tensions grow both inside and outside of the country as a result. The potential of losing the presence of high-profile multinational companies and their projects due to non-existent work permits means that the government will need to address the matter sooner rather than later.

Finally, because of the sheer intricacy of the Swiss tax system and the on-going challenges surrounding work permits, it is advisable for employers to partner with experts in order to avoid possible penalties as a result of incorrect payments. But for those willing to brave such complexity, the opportunities presented by the country are vast.

 

Michelle Reilly has almost 20 years of experience in contractor management and is acknowledged as a leading global expert in the field. In 2009, she joined CXC to set-up its global Europe, Middle East and Africa business, and last year led a management buyout of the recruitment agency side of the organisation. Michelle is now chief executive of 6CATS International, which provides compliant contractor management solutions.

Switzerland is a mountainous republic, which is renowned for its political neutrality and boasts one of the most competitive economies in the world driven mainly by a top-notch services sector.

While its economy grew at the slowest rate for nearly eight years during the second quarter of 2017, the country’s relatively low drop in performance comes against a backdrop of global volatility. This situation led to tepid public spending and weaker than expected foreign trade, which accounts for two thirds of all Switzerland’s economic activity.

However, its manufacturing, financial services and hotel and catering industries all experienced growth, although public administration and healthcare struggled. The country is also wellknown for its investment in, and reliance on, the lucrative pharmaceuticals, chemicals and electronics sectors.

But there is a general air of innovation in Switzerland at the moment, with a number of intriguing developments taking place. Most notable is the recently announced decision by one of the country’s municipalities, Chiasso, to allow citizens to pay their taxes using the bitcoin cryptocurrency and digital payment system from January 2018 onwards. The municipality will follow in the footsteps of another Swiss pioneer, Zug, which introduced a similar policy last year.

In short then, the country has a lot to offer both employers and their workers. From a professional perspective, the 2017 Expat Insider survey ranks it is as one of the safest places in the world for foreign professionals to live, scoring 18 percentage points higher than the global average for personal safety, peacefulness and political stability. On the latter point, Switzerland actually comes in second out of a total 65 countries.

But from a more personal standpoint, its beauty has also long attracted visitors too. Indeed, renowned authors such as Lord Byron and Sir Arthur Conan Doyle claimed to find inspiration in its mountainous drama.

Benefits at a cost

The country likewise has a long and interesting history and, as such, has participated in the annual European Heritage Days event for the last 24 years, in which it showcases its magnificent castles, cathedrals and other public buildings. Perhaps unsurprisingly then, the Swiss Statistics Office indicated in its 2017 annual report that it had experienced a 2.6% increase in foreign residents over the last year.

But all of these benefits inevitably come at a cost. As the latest Expat Insider survey also revealed, Switzerland’s cost of living remains relatively high in terms of housing, healthcare and childcare. While expensive, the quality of its education, healthcare and transportation services, were given much praise, however.

When considering whether to set up shop in the country, meanwhile, employers are advised to give careful thought to its complexity. The state comprises a multi-layered structure based on 26 cantons and approximately 2,250 municipalities, each of which levy their own taxes. The Swiss government, parliaments and courts also operate on three levels: federal, cantonal and communal.

It is likewise important to note that there have been ongoing challenges for both European and non- European Union (EU) employers alike in obtaining work permits. It is worth bearing in mind here that Switzerland is not a member of the EU and has, therefore, not signed up to its tenets regarding the free movement of people.

Instead its economic and trade relations with the EU are mainly governed by a series of bilateral agreements, whereby Switzerland has agreed to take on certain aspects of EU legislation in exchange for accessing the single market.

Work permit problems

But the problem at the moment is that L-permits, which enable foreign nationals to reside in Switzerland for a limited period, are in short supply. A set number of these permits are issued each year, but availability is currently not matching the demand of many cantons. In fact, cantonspecific permits for 2017 ran out in March, with federal ones not far behind.

While this situation has been the cause of frustration for some time, it now appears to be escalating as employers find themselves unable to take on the international talent they require, putting many projects at risk.

To make matters worse, working restrictions have also recently been imposed on Romanians, Croatians and Bulgarians who previously had the same employment rights as other European Union citizens. Because the number of professionals from these countries has now exceeded allowance limits, however, a temporary cap has been placed on employing them.

The permit issue is certainly one to watch as tensions grow both inside and outside of the country as a result. The potential of losing the presence of high-profile multinational companies and their projects due to non-existent work permits means that the government will need to address the matter sooner rather than later.

Finally, because of the sheer intricacy of the Swiss tax system and the on-going challenges surrounding work permits, it is advisable for employers to partner with experts in order to avoid possible penalties as a result of incorrect payments. But for those willing to brave such complexity, the opportunities presented by the country are vast.

 

Michelle Reilly has almost 20 years of experience in contractor management and is acknowledged as a leading global expert in the field. In 2009, she joined CXC to set-up its global Europe, Middle East and Africa business, and last year led a management buyout of the recruitment agency side of the organisation. Michelle is now chief executive of 6CATS International, which provides compliant contractor management solutions.