Dieter Gericke, Gregor Bühler, Felix Dasser,
Marcel Dietrich, Martin Grod, and Reto Heuberger
Section 1: China outbound investment
a) What are the key sectors in Switzerland that attract, or to which the government is seeking to attract, China outbound investment (COI)?
The Swiss government is not soliciting Chinese outbound investments for a specific sector. Investments can be seen in various industries, such as communications technology, pharmaceutical products, chemicals, luxury goods (e.g. watches), commodities, precision tools, textiles and financial services.
b) Is the government generally supportive of COI? Can you describe the current political climate surrounding China and Switzerland?
Switzerland’s attitude towards Chinese investment has always been supportive, and foreign investments are generally welcome. Besides having a liberal legislation, the Swiss government and cantonal authorities provide certain tax incentives for local and international businesses. To a limited extent, and depending on the respective canton, other benefits are also available. Additionally, the Swiss government has commissioned Switzerland Global Enterprise to promote, among others, foreign investment in Switzerland through 21 business hubs worldwide (including offices at the Swiss embassy in Beijing and at the Swiss consulates in Shanghai, Guangzhou and Hong Kong).
The political climate surrounding the PRC and Switzerland is very positive. The two countries have made reciprocal official state visits less than 12 months apart and jointly opened the World Economic Forum Annual Meeting in Davos in January 2017. Historically, Switzerland has taken a pioneering role with respect to political relationships with the PRC. Switzerland was one of the first Western countries to recognize the PRC in 1950 and to acknowledge the PRC as a market economy in 2007. Additionally, in 2013, Switzerland was the first European country to sign a free trade agreement (FTA) with the PRC and, in 2016, one of the first countries in Europe to join the Asian Infrastructure Investment Bank. Currently, upgrading the FTA and strengthening cooperation in tourism, sports, education and economics are under discussion. During the latest state visit to Switzerland in January 2017, the two nations signed a number of agreements regarding culture, customs and energy.
c) What are some notable Chinese investments or M&A that have recently taken place in Switzerland?
Recently, Switzerland has seen the following high profile M&A transactions involving a Chinese buyer:
2016: HNA Group Co. Ltd.’s CHF1.4 billion offer for the acquisition of Gategroup Holding AG.
2016: China National Chemical Corp.’s $43 billion offer for Syngenta AG. This is the largest foreign investment by a Chinese company so far.
2015: HNA Group Co. Ltd.’s $2.8 billion acquisition of Swissport International Ltd.
2015: Dalian Wanda Group Co. Ltd.’s $1.2 billion acquisition of Infront Sports & Media AG.
To support the establishment of a Swiss offshore renminbi market, the PRC granted Switzerland an $8 billion investment quota under the qualified foreign institutional investor (QFII) program in January 2015. Following this agreement, China Construction Bank opened a branch in Zurich in January 2016. The Industrial and Commercial Bank of China is also expected to open a branch in Zurich this year.
Section 2: Investment vehicles and capital
a) What are the most common legal entities and vehicles used for COI in Switzerland? How long do they take to become operational?
The most common Swiss legal forms are the stock corporation (AG) and the limited liability company (GmbH).
Generally, apart from an administrative registration in the commercial register, no government approval is required for the formation of a Swiss company. After the submission of the founding documents to the commercial register, a company may become operational within one to three weeks, depending on the canton.
b) What are the key criteria for establishment and operation of these vehicles that are relevant to COI (e.g. capital requirements, local directors)?
The stock corporation can have one or more shareholders (physical persons, partnerships or legal entities), and must have a minimum share capital of CHF100,000, of which at least CHF50,000 must be paid up. The limited liability company can also have one or more members (physical persons, partnerships or legal entities), and must have a minimum nominal capital of CHF20,000.
Both the stock corporation and limited liability company have to be registered in the commercial register at the place of their domicile. The commercial register of the limited liability company publicly lists the members and their quota in the company. This is not the case for a stock corporation.
