Switzerland, an Ideal Place for Your European or ... - Wenfei

SWITZERLAND, AN IDEAL PLACE
FOR YOUR EUROPEAN OR
INTERNATIONAL ACTIVITIES
Zürich, 2000
Switzerland is an attractive place for start-ups or international compa-
nies for many reasons.
I. I NTRODUCTION
Switzerland is a very attractive country for international corporations and therefore
frequently chosen as domicile of large and medium sized companies.
The advantages of Switzerland are, among others, its highly developed infrastruc-
ture, its reputable banking system and its modern stock exchange (see B. Financial
Market in Switzerland), its favorable tax system (see C. Taxation in Switzerland), its
renowned state and arbitration courts (see D. Arbitration in Switzerland) as well as
its neutral political environment and a strong, stable currency.
Among these advantages, the tax advantage of Switzerland may often be of decisive
importance. The region in Switzerland with one of the country’s most favorable tax
systems is the canton of Zug. Due to this fact and due to the closeness of Zug to
Zurich and the airport of Zurich, Zug is very frequently chosen as a domicile for inter-
national corporations.
Based on these considerations Wenger Vieli Belser has opened its own corporate
center in Zug. Two notary publics of the canton of Zug are currently employed with
Wenger Vieli Belser, enabling our law firm to immediately incorporate companies
with ist domicile in Zug and other cities in Switzerland. Furthermore, Wenger Vieli
Belser is able to provide foreign companies with a domicile, including address, tele-
phone and fax services, mail services, meeting rooms and, as the case may be, Swiss
members of the Board of Directors.
In KOOPERATION mit B⋅M⋅G AVOCATS
Avenue de Champel 8C, CH-1211 Genève, www.bmglaw.ch
DR. URS GUT
DR. PETER M. BELSER M.C.L.
DR. CHRISTOPH SCHMID
DR. PETER ALTORFER
DR. MARCO CEREGHETTI
BIGNIA VIELI LL.M.
DR. MICHAEL HUBER LL.M.
PROF. DR. DANIEL GIRSBERGER LL.M.
FÜRSPR. DANIEL URECH
GEORG ZONDLER
DR. WOLFGANG ZÜRCHER LL.M.
DR. CHRISTIAN WENGER LL.M.
DR. ANDREAS HÜNERWADEL LL.M.
DR. MARTIN HESS
DR. RUDOLF OTTOMANN
DR. PAUL THALER
PETER RUGGLE
ANDRÉ A. GIRGUIS
DR. URS M. WEBER- STECHER LL.M.
DR. FRANK SCHERRER LL.M.
DR. KRISTINA TENCHIO- KUZMIC
LORENZ DROESE
LARS GERSPACHER
NATHAN KAISER
ROMAN HEIZ
DR. SUSANNE METTIER
DR. MIRJAM RHEIN
DR. MICHAEL MRÁZ
MARCO NOVOSELAC M.B.L.- HSG
REGULA GRUNDER LL.M.
DR. ANDRÉ KALBERMATTER LL.M.
DR. MATTIA TONELLA
VINCENZO COCO
DR. BEAT WALTI
DR. JEAN- CLAUDE WENGER KONSULENT
DR. LELIO VIELI KONSULENT
DR. REMO CEREGHETTI KONSULENT
DR. JOSEF SCHERRER KONSULENT
MARKUS HUGGER DIPL. BUCHH./CONTR.
TELEFON +41 (0)1 563 33 33
FAX +41 (0)1 563 33 66
MAIL@WENGERLAW.CH
WWW.WENGERLAW.CH
BÜROS ZÜRICH
DUFOURSTRASSE 56 UND
MÜHLEBACHSTRASSE 38
POSTFACH 1285
CH-8008 ZÜRICH
BÜRO ZUG
INDUSTRIESTRASSE 7
POSTFACH
CH-6301 ZUG
BÜRO CHINA
ROOM 722
GOLDEN LAND BUILDING
NO. 32 LIANG MA QIAO ROAD
CHAOYANG DISTRICT
BEIJING 100016 P.R.C.
EINGETRAGEN IM ANWALTSREGISTER
MITGLIEDER DES SAV

