Investing In... 2021

Last Updated January 18, 2021


Law and Practice


Homburger was established in 1957 and has become one of the largest Swiss law firms, with more than 150 professionals, including certified tax experts and support professionals. As a leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. The corporate/M&A team offers clients expert advice and support with M&A, joint ventures, equity capital market transactions, private equity and venture capital, as well as corporate governance. It is actively involved in corporate acquisitions, auctions, mergers and public tender offers, and places special emphasis on cross-border transactions. The firm’s services are aimed at public and private companies, their directors and investors, as well as entrepreneurs from all economic sectors.

Confederation of States

Switzerland is a civil law country. Its legal system follows German and French legal traditions. Switzerland is a confederation of 26 cantons and half-cantons. The organisation of its legal, judicial and regulatory system reflects its federalist structure which has three distinct political levels: the Confederation (the federal state), the cantons (the states), and the municipalities (the local authorities).

The Confederation has authority in all areas that are assigned to it by the Federal Constitution. The cantons exercise sovereign rights in all other areas, typically areas which do not require uniform regulation by the Confederation.

Swiss laws are hierarchical: federal laws prevail over cantonal constitutions and laws, constitutional rules take precedence over ordinary statutes, and statutes take priority over regulations promulgated by governments or administrative authorities.

The Judiciary at Federal and Cantonal Levels

The cantons have jurisdiction in all matters which are not assigned to the jurisdiction of the Confederation. Most cantons have district courts which serve as courts of first instance and one Cantonal Court which serves as court of appeal.

The Federal Supreme Court is Switzerland’s highest court. It is the court of appeal for decisions of the Federal Criminal Court, the Federal Administrative Court and the Federal Patent Court, which decide matters in their competency as courts of first instance, and the Supreme Cantonal Courts. Switzerland has ratified the European Convention on Human Rights and therefore complaint to the European Court of Human Rights may be available.

No General FDI Control

Switzerland is a highly attractive destination for FDI (see 2.1 Foreign Direct Investment in the Current Climate). It provides for a stable economic and political environment with a transparent and fair legal system and as yet has not enacted any general legislation on foreign investment control that would require foreign investors to obtain specific approvals or undergo a review process or that would allow the restriction of FDI based on national interests. The Federal Parliament, has, however, mandated the Federal Council (ie, the Swiss federal government) in summer 2020 to prepare a draft legislation for such foreign investment control. The details of this draft legislation and whether it will eventually enter into force are currently unclear (see 7.1 Applicable Regulator and Process Overview). Under the current regime, the Confederation could theoretically impose constraints on a transaction to ensure Switzerland's supply with essential goods. There is no precedent for this, however.

Please note that sector-specific reviews and merger control approval requirements may apply.

Regulatory review or approval may be required for foreign investments in companies engaged in certain regulated industries and sectors, such as:

  • real estate;
  • financial sector;
  • telecommunication services;
  • nuclear industry;
  • postal services;
  • railway transportation;
  • local public transportation;
  • aviation;
  • power and gas installations;
  • radio and television broadcasting;
  • health and education;
  • defence and private security industry; and
  • lotteries and gambling industry.

Typically, no distinction is made between foreign and domestic applicants and the same regulation applies on a non-discriminatory basis. In case of certain state-licensed undertakings and services (such as the banking services, railway transportation, telecommunication services, nuclear energy, radio and television and aviation), the grant of a state licence to a foreign undertaking (or to an undertaking with foreign investors) may be subject to reciprocal rights for Swiss investors in its country of origin or additional requirements (such as for insurance services). See 8.1 Other Regimes for more information.

Further, investments in Swiss companies may be subject to antitrust approval and may need to be notified to the Swiss Competition Commission (ComCo) subject to the respective thresholds being reached. FDI are treated on a non-discriminatory basis.

FDI in Residential Real Estate is Restricted

As the only major restriction for FDI, the so-called Lex Koller prohibits the acquisition of residential real estate and restricts the acquisition of commercial real estate by foreign investors or foreign-controlled companies.

A Strong Economy with Attractive Taxation

The official currency of Switzerland is the Swiss franc (CHF), one of the strongest currencies in the world with a low inflation rate (Switzerland's inflation exceeded 1% for the last time in 2008). With USD81,994 in 2019, Switzerland has one of the highest GDP per capita of the world. Roughly three-quarters of Switzerland's GDP is generated by the service sector and 25% by the industry. Contribution by the agricultural sector is less than 1%.

The European Union is Switzerland's main trading partner, accounting for 60% of its imports and 50% of its exports. Over 99% of Swiss businesses are small and medium-sized enterprises. Switzerland has constantly reduced its public debt-to-GDP ratio over the last decades to a low of 27.5% of the GDP in 2019. Corporate taxes vary between 12% to 22% and Switzerland has the lowest rate of value added tax in Europe. 8% is levied on most goods and services, 3.8% on accommodation services, and 2.5% on basic necessities and other everyday items.