There are no citizenship requirements for shareholders, members, or the board or management. However, for both entities, at least one person with residence in Switzerland must have the power to bindingly represent the company.
Section 3: Investment approval
a) Explain the process and timing for foreign investment approval (including any national security review).
Switzerland, as a free investment market, does not hold any foreign investment restrictions and therefore requires no governmental approval. However, independent from foreign investments, certain businesses (e.g. banks) do require approvals or licenses.
Considering real estate, Swiss law restricts the acquisition by a foreign person or a foreign-controlled company of non-commercial real estate in Switzerland. Furthermore, the Swiss constitution stipulates a general limitation insofar that no more than 20% of the total stock of residential units and the gross residential floor area in any commune can be used as second home. The acquisition of shares in a company whose statutory or factual business purpose is trading in non-commercial real estate is also subject to approval, except for listed companies.
b) Briefly explain the investment restrictions for any specially regulated/restricted sectors (e.g. natural resources, financial services, telecom and infrastructure), including whether the government is entitled to any special rights (e.g. golden shares) in those sectors.
Although not exclusively related to foreign investments, restrictions exist in areas where the state has a monopoly. These include certain areas of postal services, domestic long distance transportation, and certain commodities and the trade thereof (e.g. salt).
Other sectors may have certain domiciliary requirements such as in maritime and air transport, as well as transport of dangerous material, oil/gas pipelines and electricity power plants.
Investments above certain thresholds (typically 10%) in banks, insurances and other regulated financial institutions require approval from the Swiss Financial Market Supervisory Authority (FINMA). A special license is required for foreign control of Swiss financial institutions.
c) Which authority oversees competition clearance, when is notification mandatory, and what is the merger control process (including whether pre- or post-closing)?
The Swiss Competition Commission (ComCo) oversees competition clearance in Switzerland. In special circumstances, FINMA may oversee competition approval for banks.
Planned concentrations of undertakings, mergers, as well as acquisitions of sole or joint control, must be notified to ComCo prior to their implementation if the undertaking concerned achieved, in the last year, a combined turnover of at least CHF2 billion worldwide or, alternatively, a combined turnover of at least CHF500 million in Switzerland; and each of at least two of the undertakings concerned cumulatively achieved a turnover of at least CHF100 million in Switzerland in the previous year.
However, a notification duty exists in any case if a transaction affects a market where a participant has a dominant position as established in a final and binding decision under the Cartel Act.
The clearance process can be distinguished into the following two phases:
Phase I (preliminary investigation—one month waiting period): After receipt of the complete notification, ComCo is required to notify the parties within one month whether it intends to initiate an in-depth investigation. If no notification is received from ComCo within the time period, the merger is deemed to be cleared.
Phase II (in-depth investigation—four months): A subsequent in-depth investigation has to be completed within an additional four months. Phase II may be terminated as follows: unconditional authorization; authorization subject to conditions and obligations; prohibition; or withdrawal of notification.
d) Are there any unique processes that could potentially block a foreign investment (e.g. consent from labor unions)?
There are generally no unique processes in Switzerland that could block a foreign investment if the shareholders of a target agree, a merger control process is not triggered or ComCo has cleared the concentration and the necessary licenses are obtained (e.g. banks).
e) Are there approval requirements when a foreign investor increases or exits its investments?
There is no limitation on foreign ownership in the financial industry. However, an additional license is required for a Swiss bank or securities dealer under foreign control or in case of changes in the foreign control.
Other than that, there are various notification duties. Of banks, securities dealers and insurance companies, shareholders who increase or decrease their holdings and hit the threshold of 10%, 20%, 33% or 50% of the entity’s capital or voting rights must notify FINMA, which is similar to an approval requirement. For banks and securities dealers, a notification is also required if the shareholders can otherwise exert a significant influence. In a similar manner, investments in “investment fund managers” must be notified if a threshold of 10% is reached. Last but not least, investors must fulfill certain notification duties for the acquisition of shares or capital of a non-listed target as the membership rights are otherwise suspended.