WENGER VIELI BELSER 2
Having a branch of its own in Zug, Wenger Vieli Belser is able to swiftly comply with all needs international
clients may have with respect to the incorporation of holding companies, subsidiaries or any other legal entities
in Zug and other parts of Switzerland.
II. FINANCIAL MARKET IN SWITZERLAND
Switzerland is one of the world’s leading financial centres. The main factors which helped Switzerland to
achieve this position are a stable political situation, the country’s capacity for saving, a stable currency with
minimum transfer restrictions, traditionally low interest rates, and highly sophisticated and secure financial
institutions. Domestic and international investors find a favourable financing climate and can rely upon the
quality and efficiency of the banking system nation-wide.
Switzerland has a universal banking system. Banks can engage in all financial services, including securities
transactions. Foreign controlled banks and branches of foreign banks enjoy the same treatment as domestic
institutions.
The legal sources, both public and private, governing banking and finance in Switzerland are many-fold and
wide-spread. Federal public law is the source for the regulation of the currency and the money market, banking
institutions, investment funds, securities dealers and stock exchanges. The provisions of domestic public law
and of international conventions in the area of criminal law, tax law and legal assistance are of particular im-
portance for banking and finance. Contract and corporate law (the private law areas which effect banking and
finance most) are federal and are codified in the Civil Code („CC”) and the Code of Obligations („CO”).
The power to regulate and supervise the financial market is vested in the National Bank and the Federal Bank-
ing Commission. The traditional role of the National Bank is that of the central bank; the main objective to be
pursued by the Federal Banking Commission under the banking statute is creditor protection.
The Federal Banking Commission is the supervisory authority over banks, investment funds, securities dealers
and stock exchanges.
Besides these authorities self-regulation is a long standing tradition in Switzerland’s banking and finance indus-
try. The leading self-regulatory organisations are the Swiss Bankers’ Association and the Swiss Exchange.
Banks as well as securities dealers need a licence before they can start operating in Switzerland. Portfolio man-
agers as such are unregulated, and do not fall under the banking statute or the stock exchange statute as long
as they merely administer their clients’ funds and do not conduct a banking or securities dealers’ business.
Portfolio or asset management has been traditionally a very important part of Switzerland’s financial services’
business.
The banking statute and its related ordinances regulate the banks in Switzerland. Banking secrecy is very impor-
tant in Switzerland. The breach of the banking secrecy is a criminal offence. The banking secrecy is protected by

WENGER VIELI BELSER 3
article 47 of the banking statute.
The stock exchange statute and its related ordinances provide for the regulation and supervision of stock ex-
changes and securities dealers, disclosure of share holdings, and public take-over offers for holdings in Swiss
listed corporations.
The investment funds statute and the investment funds ordinance regulate investment funds who’s manage-
ments have the legal domicile in Switzerland. Investment funds also need an authorisation from the Federal
Banking Commission. Also, the professional distribution of certificates of a Swiss or a foreign investment fund
requires an authorisation from the Federal Banking Commission.
Since 1988 Switzerland has enacted provisions against insider trading and thus contributes to the battle against
international insider trading. Article 161 of the Penal Code punishes the misuse of privileged confidential infor-
mation in stock exchange transactions in order to realise a profit or prevent a loss. Insider trading is a criminal
offence.
Switzerland also enacted provisions directed against money laundering. Article 305bis of the Penal Code pun-
ishes any person who intentionally takes an action which is aimed at frustrating the ascertainment of the origin,
the discovery, or the freezing of assets which he or she knows, or should know, were obtained in a criminal
manner. Article 305ter of the Penal Code punishes persons who show insufficient care in financial transactions.
Several attorneys at Wenger Vieli Belser have ample experience in the Swiss banking and finance laws. They act
both as consultants to banks, securities dealers, investment funds, asset managers and corporations offering
their shares publicly or privately as well as to customers of banks etc. and to investors.
III. TAXATION IN SWITZERLAND
The present Swiss tax system has a long and reliable tradition. It reflects the political structure in Switzerland
and its 26 cantons, which possess broad legislative and administrative powers in tax and fiscal matters, as they
have autonomy and sovereignty in their own territory in all matters not expressly reserved to the confederation
by the federal constitution. The cantons themselves confer taxing powers upon their municipalities in different
degrees. Consequently, there are 26 separate tax jurisdictions and three different levels of taxation (federal,
cantonal and municipal). Only 25% of Switzerland tax revenues are raised by the central government; the re-
maining 75% are raised by the cantons and municipalities. Furthermore, tax laws and tax rates vary among
cantons and municipalities, therefore the choice of tax payer’s residence is an important element of tax plan-
ning.
The following are the major taxes and duties levied at the federal level: custom duties; value added tax; stamp
tax; withholding tax and income tax on individual and corporations.

