Switzerland: Offshore Business Sectors
Switzerland's well-known attractions as a home for money are based on its widely perceived safe-haven status which is a direct consequence of its iron-clad banking secrecy provisions, the ever-appreciating value of the Swiss Franc, and the country's long history of neutrality which has kept Switzerland free of the ravages of war and has given it a political and economic stability unrivalled in continental Europe. More recently the country's decision not to join the European Union has made it a major beneficiary of investment funds fleeing high taxation and the effective ending of banking confidentiality in the EU under the Savings Tax Directive.
The Savings Tax Directive applies in Switzerland through a separate agreement reached between the country and the EU, under which Switzerland applies a withholding tax (35% since July 1, 2011, 20% from July 1, 2008) to returns on savings paid to the citizens of EU Member States, and which in various other ways is less onerous than the original Directive.
Although bank interest and dividends are caught by the Directive, payments made by what are called 'residual agents' (including for instance trusts) are apparently excluded in the Swiss agreement, which is not the case in Member States.
In 2008, the authorities and the Swiss financial sector established a framework for the dialogue on the future direction of Switzerland's financial centre, which includes seeking improvements to the tax regime for hedge fund and private equity managers.
The 'Financial Centre Dialogue Steering Committee', set up for this purpose, held its first meeting in early 2008, the focus of which was the adoption of a joint work schedule and the prioritisation of topics raised by the private sector and the Confederation. Working groups were set up to deal with various topics, and these will examine existing and new proposals for measures to improve the conditions of the financial centre, and implement them where appropriate. A working group will also examine the fiscal and regulatory framework regarding hedge funds and private equity.
Agreement was reached on enhancing dialogue on a cross-sector strategy for Switzerland's financial centre, at a meeting between Federal Councillor Hans-Rudolf Merz and the heads of associations in the financial sector in November 2007. The Financial Centre Dialogue Steering Committee was established for this purpose.
The Financial Centre Dialogue Steering Committee was chaired by the Director of the Federal Finance Administration, Peter Siegenthaler. The authorities were also represented by the Swiss National Bank, the Swiss Federal Banking Commission, the Federal Office of Private Insurance and the Federal Tax Administration. The financial sector was represented by the Swiss Bankers Association, the Swiss Insurance Association, the Swiss Funds Association and the Swiss Financial Market Services. The Financial Centre Dialogue Steering Committee were due to meet three or four times a year.
In September 2008, due to the financial crisis the realisation grew that the policy towards the financial market needed to be changed. In May 2009 the Federal Council accepted a proposal from Konrad Graber, a member of the Council of States, for a report to be compiled on a strategy for future policy towards the financial market. The “Working Group on Strategy”, consisting largely of the previous members of the Financial Centre Dialogue Steering Committee, and chaired by Peter Siegenthaler, director of the FFA, was set up to support the task. A number of hearings were held up until late autumn of 2009 with various representatives of the industry. The Federal Council’s report “Strategic Guidelines for Switzerland’s Financial Market Policy” was published on 16 December 2009.
In September 2007, the Swiss Bankers Association, the Swiss Insurance Association, the Swiss Funds Association and Swiss Financial Market Services (formerly known as the SWX Group, the SIS Group and the Telekurs Group) published the "Swiss Financial Centre Master Plan" drawn up as part of a joint project. The goal of the master plan is to strengthen and develop the international competitiveness of the Swiss financial sector.
On January 1, 2009, the Federal Act on the Swiss Financial Market Supervisory Authority (FINMA), which the Swiss Parliament approved on June 22, 2007, went into full legal force. The effect of the Act is to merge three bodies – the Federal Office of Private Insurance (FOPI), the Swiss Federal Banking Commission (SFBC) and the Anti-Money Laundering Control Authority – into a single supervisory authority.
This section of the site describes the key Swiss banking and investment fund sectors.