An Innovative Economy with Easy Access to Talent

Every year, Switzerland spends around 3% of its GDP on research and development with over three-quarters of this funding coming from the private sector, helping to make Switzerland the most innovative economy of the world in 2020 according to the Global Innovation Index. Thanks to one of the highest living standards within the OECD, world-known universities – such as ETH Zurich and EPFL Lausanne – and being party to the free movement of people in the EU, Switzerland offers businesses easy access to talent.

Robust during COVID-19

Switzerland's economy has handled the COVID-19 pandemic relatively well. In the second quarter of 2020, the negative growth of Switzerland's GDP was -8.2% (compared to an OECD average of -10.6%). In close co-operation, the Confederation, the Swiss National Bank and Swiss commercial banks made available a total amount of CHF16.9 billion in COVID-19 loans to 136,250 businesses by no later than 26 March 2020. The temporarily expanded furlough regime kept the unemployment rate as low as 3.4% in May 2020.

During the lockdown in spring 2020, individual savings increased; in the second half of 2020, the savings rate also remained slightly above the pre-crisis level of approximately 20%. Despite that, consumer confidence and spending recovered quickly after the lockdown to almost pre-COVID-19 levels. Long-term forecasts for the Swiss economy – which are based on the assumption that any COVID-19 wave(s) in winter 2020-21 would not have the same severe impact on the economy as the first wave – are robust, with an expectation that the quarterly GDP would reach the pre-crisis level again by the end of 2021.

Open to FDI

With a restrictiveness factor for FDI of 0.08 (on a scale from 0 to 1) according to OECD for 2019, Switzerland is open to FDI with almost no strings attached. Since 2015, it has seen positive FDI inflows. Most investments origin from the USA, be it directly or indirectly through US holding companies domiciled in Ireland. Only since 2018 (including the first quarter of 2020), investors from abroad effected a net withdrawal of funds from Switzerland. As for other economies, the COVID-19 pandemic has affected FDI to Switzerland as well.

Structures for Private Transactions

Acquisitions of privately owned businesses are usually structured as share or asset deals. Companies may also be acquired or combined by means of a statutory merger pursuant to the Federal Act on Mergers, Demergers, Transformations and Transfers of Assets (Merger Act). The merger consideration may consist of shares of the surviving or the newly incorporated company, shares of another company (for example, the parent company in a triangular merger), cash, or a combination thereof.

Joint venture companies may be established by transferring certain assets (and liabilities) to a newly incorporated (or existing) company in exchange for shares in such company.

The process and timing of a transaction depends, among other things, on whether the acquisition or disposal is structured as an auction process or in the form of a one-on-one negotiated deal.

Structures for Public Transactions

Swiss-listed companies are usually acquired by means of a public tender offer. The offer consideration may consist of cash, securities offered in exchange, or a combination thereof. "Mix and match" offers where a tendering shareholder may choose between cash and securities, or the ratio between cash and securities, are also permissible.

Alternatively, control over a Swiss listed company may be obtained by means of a statutory merger pursuant to the Merger Act (see above, 'Structures for Private Transactions'), although this form of acquiring control over a publicly listed company is much less common.

As an alternative to a public tender offer or statutory merger, a number of other structures are used, particularly if foreign companies are involved, including:

  • quasi-mergers, in which a subsidiary of the bidder is merged into the target, and the target shareholders receive cash or shares in the acquiring parent company ("reverse triangular merger");
  • particularly in cross-border mergers of equals, parallel public tender offers by a newly incorporated company for both "target" companies;
  • the formation of joint venture companies (ie, the transfer of certain assets (and liabilities) to a newly incorporated (or existing) company in exchange for shares in such company); and
  • cross-border statutory mergers, provided that the non-Swiss jurisdiction involved recognises such cross-border merger and certain other conditions are met.

Divestment Structures

Divestments or spin-off transactions involving private or public companies may be structured in various ways, including:

  • the transfer of the business (including the assets and liabilities) to be spun-off to the acquiring company, either by means of an asset deal or a business transfer pursuant to the Merger Act, against cash or shares;
  • a two-step demerger, in which the business (including the assets and liabilities) to be spun-off is first transferred to a (newly incorporated) subsidiary and the shares of such subsidiary are then distributed to the shareholders of the parent company (distribution in kind), who may sell the shares to an acquirer; and
  • a statutory demerger (hardly seen in practice due to the unlimited joint and several (subsidiary) liability of the companies involved and reduced flexibility).

Almost all transaction structures are available for cross-border transactions

While all these transaction structures are generally available to foreign investors, cross-border transactions under the Merger Act require that the non-Swiss Swiss jurisdiction involved recognises such cross-border merger (or spin-off transaction) and that certain other conditions are met.

Control Transactions versus Minority Transactions

In practice, mergers, asset deals and spin-off transactions are only used to acquire control over a business or company. Minority stakes are typically acquired by way of a share deal in case of private companies or open market purchases or a partial public tender offer for public companies or by way of the issuance of new shares by the target company against cash contribution, contribution-in-kind or set-off of receivables.