There are further notification duties for companies listed on an exchange in Switzerland. The stock exchange and the target must be notified if a bidder (directly, indirectly or in concert with a third party) acquires or sells shares or equity-linked securities and thereby reaches, exceeds or falls below the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 33⅓%, 50% or 66⅔% of all voting rights in the target company. Further notification duties exist in case of a takeover. Lastly, shareholders with more than 5% in the corporation’s shares must be disclosed in the annual report (to the extent known to the company).
Section 4: Tax and grants
a) Are there tax structures and/or favorable intermediary tax jurisdictions that are particularly useful for FDI into the country?
Switzerland, on a federal and cantonal level, has various corporate tax incentives in place. These include:
Foreign profit exemption: All profits attributed to foreign permanent establishments and foreign real estate are exempted from the Swiss tax base.
Participation exemption: This is granted on dividend and capital gain income from the sale of shares. For dividend income exemption, an equity investment of at least 10% or with a value of at least CHF1 million is required. For a capital gain exemption, an equity investment of at least 10% that has been held for more than one year is required.
Regional holding company regime: If a company qualifies as a holding company, all the income is exempt from regional and communal corporate tax (but not on a federal level). Holding company status is granted if: (1) the main purpose of the company is the holding and management of long-term financial participations in the subsidiaries; (2) at least two-thirds of either the assets or income is composed of or derived from participations; and (3) the company is not engaged in any commercial activity in Switzerland.
Mixed companies (trading, IP, etc.): This qualification is given if at least 80% of the income is derived from abroad and at least 80% of the expenses are foreign expenses. In such circumstances, Swiss source income is taxed at standard rates, whereas foreign source income is only partially included in the Swiss tax base.
State aid: Depending on the size and the function of the newly established business, an exemption of up to 50% from regional or communal income taxes and, in specified areas, from federal income taxes for a period of up to 10 years, may be granted. However, these state aids are limited to certain economically undeveloped regions.
Principal structures: Swiss principal companies of international groups can benefit from a special tax treatment for federal income tax purposes. A principal company has several high-level employees and assumes risks and responsibilities for certain activities, such as purchasing, R&D, manufacturing, distribution, marketing strategy and logistics. Provided that the sales are made exclusively through commission agents or low-risk distributors, the principal company can reach a reduced Swiss tax base that results, in combination with the regional tax regime of the mixed company, in tax rates as low as approximately 5% to 7%, depending on the setup and location.
Switzerland is expected to abolish the mixed, holding and principal tax regime in the next few years and introduce several other tax measures such as the license box regime. Switzerland does not, however, intend to abolish the participation exemption and foreign permanent establishment regimes.
b) What are the applicable rates of corporate tax and withholding tax on dividends?
Switzerland levies corporate income taxes on a federal, cantonal and communal level. There are large differences in tax rates between the cantons. The overall corporate income tax rates are between 11.5% and 24%. In addition, the Swiss cantons levy a wealth tax on the net equity of companies which ranges from 0.01% to 0.5%.
Switzerland levies a withholding tax at a rate of 35% on dividends and certain interest on bonds and bank accounts, but not on loans, which do not qualify as collective financing. Switzerland has tax treaties in place with the PRC and Hong Kong. The tax rates in the treaties are applicable as long as Swiss law does not provide for a lower rate. The tax treaty with the PRC limits withholding taxes on intra-group dividends to 5% (15% for portfolio dividends) and to 10% for interests. The tax treaty with Hong Kong provides for 0% withholding tax on intra-group dividends (10% for portfolio dividends) and 0% on interests.
c) Does the government have any FDI tax incentive schemes in place?
d) Other than through taxes, does the government provide any other financial support to investors? If so, please provide an overview.
Switzerland has historically set favorable conditions for foreign investments, which mostly enjoy a level playing field with local businesses. Other than tax, in rare circumstances, cantons may provide incentives that are open to both local and foreign investors. Such support is, if at all, seen mainly in the high-tech industry with a slight tendency to give priority to foreign investors.
