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Economy and Banking Sector of Switzerland

Switzerland
Location
Central Europe
Population  (2016)
8 327 126  (+0.01%)
EU Status
not a member
Currency
CHF (Swiss franc)
Nominal GDP (2015)
604.5 bln EUR  (+0.13%)
Credit Ratings (as of Sep 2016)
AAA/Aaa
Consolidated Banking Assets (2015)
3 026.15 bln CHF  (-0.51%)
Deposit Guarantee
100 000 CHF
Number of Banks
275

Switzerland is a stable, peaceful and prosperous country, with modern market economy having low unemployment and highly skilled labor force.

Among the main sectors of Swiss economy are production of chemicals, watches, textiles, machinery, and also tourism, banking, and insurance.

Swiss neutrality and national sovereignty have fostered a stable environment where the banking sector was able to develop.

List of Banks in Switzerland
Changes in Swiss banks in 2014
Changes in Swiss banks in 2015

National Currency

Swiss Franc (CHF)

Exchange Rate

1 EUR = 1.0851 CHF (2017-06-23)

During the last 11 years EURCHF exchange rate was within the range 1.0341 - 1.6762, reaching its maximum in Oct 2007 and falling to its minimum in May 2015.

Euro to Swiss franc (EURCHF). Chart 1. Euro to Swiss franc (EURCHF). Source: ECB.

GDP

Nominal GDP (2015)Nominal GDP per Capita (2015)Real GDP Growth (2015)
604.5 bln EUR  (+0.13%)73 000 EUR  (+0.12%)0.8 %  (2014: 1.9 %)

According to Eurostat, nominal GDP of Switzerland in 2015 was 604.5 bln EUR.

Switzerland outperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.1% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 0.8% which was below the Euro Area average (1.6%) and below the European Union average (1.9%). Real GDP growth in 2016 - 2022 are IMF's estimates.

Real GDP Growth in Switzerland. Chart 2. Real GDP Growth in Switzerland. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Switzerland was 73 000 EUR.

Switzerland has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 57.6% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2022 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Switzerland; European Union = 100. Chart 3. GDP Per Capita at Purchasing Power Parity in Switzerland; European Union = 100.

Inflation Rate

CPI, MoM (Mar 2017)CPI, YoY (Mar 2017)CPI, Year Average (2016)
0.1 %  (Feb 2017: 0.6 %)0.5 %  (Feb 2017: 0.7 %)-0.5 %  (2015: -0.8 %)

According to Eurostat, inflation rate in Switzerland in 2016 expressed as annual percentages of average consumer prices was -0.5% which was below the Euro Area average (0.2%) and below the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.

Inflation Rate in Switzerland. Chart 4. Inflation Rate in Switzerland. Source: Eurostat, International Monetary Fund.

Unemployment Rate

Unemployment Rate (2016)
3.3 %  (2015: 3.2 %)

Credit Ratings (as of Sep 2016)

Fitch Moody's
AAA (highest credit quality), outlook stable Aaa (prime), outlook stable

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding Tax Rates in Switzerland: 0.0 - 35.0%

Withholding tax rates applied on payments of interest and dividends in Switzerland are shown in Table 1.

Dividends Interest
Natural person, resident 35.0 %35.0 %
Natural person, non-resident 35.0 %35.0 %
Table 1. Withholding tax rates in Switzerland.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Switzerland: 101 Signed Agreements

Switzerland signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Algeria
 Antigua and Barbuda
 Armenia
 Australia
 Austria
 Azerbaijan
 Bangladesh
 Barbados
 Belarus
 Belgium
 British Virgin Islands
 Bulgaria (Oct 2013)
 Canada
 Chile
 China
 Colombia
 Cote D'Ivoire
 Croatia
 Czech Republic
 Denmark
 Dominica
 Ecuador
 Egypt
 Estonia
 Faroe Islands
 Finland
 France
 Georgia
 Germany
 Ghana
 Greece
 Grenada
 Hong Kong
 Hungary
 Iceland
 India
 Indonesia
 Iran, Islamic Republic of
 Ireland
 Israel
 Italy
 Jamaica
 Japan
 Kazakhstan
 Korea, Republic of
 Kuwait
 Kyrgyzstan
 Latvia
 Liechtenstein
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta
 Mexico
 Moldova, Republic of
 Mongolia
 Montenegro
 Montserrat
 Morocco
 Netherlands
 New Zealand
 Norway
 Pakistan
 Peru (Mar 2014)
 Philippines
 Poland
 Portugal
 Qatar
 Romania
 Russian Federation
 Saint Kitts and Nevis
 Saint Lucia
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sri Lanka
 Sweden
 Tajikistan
 Thailand
 Trinidad and Tobago
 Tunisia
 Turkey
 Turkmenistan (Dec 2013)
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uruguay
 Uzbekistan
 Venezuela
 Vietnam

