Economy and Banking Sector of Switzerland
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.
Durung the last 10 years EURCHF exchange rate was within the range 1.0468 - 1.6762, reaching its maximum in Oct 2007 and falling to its minimum in Jan 2015.
According to Eurostat, nominal GDP of Switzerland in 2013 was 490.0 bln EUR.
Switzerland outperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.3% over the past 10 years (2003 - 2013). In 2013 real GDP growth was 2.0% which was above the Euro Area average (-0.5%) and above the European Union average (0.1%). Real GDP growth in 2014 - 2019 are IMF's estimates.
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 8.84% over the past 10 years (2003 - 2013). In 2013, nominal GDP per capita in Switzerland was 61 100 EUR.
GDP per capita at PPP in 2014 - 2019 are IMF's estimates.
According to Eurostat, inflation rate in Switzerland in 2014 expressed as annual percentages of average consumer prices was 0.0% which was below the Euro Area average (0.4%) and below the European Union average (0.6%). Inflation rates in 2015 - 2019 are IMF's estimates.
Taxation in Switzerland
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 applied on payments of interest and dividends in Switzerland are shown in Table 1.
Double Taxation Agreements
Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.
Switzerland signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):
There are also several agreements between Switzerland and other jurisdictions which was signed but haven't yet come into force (for agreements signed after after 1 January 2013 of signing the agreement is given in brackets):
There are 3 ways for jusrisdictions to exchange information on tax matters:
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.
There are also several agreements between Switzerland and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 1 January 2013 of signing the agreement is given in brackets):
Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.
Switzerland didn't sign the automatic information exchange agreement but made a commitment to start the automatic information exchange in September 2018.
Swiss Banking Sector
Financial Market Development
According to World Economic Forum's Global Competitiveness Report 2014-2015, financial market development in Switzerland is scored 5.300 out of maximum 7.000 and ranked 11th out of 144 analysed economies. Soundness of banks is scored 5.900 bringing Switzerland into the 21st place, trustworthiness and confidence of financial market is scored 5.700 (11th place).
Banking Industry Country Risk
Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.
Switzerland is included into group '1' with economic risk scored '1' and industry risk scored '2'.
Deposit Guarantee Scheme
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:
All these details about deposit guarantee scheme in Switzerland are summarised in Table 3.
Further Information: Deposit Guarantee Schemes in Europe
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) deposit ceiling for Switzerland is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).
Banking Sector Structure
Currently there are 288 credit institutions operating in Switzerland.
Recent structural changes (2011 - 2013) of the banking sector of Switzerland are summarised in Table 4.
All the credit institutions operating in Switzerland can be classified into several categories. Table 5 summarises the number of banks in each category.
The list of the most recently opened banks in Switzerland is provided in Table 6.