Country Risk: Switzerland

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Location and Size

Switzerland is located in central Europe. It is landlocked, bordered on the west by France, on the north by Germany, on the east by Austria, and on the south by Italy. Its territory covers 41,277 sq. km., making it slightly less than twice the size of the U.S. state of New Jersey. Its capital city of Bern is located in central Switzerland.

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Government

Switzerland is a confederation comprised of 26 cantons. Its structure is similar to a federal republic.

Branches:

• Executive: President of the Swiss Confederation – Ueli Maurer, Vice President – Simonetta Sommaruga and the Federal Council, which is comprised of seven federal Councillors, constitute the federal government of Switzerland. Council members rotate in one-year terms as federal president (chief of state and head of government).
• Legislative: Bicameral Federal Assembly divided into the Council of States (46 seats) and the National Council (200 seats); members, elected by popular vote on the basis of proportional representation, serve four-year terms.
• Judicial: Federal Supreme Court (consists of 38 judges and 19 deputy justices; organized into 7 sections).

Legal System

Switzerland has a civil law system with judicial review of legislative acts, except for federal decrees of a general obligatory character.

Switzerland accepts compulsory International Court of Justice (ICJ) jurisdiction with reservations. It also accepts International Criminal Court (ICC) jurisdiction.

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People

• Population: 8,508,698 (2024)
• Population growth rate: 0.65% (2024)
• Languages: German (official), French, Italian, English
• Literacy: 98.5% (2024)
• Ethnic Make-up: 96% Swiss, 4% German
• Religions: Roman Catholic 34.4%, Protestant 22.5%, other 10.5%, none 29.5

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Economy

Switzerland has a prosperous market economy which features low unemployment, a highly skilled labor force and a per-capita GDP among the highest in the world. It also benefits from a highly developed service sector led by financial services and a manufacturing industry specializing in high-technology and knowledge-based production.

The Swiss economy is tightly linked to that of its neighbors in the euro zone, which purchase half of all its exports. Additionally, the strength of the Swiss franc, while making the country a safe haven for investors, has also had the negative effect of making exports more expensive, thereby affecting economic growth. Nevertheless, despite some stress in the financial system, the country has emerged from the recent global economic turmoil relatively unscathed.

Leading Markets (2024): Germany 15.2%, US 12.3%, China 8.2%, India 6.7%, France 5.7%, UK 5.7%, Hong Kong 5.4%, Italy 5.3%

Leading Exports – Commodities: Machinery, chemicals, metals, watches, agricultural products

Leading Suppliers (2024): Germany 29.7%, Italy 10.2%, France 8.4%, US 5.6%, China 5.6%, Austria 4.2%

Leading Imports – Commodities: Machinery, chemicals, vehicles, metals, agricultural products, textiles

Top Industries: Machinery, chemicals, metals, watches, agricultural products

Top Agricultural Products: Grains, fruits, vegetables, meat, eggs, dairy products

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Comparative Economic Indicators – 2024

* 2024 estimates
** PPP – Purchasing Power Parity

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Credit and Collections

Swiss Statutes of Limitations:

• Open Account: 10 years
• Promissory Notes: 10 years
• Written Contracts: 10 years
• Oral Agreements: 10 years

Dispute Resolution

Swiss legal provisions, which include the Code of Commercial Obligations and the revised bankruptcy law, provide extensive protection of secured interests in property.

Where American citizens are involved in disputes (with private individuals or business enterprises) and the controversy cannot be settled amicably, the normal recourse is to seek remedies provided by the law of the appropriate cantonal jurisdiction. Foreign lawyers may not act as “attorneys at law” unless they are admitted to a Swiss bar. There are, however, no restrictions on practicing as a “legal consultant”.

The effects of bankruptcy on creditors’ rights are set out in the Swiss Federal Debt Prosecution and Bankruptcy Statute. Initiating bankruptcy proceedings results in all obligations of the customer becoming due, with the exception of those secured by mortgages on real estate. The creditor can claim the amount of the debt and interest up until the date of the opening of bankruptcy proceedings, as well as the costs of enforcement.

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Risk Assessment

Coface Country Rating: A1 – The overall risk is a combination of business-specific factors and factors relating to the country in which the business operates. The analyses use a seven-level ranking. In ascending order of risk, these are: A1, A2, A3, A4, B, C and D.