WENGER VIELI BELSER 4
The federal government is entitled to levy a value added tax on the following transactions executed by tax
payers: (1) the supply of goods on Swiss territory against consideration; (2) the supply of services on Swiss
territory against consideration; (3) on consumption; and (4) the importation and services from abroad against
consideration.
Based on the federal stamp tax statute, the federal government levies different stamp taxes: federal stamp tax
on issue of securities, federal stamp tax on transfer of securities and federal stamp tax on insurance premium.
The word “stamp” is a relic of the time when payment of the tax was acknowledged by stamping the relevant
document. Nowadays, the stamp disappeared, the tax itself and its name however remained.
Pursuant to the federal withholding tax statute, the federal government levies a withholding tax on any invest-
ment income derived from shares and bonds and bank deposits as well as on lottery games on a rate of 35%.
The primary goal is to ensure tax payers correct reporting of all such taxable income towards tax authorities.
Upon evidence of such correct reporting, the refund of the federal withholding tax may be requested.
In Switzerland, many international companies try to obtain the status of a holding company from the fiscal
administration of the canton of Zug. As a holding company, the company is excepted from the canton commu-
nal taxes and profit (including taxes on capital gains), and is solely subject to reduce capital tax amounting to
0.15% of the paid-up equity capital. The reserves are not taken into consideration. According to the fiscal revi-
sion of the cantonal fiscal law which is in progress, a future tax is to be levied from holding companies on real
estate that is located in the canton of Zug, capital tax is to be reduced to 0.0075% but the taxation basis is to
be extended to the entire equity capital. As the level of direct federal tax, the company enjoys a tax reduction
with regard to dividend earnings from qualified participating interests.
In short: Switzerland offers a very competitive tax system that allows in certain areas an ideal tax planning (i.e.
canton of Zug). Switzerland can offer tax advantages without causing the disadvantages of off-shore destina-
tions.
IV. ARBITRATION IN SWITZERLAND
Switzerland is a popular place for international arbitration, and it has a long tradition both with regard to com-
mercial matters and matters of public international law. There are various reasons for this:
First, Switzerland offers security, political stability and a highly developed infrastructure. Second, Switzerland’s
political neutrality makes it particularly attractive for parties to international contracts to choose Switzerland as
the place of arbitration and Swiss law to govern. Intervention of local courts is limited and can be excluded.
Thirdly, Switzerland offers a great number of experienced and well-known arbitrators as well as supporting
staff.

WENGER VIELI BELSER 5
In Switzerland, a number of chambers of commerce offer arbitration services. Among these, the most important
are the Zurich and the Geneva Chamber of Commerce, but also the Swiss-German or the Swiss-American
Chamber of Commerce. Each of these chambers offer their own arbitration rules designed for international
arbitration cases. Swiss arbitration tribunals also frequently use arbitration rules such as the ICC Rules of Arbi-
tration or the UNCITRAL Arbitration Rules.
However, the parties to the arbitration are free to choose the rules governing the arbitral proceedings as well as
the law governing the subject matter in dispute. In the absence of a choice of procedural rules, the arbitral
tribunal sets up its own rules as far as necessary. In any case, the arbitral tribunal must ensure equal treatment
of the parties and their right to be heard (Article 182 of the Federal Private International Law (PIL) Act enacted
in 1989). In the absence of a choice of substantive law, the arbitral tribunal must decide the case according to
the provisions of the law having the closest connection with the case. The parties may also authorise the tribu-
nal to decide ex aequo et bono (Article 187).
International arbitrations (i.e. where at least one party is not a Swiss individual or entity) are governed by Chap-
ter 12 of the PIL Act, which applies to all arbitration cases where the arbitral tribunal has its seat in Switzerland
and at least one of the parties had no domicile or habitual residence in Switzerland at the time when the arbi-
tration agreement was concluded (Article 176). Companies are considered to be domiciled at their registered
seat. The application of Chapter 12 of the PIL Act may be excluded by the parties.
The PIL Act reflects a broad concept with regard to arbitrable disputes. In principle, any dispute involving a
financial interest may be arbitrated (Article 177). In particular, the dispute in question need not be ‘commercial’
in order to be arbitrable under the PIL Act. An arbitral award may be challenged before the Swiss Federal Su-
preme Court for a limited number of reasons (Article 190 PIL Act). However, if neither party has ist domicile, its
habitual residence or a business establishment in Switzerland, they may even exclude any challenge of the
arbitral award by an express stipulation (Article 192 PIL Act).
Several attorneys at Wenger Vieli Belser have ample experience in international commercial arbitration. They
have acted both as party representatives and arbitrators in various major arbitration proceedings.
DISCLAIMER
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