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TAXES

MAP: The best cantons for business in Switzerland

From tax rules to staffing, airport access and education - here's the latest ranking on which areas of Switzerland are the most attractive to businesses.

Published: 16 August 2022 14:27 CEST
MAP: The best cantons for business in Switzerland

Switzerland is undoubtedly one of the major global hubs for business – its central European location, neutrality, and connections to international organisations make it a great place to do business.

But which cantons have it better and why?

The main measure cantons can take to attract businesses is to revise their tax rules, and tax reforms over the past few years have shown results in attractiveness to companies, according to Credit Suisse’s 2022 locational quality study.

READ ALSO: What is the average salary for (almost) every job in Switzerland?

The lender has assessed the tax burden based on its tax indices for legal entities and private individuals to see how attractive a region may be. Corporate taxes on profit and capital as well as taxes on income and wealth for private individuals are taken into consideration.

Additionally, the Swiss bank looked into the availability of specialist labour and highly qualified personnel, basing this index on the level of education of the residents, inbound commuters and cross-border commuters of a region.

How accessible the canton is to the population, workers, and commuters was also a factor taken into consideration.

READ ALSO: Cost of living: The most – and least – expensive cantons in Switzerland

What are the most attractive cantons?

Credit Suisse attached a locational quality indicator (LQI) to each Swiss canton, with the best being +2.5 and the worst being -2.0. The map visualisation makes it clear that there is a cluster of business-friendly cantons: in German-speaking Switzerland.

Geneva, in the French-speaking region, also scores high, which is not a surprise, as the canton is home to many international organisations.

Still, the most attractive canton for business is, for the second year in a row, Zug, ahead of Basel-City, Zurich and Geneva.

Canton Aargau has suffered the most significant ranking loss, dropping two places just behind Nidwalden and Schwyz in 7th place. On the other hand, the cantons of Schaffhausen and Valais, in particular, have become more attractive, each climbing one place.

READ ALSO: Why Switzerland is no longer the tax haven it used to be

Nidwalden, Zug, and Appenzell Innerrhoden are fiscally more attractive

Zug takes the overall top place for a combination of factors, but critical changes in tax policy have brought other cantons higher on the ranking - especially since tax reforms are easier to implement than measures to attract more qualified workers, for example.

Schaffhausen has reduced taxes significantly for private individuals, climbing six places in the Credit Suisse tax index for private individuals.

Also worthy of note is Schwyz, which has become more attractive for private individuals by reducing the cantonal tax multiple considerably from 150 to 120, closing the gap to first-placed Zug.

READ ALSO: EXPLAINED: How where you live in Switzerland impacts how much income tax you pay

As part of Switzerland’s corporate tax reform, a small number of cantons have once again reduced their corporate tax rates this year.

The most considerable reductions have been observed in the cantons of Valais and Jura, each climbing one place to 20th and 22nd respectively in the tax index for legal entities, which is based on the tax burden faced by companies with varying profit situations in all Swiss municipalities.

However, a number of other cantons remain more fiscally attractive: The top places remain unchanged, with Nidwalden leading the way, just in front of Zug and Appenzell Innerrhoden.

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WORKING IN SWITZERLAND

The pitfalls of Switzerland’s social security system you need to avoid

In most cases, Switzerland’s social benefits system functions well. But there are also some loopholes you should know about.

Published: 24 April 2024 13:37 CEST
The pitfalls of Switzerland's social security system you need to avoid

The Swiss social security system has several branches: old-age, survivors’ and disability insurance; health and accident insurance; unemployment benefits, and family allowances.

This is a pretty comprehensive package, which covers everyone who pays into the scheme for a wide variety of ‘what ifs’.

As the government explains it, “people living and working in Switzerland benefit from a tightly woven network of social insurance schemes designed to safeguard them against risks that would otherwise overwhelm them financially.” 

But while most residents of Switzerland are able to benefit, at least to some extent, from this system, others don’t.

What is happening?

If someone becomes ill or has an accident, Switzerland’s compulsory health insurance and / or accident insurance will cover the costs.

However, a prolonged absence from work can become costly.

That is especially the case of people employed by companies that don’t have a collective labour agreement (CLA), a contract negotiated between Switzerland’s trade unions and employers or employer organisations that covers a wide range of workers’ rights. 

READ ALSO: What is a Swiss collective bargaining agreement — and how could it benefit you?

It is estimated that roughly half of Switzerland’s workforce of about 5 million people are not covered by a CLA.

If you just happen to work for a company without a CLA, your employer is not required to pay your salary if your illness is long.

You will receive money for a minimum of three weeks – longer, depending on seniority — but certainly not for the long-haul.

You may think that once your wages stop, the disability insurance (DI) will kick in.

But that’s not the case.

The reason is that DI can be paid only after a year after the wages stop. In practice, however, it sometimes takes several years of investigations and verifications to make sure the person is actually eligible to collect these benefits, rather than just pretending to be sick. 

In the meantime, these people have to use their savings to live on.

What about ‘daily allowance insurance’?

Many companies (especially those covered by a CLA) take out this insurance, so they can pay wages to their sick employees for longer periods of time.

However, this insurance is optional for employers without a CLA is place.

As a result, small companies forego it because it is too much of a financial burden for them.

And people who are self-employed face a problem in this area as well: insurance carriers can (and often do) refuse to cover people they deem to be ‘too risky’ in terms of their age or health status.

Critics are calling the two situations —the length of time it takes for the disability insurance to kick in and gaps in the daily allowance insurance—”perhaps the biggest failures of the social security system.”

Is anything being done to remedy this situation?

Given numerous complaints about the unfairness of the current system, the Social Security and Public Health Commission of the Council of States (CSSS-E) will look into the “consequences of shortcomings and numerous dysfunctions in long-term illness insurance.”

But not everyone in Switzerland sees a problem in the current situation.

According to the Swiss Insurance Association (SIA), for instance, “making daily sickness allowance insurance compulsory for employers would not have the desired effect. Due to false incentives, it would only exacerbate the upward trend in costs and premiums.”

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