Domestic M&A transactions may be subject to the following review and/or approval procedures:

  • the acquisition of a controlling stake or the creation of a joint venture may be subject to merger control approval by the Swiss Competition Commission (ComCo);
  • any public tender offer is reviewed pre-publication or post-publication by the Swiss Takeover Board for compliance with Swiss takeover law;
  • investments in companies engaged in certain regulated industry and sectors may be subject to review or approval by a regulatory authority.

The main rules relating to corporate governance in Switzerland are the following:

  • Swiss corporate law as set forth in the Swiss Code of Obligations (CO), applicable to public and private Swiss companies and containing certain mandatory provisions;
  • Swiss legal provisions on the compensation of members of the board of directors and management of public companies, currently set forth in the ordinance against excessive remuneration by listed companies (OaEC), but to be incorporated in the CO by 2022;
  • the Swiss Code of Best Practice for Corporate Governance issued by economiesuisse, an association representing the interests of Swiss businesses, whose non-binding recommendations are widely followed especially by public companies;
  • for public companies only, the Swiss regulation of the financial markets (see 5 Capital Markets); and
  • for public companies only, the non-binding proxy voting guidelines and benchmarks of national and international proxy advisers (eg, Ethos, ISS, Glass Lewis), which have become increasingly important.

Protection of Minority Shareholders by Corporate Law and Contracts

Two basic principles of Swiss corporate law protect minority investors:

  • the principle of equal treatment prohibits any discrimination of shareholders, unless there are any compelling and overriding interests of the company that justify an unequal treatment; and
  • the principle of objectivity requires a company to use any discretion in the way that impedes shareholders' rights the least.

By law, minority shareholders of Swiss companies have the following rights.

  • Financial rights – each shareholder has the right to participate pro rata in any issuance of new shares or share options. This right may only be excluded based on objective reasons. Further, all shareholders are entitled to participate pro rata in any dividend or distribution by the company and in the liquidation proceedings.
  • Participation rights – each shareholder has the right to participate in, speak and vote at the general meeting of shareholders. Shareholders representing 10% of the registered votes (5% for listed companies pursuant to the new law to enter into force in 2022) have the right to call a general meeting and to put items on the agenda of a general meeting. The articles of association may grant a group of shareholders the right to be represented on the board of directors.
  • Information rights – each shareholder has the right to review the financial statements and the audit report, to ask questions at a general meeting of shareholders, to request a vote at a general meeting on a special audit and to request that the financial statements are audited by an independent audit firm. Further, shareholders representing 10% of the registered votes may request a special audit.
  • Right of action – each shareholder may challenge resolutions of the general meeting of shareholders in court or request damages from the members of the board of directors and the management for a violation of their fiduciary duties.

Shareholder agreements may grant shareholders additional rights such as rights of first refusal, drag-along or tag-along rights or down-round protection.

Protection of Minority Shareholders of Public Companies

Swiss takeover law contains several provisions that protect minority shareholders of public companies. These include the obligation to launch a mandatory tender offer if the threshold of 33.33% of the voting rights of a public company is exceeded, the obligation to treat all shareholders equally in a tender offer and the obligation not to pay any shareholders a premium (prohibiting package premiums) as well as the minimum price rule and the best price rule.

Any shareholder of a private company holding 25% or more of the registered share capital has to report its ultimate beneficial owner to the company. The company has to keep available in Switzerland a register of all beneficial owners which have been notified to it.

Any direct shareholder of a limited liability company needs to be registered in the commercial register of the Canton of the registered office of the company. The commercial register is public.

Anyone who directly or indirectly or acting in concert with third parties acquires or disposes of shares or acquisition or sale rights relating to shares of a public Swiss company or a foreign company with primary listing in Switzerland, and thereby reaches, falls below or exceeds the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 33.33%, 50% or 66.66% of the voting rights, whether exercisable or not, must notify this to the company and to the stock exchange on which the equity securities are listed.

There are no additional disclosure or reporting obligations for foreign investors. 

The most important exchange for equity and debt securities, structured products, derivatives and other securities in Switzerland is SIX Swiss Exchange (SIX) in Zurich. BX Swiss in Berne, the second Swiss exchange, focuses mainly on domestic issuers.

In 2019, SIX recorded seven IPOs with a total market capitalisation of CHF38.3 billion. In the same period, Swiss corporations raised almost CHF80 billion with bond issues. Despite the high activity on the CHF bond market, with roughly CHF1,700 billion, the Swiss stock market is about more than three times larger than the market for CHF bonds. Loans also play an important role in the financing of Swiss businesses with close to CHF600 billion in loans outstanding as of the end of 2019.

