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Switzerland, formally known as the Swiss Confederation, is a landlocked nation in Western, Central, and Southern Europe. The nation is a federal republic made up of 26 cantons, with the central government centered in Bern. Switzerland is bounded to the south by Italy, to the west by France, to the north by Germany, and to the east by Austria and Liechtenstein. It is physically separated into the Swiss Plateau, the Alps, and the Jura, and has a total area of 41,285 km2 (15,940 sq mi) and 39,997 km2 of land (15,443 sq mi). Although the Alps cover the majority of the country, the Swiss population of around 8.5 million is centered largely on the plateau, which is home to the country's greatest cities and economic centers, including Zürich, Geneva, and Basel. Several international organizations have offices in these three cities, including the World Trade Organization, the World Health Organization, the International Labour Organization, FIFA's headquarters, the United Nations' second-largest office, and the Bank for International Settlements. These cities also house Switzerland's major international airports.
The Old Swiss Confederacy was formed in the late Middle Ages as a consequence of military victories against Austria and Burgundy. In 1648, the Peace of Westphalia legally recognized Swiss independence from the Holy Roman Empire. The Federal Charter of 1291 is regarded as Switzerland's foundation constitution, and it is commemorated on Swiss National Day. Switzerland has maintained a solid policy of military neutrality since the 16th century Reformation; it has not fought an international war since 1815 and did not join the United Nations until 2002. Nonetheless, it maintains an active foreign policy. It is regularly engaged in global peace-building activities. The Red Cross, one of the world's oldest and most well-known humanitarian organizations, was founded in Switzerland. Although it is a founding member of the European Free Trade Association, it is not a member of the European Union, the European Economic Area, or the Eurozone. It does, however, participate in the Schengen Area and the European Union via bilateral accords.
Switzerland is situated at the crossroads of Germanic and Romance Europe, as shown by its four major language and cultural regions: German, French, Italian, and Romansh. Despite the fact that the majority of the population speaks German, Swiss national identity is built on a shared historical past, shared principles such as federalism and direct democracy, and Alpine symbols.
Switzerland is known by a number of local names due to its linguistic diversity: Schweiz [ˈʃvaɪts] (German); Suisse [sɥis(ə)] (French); Svizzera [ˈzvittsera] (Italian); and Svizra [ˈʒviːtsrɐ, ˈʒviːtsʁɐ] (Romansh). On coins and stamps, the Latin term, Confoederatio Helvetica – often abbreviated to "Helvetia" - replaces the four national languages. It is a developed nation with the greatest nominal wealth per adult and the eighth-highest per capita GDP. Some international measurements, such as economic competitiveness and human development, place it highly. Its cities, such as Zürich, Geneva, and Basel, rank among the greatest in the world in terms of quality of life, while having some of the world's highest living expenses. IMD ranked Switzerland tops in recruiting talented employees in 2020. According to the World Economic Forum, it is the fifth most competitive nation in the world.
Employees above the age of 20 are entitled to four weeks of paid vacation. They are entitled to five weeks of paid vacation if they are under the age of twenty.
Geneva recognizes nine public holidays.
Employees are entitled to receive continuous wage payments for a set amount of time, which is determined by their years of service (three weeks during the first year of service). Employers can also choose for a daily benefits insurance plan, in which employees get 80 percent of their last income for a maximum of 720 days.
Employees who have worked for at least five months and contributed to the OASI for at least nine months are eligible for maternity leave.
For 98 days, mothers (including full-time and part-time employees) are given 80% of their income as a daily stipend (up to a maximum cap of SFr 196 per day). However, Geneva law adds two weeks to the total, bringing the total to 16 weeks.
In Switzerland, fathers have the right to ten days of paid paternity leave. They can take paternity leave in chunks or as individual days, but they must do it within six months of the baby's birth.
Paternity leave benefits will be capped at CHF2,744, or CHF196 per day, and will be equal to 80 percent of the employee's average wage before to the baby's birth.
If an employment contract is concluded for a specified period of time or for the performance of a specified task, it terminates automatically at the end of that period or upon completion of the task, unless the employment contract is extended. In the latter situation, the employment contract becomes an indefinite-term contract. Regardless of the employment contract's set period, the parties are free to agree on abrupt termination at any moment. If an employment contract is not fixed in duration, either the employer or the employee may cancel it at any time by giving notice of termination, however the minimum notice period required varies according to the prior duration of the work connection. Both the employer and the employee have the right to cancel the employment contract without prior notice if a "serious cause" exists. A severe cause is any event in which the terminating party's loyalty and trust in the work relationship may no longer be reasonably expected.