Coface Business Climate Rating: A1 – Evaluating the business environment involves measuring the quality of a country’s private sector governance – in other words businesses’ financial transparency and the effectiveness of the courts in settling debts. Evaluations use a seven-level ranking. In ascending order of risk these are: A1, A2, A3, A4, B, C and D.

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Business Climate

The Swiss Federal Government adopts a relaxed attitude of benevolent noninterference towards foreign investment, allowing the 26 cantons to set major policy, while confining itself to creating and maintaining general conditions favorable to both Swiss and foreign investors. However, in spite of the country’s basic conformity with EU economic practices, some trade protectionism remains, particularly for its small agricultural sector.

Foreign and domestic enterprises may engage in various forms of remunerative activities and may freely establish, acquire and dispose of interests in business enterprises with some restrictions. Many U.S. firms base their European or regional headquarters in Switzerland, drawn to the country’s low corporate tax rates, exceptional infrastructure, and productive and multilingual work force.

Switzerland’s business climate is further characterized by a developed infrastructure for scientific research, generally strong intellectual property protection and transparent and stable public institutions.

Economic Freedom: Switzerland’s economic freedom score is 83, making its economy the 2nd freest in the 2024 Index. Its score is essentially the same as last year, with modest declines in business freedom and the management of government spending counterbalanced by improvements in monetary freedom and freedom from corruption. Switzerland is ranked 1st out of 44 countries in Europe.

Market Access: A number of administrative requirements restrict retail operations in the domestic market. These include planning regulations, local building codes, advertising restrictions, standards for equipment, approval procedures, and opening hours for shops. Although such measures are not intended to be discriminatory, their practical effect can be to limit market access for large discount retailers. Bureaucratic procedures are numerous, but generally transparent and nondiscriminatory.

Regulatory System: Regulations affecting both local and foreign investors are generally transparent and applied in a nondiscriminatory manner.

Intellectual Property Rights: Switzerland is a member of the major international intellectual property rights conventions and remains one of the best regimes in Europe for the protection of intellectual property. Protection is afforded equally to both foreign and domestic rights-holders. Secured interests in property are recognized and enforced, and mortgages are widely used. The legal system protects and facilitates the acquisition and disposition of all property rights with the exception of works available on the internet.

Exchange Control: Swiss foreign exchange markets are highly developed and efficient. There is freedom of transfer for investment income, royalties, and repatriation of capital. There are no Swiss government policies or laws that would regulate or limit the inflow or outflow of capital. Foreign exchange markets are free and access to foreign exchange is uncontrolled.

Corruption: Switzerland maintains effective investigative and enforcement procedures to combat domestic corruption. The giving or accepting of bribes in Switzerland is subject to criminal and civil penalties, including imprisonment up to five years.

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Business Protocol

• It’s proper for a foreign professional to give a business card to the receptionist when entering the meeting location. Business cards should also be presented to each meeting participant. The cards can be printed in English in most cases, as English is usually spoken in meetings with international colleagues.
• Swiss attitudes towards business dress have evolved in recent years. More casual dress is acceptable in many companies; ‘dress-down’ Friday is commonplace and some firms have even banned suits. The degree of informality, however, depends on the degree of direct client-contact. A Swiss executive meeting a foreign visitor will usually dress in a formal and conservative style. You should do the same.
• Be punctual for business meetings. If you will be late for an appointment, call ahead with an explanation.
• When meeting people, shake hands with all present. A firm, short handshake is best. Maintain eye contact during the handshake.
• In Swiss business culture, propriety is considered more important than gestures of affection such as gifts. When the Swiss decide that they like you, however, they will go out of their way to be friendly and generous. The best policy is to wait until the conclusion of negotiations before presenting any gift. Allow your Swiss contact to give the first gift so that you can reciprocate.
• When first meeting Swiss business persons, address them by professional title and surname until invited to address them by their first name.
• The Swiss are a private people, so try to avoid asking personal questions until a good relationship has been established.
• There is usually an agenda in place for Swiss business meetings, which is followed quite strictly.
• The Swiss will refuse to rush a decision until they have properly examined all the facts and information and reported these to the decision maker(s).
• Swiss business culture is very hierarchical. Only the highest individuals in authority make final decisions, even if others disagree with it.

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries. For further information, contact [email protected].