Legal Framework

Although not a member state of the European Union (EU) or the European Economic Area (EEA), Switzerland's securities laws and regulations are to a large extent harmonised with the respective legislation of the EU, although maintaining some Swiss particularities. Switzerland regularly adapts its regulatory framework to meet the EU equivalence requirements and to ensure unrestricted access to the European financial markets. On 1 January 2020, for instance, Switzerland has introduced the Financial Services Act, a law mirroring the MiFID II, MiFIR, the Prospectus Directive and the PRIIPs Regulation.

Stock Exchange Regulation

While Swiss securities laws provide for certain principle standards for Swiss trading venues, SIX and BX have adopted their own comprehensive regulations under the principle of self-regulation. These regulations govern, among other things, the regular reporting and ad hoc disclosure obligations of listed companies and the listing requirements. To qualify for a listing at SIX, a company requires a track-record of at least three years (subject to exemptions), a minimum equity of CHF2 million, a market capitalisation of at least CHF25 million and a free float of the listed securities of at least 20%. Further, the company needs to comply with the SIX reporting requirements and publish a prospectus which is reviewed by SIX. Duly incorporated Swiss and foreign companies can be listed at SIX.

Supervisory Authority

The Swiss Financial Market Supervisory Authority FINMA (FINMA) is the regulatory authority supervising Swiss financial markets and institutions. FINMA supervises the Swiss trading venues and approves their regulations.

There is no regulatory review specifically applicable on FDI by foreign investment funds. 

ComCo as Competent Authority

Merger control is regulated in the Federal Act on Cartels and other Restraints of Competition (Cartel Act) and the Ordinance on the Control of Concentrations of Undertakings (Merger Control Ordinance). The main enforcement authority is the Swiss Competition Commission (ComCo). ComCo takes the decisions while its full-time Secretariat conducts the investigations. Parties have to submit notifications and it is recommended to also submit pre-notifications to the Secretariat of the ComCo.

If a bank is involved in the proposed merger, the Swiss Financial Market Supervisory Authority (FINMA) may exceptionally be the competent authority. It may allow a concentration on an exception basis to protect creditors’ interests (eg, rescue merger). In such case, FINMA shall invite ComCo to submit an opinion.

Transactions to be Notified

Merger control applies to the following transactions:

  • merger – the merger of two or more previously independent undertakings;
  • acquisition of control – any transaction, by which one or more undertaking acquires direct or indirect control of one or more previously independent undertakings or parts thereof, in particular by acquiring an equity interest or by the conclusion of an agreement, (ie, an acquisition or the creation of a joint venture).

Such transactions need to be notified if the following turnover thresholds are cumulatively met: in the financial year preceding the transaction, (i) the companies concerned reported together a worldwide turnover of at least CHF2 billion or a turnover in Switzerland of at least CHF500 million, and (ii) at least two of the companies concerned reported a turnover in Switzerland of at least CHF100 million.

Irrespective of any turnover thresholds, notification is also mandatory if the planned transaction involves a company that has been held to be dominant in a certain market in Switzerland and if the transaction affects either that market or a neighbouring market or a market upstream or downstream thereof. The market dominance must have been established in a final and non-appealable decision under the Cartel Act.


The notification has to be submitted prior to the implementation of a transaction (effective acquisition of control/closing). The transaction can be notified as soon as the parties have reached a binding agreement or can demonstrate a good faith intention to conclude such agreement. In practice, a written letter of intent or a memorandum of understanding may be sufficient. The notification form can be submitted in either German, French or Italian (ie, any official Swiss language). Accompanying documents can also be submitted in English. The notification must contain, among other information, a description of the planned transaction, turnover and similar information of the businesses concerned for Switzerland and worldwide and information on the relevant product and geographic markets for the preceding three years.

In case of a merger, both merging parties need to jointly submit the notification. In case of an acquisition of control, the notification obligation is upon the company or companies acquiring control.

ComCo is required to inform the companies concerned within one month from receipt of the complete notification whether it intends to open an investigation (Phase I). If ComCo decides to open an investigation, it must be completed within four months, subject to the due co-operation of the notifying companies (Phase II). The transaction must not be implemented prior to clearance or grant of a derogation from the suspensive effect ("gun-jumping").

Merger control applies on a non-discriminatory basis equally on Swiss and foreign investors.

Notified transactions are assessed by ComCo under the substantive test. The substantive test is based on a dominance test supplemented by an additional test on the remaining degree of competition. According to this "dominance-plus test", a concentration may only be prohibited, if:

  • the transaction creates or strengthens a dominant position;
  • that dominant position is liable to eliminate effective competition in the relevant market; and
  • the transaction does not strengthen competition in another market outweighing the negative effects of the dominant position.

Compared to other jurisdictions, this is a high threshold. It is currently being considered to replace this dominance-plus test with the SIEC test (significant impediment to effective competition) as applied in the EU. A respective draft legislation is currently in preparation.

A transaction may be cleared subject to certain conditions or obligations. The law does not specify the types of conditions or obligations that may be ordered. In practice, both (i) divestitures (eg, sale of business units, granting of licences or unbundling of contractual relationships) and (ii) certain behavioural remedies (eg, restriction of long-term purchase or supply commitments) have been implemented, and the scope of these remedies will be discussed by the parties with ComCo.