Seven days' notice is required for dismissal during the probationary period. A month's notice is customary for dismissals occurring during the first year of employment. This increases to two months between the second and ninth years of employment, and to three months beginning with the tenth year of employment. Employers and employees may agree to an immediate termination of contract if it is mutually beneficial.
In Switzerland, probationary periods typically last between one and three months. Seven days' notice is required for dismissal during the probationary period.
Severance is necessary in a few instances. Employees over the age of 50 who have worked for their employer for more than 20 years are entitled to a minimum of two months' salary in lieu of severance. Severance is normally not paid in other circumstances unless a contract or collective bargaining agreement requires it.
In Switzerland, the standard workweek for industrial workers, office personnel, technical personnel, and retail employees is 45 hours. All other employees are limited to 50 hours per week. Having said that, standard work hours vary by employer, job requirements, and industry, and the majority of employees work between 40 and 42 hours per week.
Overtime is limited to two hours per day. Employees working 45 hours per week are limited to 170 overtime hours per year, while employees working 50 hours per week are limited to 140 overtime hours per year. Overtime pay is 125 percent of the employee's standard hourly rate, although white collar workers and retail employees in large stores do not receive the 25% supplement until they work 60 hours.
While there is no legal minimum wage in Switzerland, the majority of voluntary collective bargaining agreements include minimum compensation provisions ranging from 2,200 to 4,200 francs per month for unskilled workers and 2,800 to 5,300 francs per month for skilled personnel.
Anyone staying in Switzerland for more than three months, including non-residents, is required to buy private health insurance. All health insurance firms provide a basic coverage that is reasonably priced, and insurers are obliged to insure all applicants. Many people augment their basic insurance with extra coverage.
All Swiss citizens are required to have health insurance, which covers the expenses of medical treatment and hospitalization. Residents must contact insurance providers since employers are not always responsible for obtaining coverage. Even if the policy specifies that it covers medical treatment in Switzerland, most Swiss insurance authorities will not recognize it.
An annual individual health insurance package may cost up to CHF 10,000 depending on the amount of coverage. Residents must additionally contribute to the cost of treatment by paying a CHF 300 yearly deductible and a 10% surcharge on expenses over and above the excess, up to a maximum of CHF 700.
Some companies provide supplemental private insurance plans that cover treatments that are not covered by the basic insurance or that enhance the quality of accommodation and service in the event of hospitalization.
Swiss CIT is levied on resident businesses' taxable earnings produced in Switzerland. CIT is imposed at the federal, cantonal, and municipal levels. Foreign-source income due to foreign permanent establishments (PEs) or real estate property situated overseas is excluded from the Swiss tax base and is only considered for rate progression purposes in cantons with progressive tax rates.
Non-resident businesses may be subject to Swiss CIT if they have a PE in Switzerland, possess real estate in Switzerland, are partners in a Swiss company, have loan receivables backed by a mortgage on Swiss real estate property, or trade with or serve as a broker of Swiss real estate property. Non-resident corporations are taxed on income earned in Switzerland.
In general, the maximum CIT rate on profit before tax for federal, cantonal, and communal taxes is between 11.9 percent and 21.6 percent, depending on the company's corporate domicile in Switzerland. The specific cantonal tax regimes (e.g., the regimes for holding companies, domicile businesses, and mixed trading firms) were eliminated with the implementation of the TRAF on January 1, 2020. At the same time, most cantons have reduced or will reduce their CIT rate, resulting in an effective tax rate of around 12% to 15% in the majority of cantons, and have introduced internationally accepted replacement measures such as an OECD-compliant patent box, an R&D super deduction, and other measures.
Individuals who are tax residents are taxed on their global income and wealth. Non-residents are solely taxed on their Swiss sources of income and wealth.
Income taxes are collected at three levels: federal (which is the same across Switzerland), cantonal (which is the same within a certain canton and is based on the canton's own tax legislation and tax rates), and municipal (municipalities follow the cantonal tax law, but are entitled to set their own communal tax rate within certain parameters). At the federal level and in the majority of cantons, income tax rates are progressive. Some cantons have recently implemented flat taxes.
All income is taxed on the same tax return with the same tax rate (i.e., all income sources are combined together), and all eligible deductions are deducted from such total income. As a consequence, an appropriate tax rate is imposed on every taxable income. The actual taxable income in Switzerland may vary from the tax rate determining income due to relevant double taxation treaties (DTTs). Furthermore, depending on domestic federal and cantonal legislation, dividend income from significant participations may be taxed at a reduced tax rate.
