I recently attended a talk in Johannesburg. It was jointly held by the Greater Geneva Berne Area (GGBA) – a sort of chamber of commerce for the six Swiss cantons represented by the group – and Transforma Consulting, with the support of the Swiss Embassy in South Africa. The topic was “Switzerland: your gateway to Europe”. If you want to do business in Europe, Switzerland really does seem like the ideal base from which to operate.
This mountainous, landlocked federation of 26 cantons is one of the wealthiest countries in Europe, yet it has no natural commodities. Watch-making, banking and diamond trading are what the Swiss are best known for. As a base of operations for those wishing to sell goods or services into Europe, Switzerland has the following attributes:
- It’s centrally located in Europe, surrounded by Italy, France and Germany – all regional powerhouses.
- Swiss employees are often fluent in more than one European language, and all speak English. Thus, one staff member might be able to handle commercial transactions in France, Germany and Italy.
- Switzerland has trade treaties with most of its European neighbours.
- The tax rate in Switzerland varies, as each village or town basically handles its own taxes.
A firm that would like to set up operations in a certain region in Switzerland would typically, with the help of a firm such as Transforma Consulting, negotiate a tax rate that would suit both the firm and the local tax authority.
Pro-active TAX authorities
A Swiss tax lawyer I spoke to told me she’s appeared in court only a handful of times in matters regarding tax, because the tax authorities are pro-active. They seek solutions as opposed to confrontation. Top tax rates are comparable with those of Botswana at around 25%, while the lower rates are around the 11% mark.
The VAT rate is only 8%. Swiss bankers are known for their discretion, which is why the elite among the world’s most wealthy choose to conduct their banking affairs in Switzerland. Having dealt with Swiss bankers from time to time, I can testify that they’re a different breed compared to their local counterparts.
The Swiss are service driven. Their attention to detail is legendary. Turnaround times are astounding. Farmers looking at international diversification of their farming operations should consider methods of incorporation in Switzerland as a platform from which to trade.
Without going into too much detail, neighbouring jurisdictions, such as Botswana, can help in assisting with international structures, as Botswana has the lowest tax rate in Africa at present, a range of special vehicles for international trade and no exchange controls.
Peter O’Halloran is head of tax at BDO, Gaborone. Contact him on 00267 390 2779 or at [email protected]. Please state ‘Tax’ in the subject line of your email.