In case of international transactions, it is particularly important to co-ordinate the remedies offered with those offered to other competition authorities, in particular the European Commission. While ComCo prefers structural undertakings (ie, divestitures), it has shown to be more open to behavioural remedies than the European Commission. Remedies ordered by the ComCo can only take into account competition issues. Other than in EU merger control proceedings, there are no procedural provisions under Swiss law in this regard (eg, on the timing of the negotiations on remedies).

ComCo may prohibit or interfere with a transaction only if the conditions of the dominance-plus test (see 6.2Criteria for Review) are met. If the undertakings do not comply with a prohibition decision, ComCo may take all necessary steps to restore effective competition. In particular, ComCo may order the separation of any combined undertakings or the cessation of the controlling influence. In addition, ComCo may sanction companies that do not comply with a prohibition decision with a fine of up to CHF1 million.

If the thresholds (see 6.1 Applicable Regulator and Process Overview) are not met, ComCo does not have power to investigate a transaction or to impose any corrective measures if a transaction creates or strengthens a dominant position liable to eliminate effective competition.

No FDI Review Process

There are no generally applicable laws on foreign investment control in Switzerland that would allow a general review of foreign investments or to restrict foreign investments (eg, on national security grounds). FDI may, however, be subject to certain sector-specific reviews or approvals; see 8OtherReviews/Approvals.

Draft Bill on FDI Review in Discussion

Following the acquisition of some major Swiss companies by foreign investors, including by companies under the influence of foreign governments in recent years, a public debate on the introduction of a general foreign investment control regime broke out. Answering specific motions from the Swiss parliament, on 13 February 2019 the Federal Council issued a report on the advantages and disadvantages of such regime. The Federal Council found that foreign investment control would not be beneficial to Switzerland.

On the one hand, most critical infrastructure is already owned by the state, either by the Confederation, the cantons or the municipalities. On the other hand, sector-specific regulations would allow to control foreign investments in other critical infrastructures. Therefore, the Federal Council found it sufficient to monitor the market developments and review its report after four years.

Despite the report, which emphasised the principles of economic freedom and the benefits that Switzerland enjoys from FDI, the Federal Parliament mandated the Federal Council on 3 March 2020 to prepare a draft legislation for the control of direct investments from foreign investors in Swiss companies, including by introducing a respective approval authority. The Federal Council has not yet presented its draft legislation. It is also not clear that the Swiss parliament will eventually adopt a respective legislation when presented.

Given that Switzerland currently has no general foreign investment control regime, investments generally cannot be prohibited based on national – security – interests. Investments in certain regulated sectors may require approval or a licence which may be subject, in particular, to reciprocal rights being granted by the relevant foreign country (see 8.1 Other Regimes). Theoretically, the Confederation could impose based on the Constitution constraints on a transaction to ensure Switzerland's supply with essential goods. There is no precedent for this, however.

Switzerland has no general foreign investment control regime today. Remedies or commitments could only be imposed on a foreign investment by the Swiss Competition Commission (ComCo); see 6 Antitrust/Competition.

As part of its merger control proceeding, ComCo may prohibit a concentration or approve it subject to remedies; see 6.3 Remedies and Commitments. For the sector-specific review and approval procedures, the powers of the competent authorities to prohibit or otherwise interfere with a transaction vary between the sectors; see 8 Other Reviews/Approvals.

Financial Sector

Under the Swiss Banking Act, the acquisition of a controllinginterest in a licensed Swiss bank by a foreign investor requires an additional licence from the Swiss Financial Market Supervisory Authority FINMA (FINMA). An additional licence is also required when such controlling interest is transferred from one foreign investor to another. The additional licence is subject to a number of conditions, in particular:

the country of origin of the foreign investor grants Swiss investors reciprocity (ie, Swiss residents or entities can operate a bank in the country of origin and such operations are not subject to more restrictive provisions as Switzerland imposes on the foreign investor), whereby the reciprocity requirements do not apply with respect to member states of the World Trade Organisation, or where it would contravene other obligations under international law;

  • the corporate name of the Swiss bank must not suggest that the bank is controlled by Swiss individuals or entities; and
  • FINMA may request that the bank becomes part of the consolidated group supervision of the acquiring foreign bank.

Similar rules apply under the Federal Act on Financial Institutions on the acquisition of a controlling interest in a licensed Swiss securities dealer.

Real Estate

Under the Federal Law on the Acquisition of Real Estate by Non-Residents (Bundesgesetz über den Erwerb von Grundstücken durch Personen im Ausland, Lex Koller), the direct or indirect acquisition of residential properties (as opposed to industrial or business properties such as warehouses, manufacturing facilities, offices, shopping malls, hotels or restaurants) in Switzerland by a non-Swiss resident is subject to approval. The following persons are considered non-Swiss residents under Lex Koller:

  • private individuals who are neither Swiss citizens nor residents;
  • companies with registered offices or its effective management in a foreign country; or
  • Swiss companies which are controlled by a non-Swiss resident, whereby control is assumed if the non-Swiss resident holds more than one-third of the capital and/or voting rights in the Swiss company or has predominately financed the Swiss company.