Generally the direct federal tax on income of single taxpayers ranges from 0 to 11.5 percent. For married taxpayers with minor children, the rate is identical but with different graduations. The cantonal tax varies depending on the location of the taxpayer.
In general, the profits of sales and services rendered in Switzerland are liable to VAT at the normal rate of 7.7 percent. VAT is levied at a lower rate of 2.5 percent on goods for essential necessities. In addition, services related to the supply of accommodation are subject to VAT at a specific rate of 3.7 percent.
If a person carries on a business and is not exempt from VAT, that person is subject to VAT, regardless of legal form, objectives, or desire to earn a profit. A person conducts a business if he or she independently undertakes a professional or commercial activity with the goal of generating a sustainable revenue from suppliers and acts externally under his or her own name. Taxable individuals must register with the Swiss Federal Tax Administration on their own initiative and in writing within specified dates. A registered taxpayer may usually deduct the amount of VAT charged by suppliers or paid on imports from the amount of VAT due.
The VAT rate is determined by the products sold or the services rendered. Some suppliers are tax-free without credit (for example, hospital treatment, cultural services, insurance and reinsurance turnovers, and particular turnovers in the area of money and capital transactions), while others are completely tax-free (e.g. supply of goods that are transported or dispatched directly abroad). The distinction is that input VAT on supply exempt from tax that do not get credit cannot be deducted, while supplies free from tax are completely eligible for input VAT deduction.
Any foreigner intending to work in Switzerland must request that their potential employer contact the Office Cantonal de la Population et des Migrations (OCPM) in order to get a residency permit.
The procedure for obtaining a work visa varies depending on whether the applicant is a citizen of a European Union or European Free Trade Association (EU/EFTA) countries.
The present immigration system takes into account both Switzerland's worldwide economic interests and the integration of immigrants in Switzerland. Employers are required to inform regional placement centers of empty opportunities in specific professions when the national unemployment rate reaches 5.00 percent.
In Switzerland, employment contracts are often written, however this is not compulsory. However, whether the employee's contract is for an indefinite duration or a fixed-term lasting more than a month, the employer is required to give the employee with a written agreement that includes:
The employer's and employee's names
The start date of the work connection
A job description
The pay of the employee, as well as any modifications
The amount of weekly hours to be worked
It is also a good idea to include the duration of the work relationship, regulations for probation and notice periods, the employee's vacation time, rules for sick leave and maternity leave, and any other special conditions agreed upon between the employer and employee. In reality, employment conditions are often regulated via collective agreements, which encompass around 40% of Swiss employees.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Swiss Franc
If you decide to establish up your Switzerland subsidiary on your own, you must first examine and negotiate various things. The different cantons of Switzerland might make it difficult to grow since each state has its own regulations governing incorporation. It is essential to investigate the subsidiary legislation for each canton and choose which location is appropriate for your industry or company. You might also base your decision on current trade agreements or ties.
Language is very important to remember. Switzerland has four national languages: French, German, Italian, and Romansh, and only French, German, and Italian are official. The majority of the population speaks German; nevertheless, this language is often a Swiss-German variant of standard German. Because most commercial activities are handled in German, Italian, or French rather than English, you'll need to recruit personnel who know the language or pay a translator.
During the Switzerland subsidiary establishment procedure, you will also need to pick which company structure is ideal for you. Liaison offices, branch offices, and limited liability firms are the three most frequent arrangements.
The most common sort of subsidiary is a private limited liability corporation. To create this sort of subsidiary, you must do the following:
1. Examine the brand name
2. Invest in a bank with paid-up capital.
3. Notarize the articles of incorporation
4. Declaration forms must be submitted.
5. Register with the Commercial Registry.
6. After receiving an assessment in the mail, pay the Stamp Tax at a post office or bank.
7. Make a VAT registration.
8. Enroll your staff in the Social Security system.
Although there are no limitations on foreign ownership in Switzerland, each form of business needs at least one person to live in Switzerland. Individuals from outside the EU who want to administer the subsidiary in Switzerland or relocate international employees to the region will need a work visa (TWV).
Because Switzerland is not a member of the EU, EU immigration and visa laws do not apply. Switzerland, on the other hand, is a part of the Schengen area, therefore there is free movement between Switzerland and other countries such as Germany, France, and Scandinavia. You will also need to apply for a residence visa since someone will need to live and work in Switzerland to administer the subsidiary.