There are also several agreements between Switzerland and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Argentina (Mar 2014)
 Australia (Jul 2013)
 China (Sep 2013)
 Hungary (Sep 2013)

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Exchange on Request: 6 Signed Agreements

There are also several agreements between Switzerland and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Andorra (Mar 2014)
 Guernsey (Sep 2013)
 Isle of Man (Aug 2013)
 Jersey (Sep 2013)
 San Marino (May 2014)
 Seychelles (May 2014)

Automatic Exchange: Starts in September 2018

Switzerland signed the automatic information exchange agreement on 29 October 2015 and committed to start the automatic information exchange in September 2018.

Further Information

FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

FATCA Status in Switzerland
IGA in effect since 14 February 2013, Model 2

Switzerland has FATCA agreement with the U.S. in effect since 14 February 2013 (Intergovernmental Agreement Model 2).

Further Information

Financial Market Development

Financial Market Development
5.3 (max 7.0), 8th out of 138 countries
Banks' Soundness
5.9 (max 7.0), 19th out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Switzerland is scored 5.3 out of maximum 7.0 and ranked 8th out of 138 analysed economies. Soundness of banks is scored 5.9 bringing Switzerland into the 19th place, trustworthiness and confidence of financial market is scored 5.2 (21st place).

Financial Market Development in Switzerland. Chart 5. Financial Market Development in Switzerland. Source: WEF.

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 CHF

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Switzerland are summarised in Table 2.

Scheme Participantsall credit institutions operating in Switzerland (including branches of foreign banks), branches of Swiss banks abroad
Eligible Depositorsprivate individuals, commercial enterprises and public-sector offices
Covered Accountscredit balances (e.g. personal accounts, savings accounts, investment accounts, salary accounts, numbered accounts, deposit accounts and current accounts)
Covered Currenciesall
Maximum Protected Amount100 000 CHF
Paid In CurrencyCHF

Table 2. Deposit guarantee scheme in Switzerland.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Swiss franc) Foreign Currency
Aaa (prime) Aaa (prime)

Local currency (Swiss franc) deposit ceiling for Switzerland is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

Banking Sector Structure

Number of Banks
275
Consolidated Assets (2015)
3 026.15 bln CHF  (-0.51%)
Recent Changes (2015)
new banks: 8, closed banks: 15

Currently there are 275 credit institutions operating in Switzerland.

In 2015 consolidated banking assets in Switzerland were 3 026.15 bln CHF. The consolidated banking assets' evolution is shown at Chart 6 below.

Consolidated banking assets in Switzerland. Chart 6. Consolidated banking assets in Switzerland.

Recent structural changes (2011 - 2015) of the banking sector of Switzerland are summarised in Table 3.

20112012201320142015
Number of Opened Banks22118
Number of Closed Banks01716815

Table 3. Recent structural changes in the banking sector of Switzerland.

The list of the most recently opened banks in Switzerland is provided in Table 4.

NameStart Date
 SOCIETE GENERALE Private Banking (Lugano-Svizzera) SA (new)January 2015
 IG Bank S.A. (new)January 2015
 Zähringer Privatbank AG (new)January 2015
 Bank of America, National Association, Charlotte, Zurich Branch (new)January 2015
 UBS Switzerland AG (new)January 2015
 CACEIS Bank Luxembourg, Luxembourg, succursale de Nyon (new)January 2015
 Banque Internationale de Commerce - BRED (Suisse) SA (new)January 2015
 China Construction Bank Corporation, Beijing, Swiss Branch Zurich (new)January 2015
 Banque du Léman SA (new)January 2014
 PostFinance AGJanuary 2013
 

Table 4. The most recently opened banks in Switzerland.

All the credit institutions operating in Switzerland can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Big banks3
Branches of foreign banks26
Cantonal banks24
Central banks1
Foreign-controlled banks86
Institutions with a special field of business6
Other banks14
Private bankers who do not actively seek deposits from the public7
Raiffeisen banks1
Regional banks and savings banks62
Stock exchange banks45

Table 5. Number of banks by category in Switzerland.

Time Deposit Accounts

Minimal Interest Rate
0.00 %
Maximum Interest Rate
1.50 %
48 offers from 9 banks

Credit Cards

Minimal Annual Costs
75.00 CHF
Maximum Annual Costs
220.00 CHF
15 offers from 3 banks

Consumer Loans

Minimal Effective Rate
5.90 %
Maximum Effective Rate
9.95 %
19 offers from 3 banks