The focus of Lex Koller lies on residential real estate. For the acquisition of industrial or business properties an approval is only required in the following cases:

  • the acquisition of real estate with undeveloped land reserves exceeding 50% of the total property (if exceeding 33%, it is to be decided on a case-by-case basis whether approval is required);
  • the acquisition of undeveloped land if construction is not commenced within one year of the acquisition; and
  • the acquisition of real estate used for both commercial and residential purposes.

The following transactions may qualify as an acquisition under the Lex Koller:

  • the investment in a non-listed real estate company or fund;
  • the creation of certain rights in rem over real estate;
  • long-term rentals granting the tenant atypical rights and creating a dependency of the landlord; and
  • the financing of real estate projects creating a dependency of the owner of the land.

Each canton has a designated one or several administrative bodies which have the authority to grant approval under the Lex Koller. Competence lies with the canton in which the real estate concerned is predominantly situated. In addition, the Federal Council may, upon request of the cantonal government, approve on an exemption basis a specific acquisition or deny an acquisition on grounds of national interests.


Under the Federal Aviation Act (Luftfahrtgesetz), the operation of an air transport business for people or goods requires a licence from the Federal Office of Civil Aviation (FOCA). Subject to opposing international treaties, the licence may be refused to foreign-domiciled companies, or Swiss companies under foreign control, if the respective foreign country does not grant Swiss individuals or companies reciprocal rights.


Under the Federal Telecommunication Act, the use of a telecommunication frequency requires a licence from the Federal Communication Commission. Subject to opposing international treaties, the licence may be refused to foreign-domiciled companies if the respective foreign country does not grant Swiss individuals or companies reciprocal rights. In addition, foreign-domiciled companies need to provide a contact address in Switzerland.

Nuclear Energy

Under the Nuclear Energy Act, the construction or operation of nuclear facilities requires a permission by the Federal Council. Subject to opposing international treaties, the licence may be refused to foreign-domiciled companies if the respective foreign country does not grant Swiss individuals or companies reciprocal rights. In addition, foreign-domiciled companies have to register a Swiss branch in the commercial register.

Radio and Television

Under the Federal Act on Radio and Television, any person wishing to broadcast a Swiss programme service must notify this in advance to the Federal Office of Communications. A programme service means a sequence of programmes which are offered continuously, defined in time and transmitted using telecommunications techniques and which are intended for the public. Subject to opposing international treaties, the licence may be refused to foreign-domiciled companies, Swiss companies with foreign shareholders or non-Swiss citizens if the respective foreign country does not grant Swiss individuals or companies reciprocal rights. In addition, foreign companies have to register a Swiss branch in the commercial register.


Income tax

In principle, Swiss tax-resident companies have to pay income taxes on their worldwide income, but Switzerland unilaterally exempts income from foreign businesses, permanent establishments and real estate from taxation. A company is Swiss tax-resident if (i) its registered offices and/or (ii) its place of effective management is in Switzerland. Non-Swiss tax-resident companies pay income taxes on income from Swiss businesses, establishments and real estate. Each of the Confederation, the cantons and the municipalities levy income taxes. The effective combined income tax rate depends on the applicable cantonal and municipal tax rates and varies between 12% to 22%.

Capital tax

Cantons and municipalities levy an annual capital tax on the net equity of both unlimited and limited tax liable companies. The tax rates range from close to 0.0001% and 0.53%; reduced rates apply to the extent that a company holds equity investments, loans to affiliates or patents. Some cantons credit the capital tax to the income tax with the effect that in most cases only the income tax is payable. Certain cantons levy an annual tax on the real estate.

Stamp duty

Stamp duty of 1% is payable on contributions to the equity of Swiss tax-resident companies exceeding CHF1 million in total. Exemptions apply to reorganisations, immigrations, grandparent contributions and recapitalisations.

Value added tax

Value added tax (VAT) of 7.7% (or 2.5% for certain everyday consumer goods or 3.7% for hotels) applies on all goods and services.


Partnerships are treated as fiscally transparent in Switzerland. Their tax treatment thus depends on the types of partners.

Withholding Taxes on Dividends

Dividends by Swiss tax-resident companies are generally subject to withholding taxes at a rate of 35%.

The repayment of share capital is not subject to withholding tax. Dividends in the form of a repayment of former capital contributions are exempted from withholding taxes provided that they are (i) from contributions by the shareholders to the company’s equity and (ii) accepted by the Federal Tax Authority as qualifying capital contribution reserves.

Swiss tax-resident private and corporate shareholders can fully reclaim withholding taxes when they declare the dividend income in their tax return. For Swiss corporate shareholders holding at least 20% of the share capital, the withholding tax obligation may be replaced by a notification to the Federal Tax Administration.

For non-Swiss tax-resident recipients, a full or partial relief from the withholding tax may be available under the applicable double taxation treaty with Switzerland. Based on such a treaty, the notification procedure may also be available for dividend payments to non-Swiss tax residents under the following conditions:

  • the recipient is a corporate shareholder holding at least the required threshold of the share capital of the distributing Swiss company under the applicable tax treaty;
  • all other conditions under the applicable double taxation treaty are fulfilled (including, under certain tax treaties, the observation of a holding period); and
  • an advance filling with the Swiss Federal Tax Authority is made.

Withholding Taxes on Royalties

Switzerland does not levy any withholding taxes on royalties.

Withholding Taxes on Interest

Interest payments by Swiss tax resident companies are generally not subject to withholding taxes unless (i) the debt on which interest is paid qualifies as bond under the Swiss tax rules or (ii) the interest is paid on a customer deposit with a Swiss bank. Excessive royalties or interest payments (ie, exceeding the arm's-length amount) to related parties may be requalified into a constructive dividend and hereby become subject to withholding taxes.

Given that qualifying capital contribution reserves can be distributed free of withholding taxes, a common strategy when incorporating a business in Switzerland, acquiring a Swiss company or migrating the holding seat of a group to Switzerland is to create capital contribution reserves. As a basic principle, capital contribution reserves are created by way of cash contribution or contributions in kind (eg, contribution of shares in other companies or intellectual property rights) to the Swiss company or transactions having the same economic effect (eg, a share for share exchange or triangular merger).

Tax losses can be carried forward and offset against income of the next seven years.

Swiss tax law also provides for certain reliefs that companies can benefit from, as listed below.

  • Participations relief – dividends from participations of at least 10% of the nominal share capital or reserves of the distributing company or with a market value of at least CHF1 million can benefit from the participations relief, subject to the minimum holding period of one year. Capital gains from the disposal of participations of at least 10% which have been held for a least one year also benefit from participations relief.
  • Step-up in basis – companies relocating to Switzerland benefit from a step-up in basis for corporate income tax purposes. The stepped-up assets and goodwill can be amortised tax effectively over a certain period of time. The step-up in basis was also available in 2019 when Switzerland abolished the cantonal tax privileges and companies became subject to standard taxation starting 2020.
  • Reliefs for companies engaged in research and development or holding patents – under the patent box regime, subject to the applicable cantonal rules, companies can benefit from a relief on a cantonal level of up to 90% on income from qualifying patents and similar rights. Further, cantons may allow companies to make special deductions from their taxable income for research and development expenses.
  • Notional interest deduction – the canton of Zurich grants a notional interest deduction to companies with a high equity.

If a Swiss business is acquired by way of an asset deal, the buyer entity is typically a Swiss company. The acquirer may capitalise the full purchase price on its balance sheet up to the fair market value of the assets. If the purchase price exceeds the fair market value, the difference can be capitalised as goodwill. The acquisition value of the assets and the goodwill can be depreciated as per Swiss tax and accounting rules and deducted from taxable income.

Switzerland grants the participations relief on dividend income and the exemption of foreign permanent establishment income irrespective of the application of any double taxation treaty and has not introduced any controlled foreign corporation rules.

Switzerland has not introduced any interest barrier rules. It applies thin capitalisation rules and arm's-length interest rules only on financings from related parties.

Switzerland does not tax a capital gain realised by a foreign investor on the sale or other disposition of shares in a Swiss-resident company unless the company is a real estate company.

Capital gains from the sale of real estate is subject to real estate tax, for private individuals as for corporates. Deductions may apply on the real estate tax, in particular based on the holding period. On a federal level and in some cantons, for corporate profits from the sale of real estate are subject to the ordinary income tax instead. In addition, real estate transfer tax (a turnover tax) is payable in most cantons.

Capital gains from the sale of Swiss partnership interests are treated as capital gains from the disposal of business assets in asset deals and are subject to standard income taxation.

Swiss tax law assesses transactions based on their economical substance and not on their legal form. There are no specific anti-evasion regimes applying on FDI.

With regard to transfer-pricing, Swiss tax law requires group internal transactions and financings to be at arm's-length terms. The OECD guidelines on transfer pricing methods are accepted in Switzerland. The only special Swiss guidelines in that respect are the minimum and maximum interest rates on group internal loans regularly updated by the Swiss Federal Tax Administration in a circular. In addition, thin capitalisation rules limit the extent of a debt push-down.

Switzerland has not introduced any anti-hybrid rules. However, the Federal Tax Administration levies the dividend withholding tax on non-arm's-length structures and transactions under the notion of a deemed dividend distribution. And they deny the privileged residual withholding tax rates of double taxation treaties if the recipient of the non-arm's-length payment is not the direct shareholder.

The main sources of employment law in Switzerland are:

  • the Swiss Code of Obligations, containing the legal framework applying on employment contracts (eg, principal duties of employees and employers and rules on termination); and
  • the Federal Labour Act, containing rules on workplace safety and employee protection applicable for most industries (eg, maximum working hours).

In some industries, mandatory collective bargaining agreements will apply.

Other legislation may provide for additional rights or obligations, such as the Participation Act, the Gender Equality Act, the Data Protection Act, the Merger Act or the Ordinance against Excessive Compensation in Public Companies.

Swiss employment law is considered to be rather employer-friendly and allows an employer to terminate an employee without cause with the applicable notice period, which is – subject to a longer notice period in the employment agreement – up to three months.

Upon request by its employees, companies with more than 50 employees have to set up a work council. However, work councils are not very common in Switzerland.

The right to form unions and to strike are guaranteed by the Swiss Constitution – the right to strike, however, only so far as it is not contractually limited (in particular by the applicable collective bargaining agreement) or restricted by a specific legislation. Strikes are very rare in Switzerland and unions do not play such a dominant role in Switzerland as in other European jurisdictions.

Employee compensation may also consist of incentive-based components, including equity compensation, and fringe benefits (eg, costs of mobile phones, company cars, gym memberships and health insurance), whereas certain benefits are often granted only to expatriates (eg, housing, school allowance and tax equalisation). Moreover, it is common for executives to receive a tax-exempt lump sum allowance covering petty expenses. Employers are required by law to make contributions to or payments for, respectively, the federal old age and disability insurance, the unemployment insurance, the private pension fund and the casualty insurance.

In case a company is acquired, entitlements under compensation plans are either compensated at the occasion of the acquisition or rolled over into the acquiring business' plans. Any negative change to the employment conditions needs to respect the applicable notice period for a termination and would be deemed a termination by the employer if not accepted by the employee.

In the case of an asset deal, employees will transfer by virtue of law with the transferred business. The transferring company needs to inform or, in case measures are planned that affect the employees, consult with the employee council or, absent an employee council, with the employees before the effectiveness of the transaction. This information or consultation obligation also applies in case of a statutory merger, the information or consultation to take place before the approval of the merger by the competent corporate body. In addition, employees can request from the transferring and the acquiring company to put aside a reserve for all salaries payable until the next possible date for termination. Employees could block the effectiveness of the merger in case these requirements are violated.

In case of a share deal, there is no obligation to inform or consult with the employees. The employment contracts continue with the same terms. 

Given that Switzerland currently has no general FDI control, the protection of intellectual property rights is not an aspect for the review of an acquisition. Theoretically, the Confederation could impose constraints on a transaction to ensure Switzerland's supply with essential goods. There is no precedent for this, however.

Following its position as innovation hub and being base to several large pharmaceutical companies, Switzerland is considered to provide for a strong and sound protection of intellectual property rights with its laws following or exceeding TRIPs standards. The most important laws are:

  • the Federal Act on Patents for Inventions;
  • the Federal Act on the Protection of Designs;
  • the Federal Act on the Protection of Trademarks and Indications of Source; and
  • the Federal Act on Copyrights and Related Rights.

Data protection in Switzerland is governed mainly by the Swiss Federal Data Protection Act (DPA). Switzerland is not a member of the EU, but its data protection laws provide for an adequate level of protection as recognised by the European Commission. The DPA may have extraterritorial reach, including, for instance, if the rights of a data subject residing in Switzerland are infringed upon by a processing activity outside of Switzerland.

Under the current DPA, the powers of the Swiss Federal Data Protection and Information Commissioner (FDPIC) are limited. Nevertheless, the FDPIC has regularly initiated enforcement actions in case of non-compliance with the DPA. The new DPA recently approved by the Swiss parliament will broaden the powers of the FDPIC, most importantly to enable the FDPIC to issue binding administrative orders (eg, to stop the processing of personal data in violation of the DPA). Thus, increased enforcement action and more formalised proceedings are to be expected.

The most relevant remedies for non-compliance with data protection laws are private damage claims and actions to cease the non-compliant conduct. In addition, the DPA currently provides for criminal fines up to CHF10,000 in case of a wilful breach of certain information, notification and co-operation obligations under the DPA. Further, the failure by certain professionals under specific confidentiality requirements to keep sensitive personal information confidential may be fined. The new DPA will significantly extend the scope of criminal actions and increases the maximum fine to up to CHF250,000. Under the current as well as under the new DPA, the fines are an individual criminal liability of those committing the unlawful acts.

There are no other significant issues.


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Law and Practice


Homburger was established in 1957 and has become one of the largest Swiss law firms, with more than 150 professionals, including certified tax experts and support professionals. As a leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. The corporate/M&A team offers clients expert advice and support with M&A, joint ventures, equity capital market transactions, private equity and venture capital, as well as corporate governance. It is actively involved in corporate acquisitions, auctions, mergers and public tender offers, and places special emphasis on cross-border transactions. The firm’s services are aimed at public and private companies, their directors and investors, as well as entrepreneurs from all economic sectors.

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