Depending on the specific canton, incentives may be granted in the form of subsidies, cantonal loans (usually below market interest rates), cantonal guarantees for bank loans and payment of interest rates by the canton. Furthermore, direct monetary contributions may be made for the acquisition of intellectual property rights, industry certificates, development of new production processes, market studies, participation in trade shows and training of employees.
e) Are there any reciprocal tax arrangements between Switzerland and China? If so, how can they aid investors?
Section 5: FX controls and local operations
a) What foreign currency or exchange restrictions should investors be aware of?
Switzerland has no foreign currency or exchange restrictions in place.
However, the Swiss National Bank may set a minimum exchange rate with respect to certain currencies from time to time, as it did against the EUR at a rate of CHF1.20 until January 15, 2015.
b) Are there any legal restrictions on bringing in foreign workers? How difficult is it to secure expatriate visas for shareholder representatives, senior managers and workers in practice?
Switzerland distinguishes between citizens from the EU/EFTA and those from all other countries.
EU/EFTA citizens are allowed to work in Switzerland for up to three months a year without a work permit, provided the notification duties have been fulfilled. A formal work permit is required if the employment extends beyond three months in a given year. Such permits are issued based on the Free Movement of Persons Agreement with the EU, and are usually granted in two to four weeks.
Employees from other countries require a work permit in any case. These are subject to yearly quotas. Furthermore, non-EU/EFTA citizens can only be employed in Switzerland if no other persons with an equivalent qualification in Switzerland or the EU/EFTA can be found. Generally, managers, specialists and other highly qualified people with a university degree and professional experience have the best chances of obtaining a work permit. There may also be further integration requirements, such as language skills. No work permits are required for business meetings. The process of obtaining a work permit for a non-EU/EFTA citizen can last from three weeks to several months depending on the complexity of the case.
c) What are the requirements and process for purchasing commercial property?
Contrary to residential real estate, there are no restrictions or authorization requirements for the acquisition of commercial property in Switzerland.
The process for purchasing commercial property is straightforward. Besides identifying an object, a buyer must ensure financing and sign and notarize the contract. The transfer of the real estate must then be registered in the land register, which serves as a proof of ownership.
Acquisitions by foreigners or foreign-controlled entities may be restricted for commercial properties involving reserved land or partly residential users.
Section 6: Dispute resolution
a) Does Switzerland have a bilateral investment protection treaty with China or other locations commonly used for investing into the country?
According to the Investment Policy Hub of the United Nations, Switzerland has signed 114 bilateral investment treaties, of which 112 are in force. A revised bilateral investment protection treaty between Switzerland and the PRC has been in force since April 13, 2010, which replaced the 1987 treaty. Since then, the two nations have further strengthened their relationship by a FTA that entered into force on July 1, 2014 and a double tax treaty that has been effective since October 14, 2014.
Additionally, as a member of the World Trade Organization, Switzerland applies the General Agreement on Trade Services (GATS) and the Agreement on Trade-Related Investment Measures (TRIMS). It has also signed the Energy Charter Treaty (ECT).
An investment protection treaty between Switzerland and Hong Kong has been in force since October 22, 1994. Also in place is a tax treaty effective since October 15, 2012 and an FTA signed with other EFTA states on October 1, 2012.
b) How efficient are local courts’ enforcement and dispute resolution proceedings, and are there any procedural features foreign investors must be aware of?
Switzerland has a long tradition of solving international disputes in an efficient, neutral and professional manner, catering to the needs of international businesses and governments alike. Switzerland has an impartial state court. Furthermore, unlike those in other jurisdictions, the Swiss commercial courts willingly assist the parties in finding a reasonable solution to their dispute early on in the proceedings and based on prima facie assessment of the strengths and weaknesses of the case by the court itself. Further, the parties need not fear expensive and disruptive document production proceedings that are known from common law jurisdictions (no discovery).
As for arbitration, Switzerland is one of the leading arbitration venues and regularly can be found among the top three in the International Chamber of Commerce’s statistics. The same holds true for the popularity of the use of Swiss substantive law to govern international contracts.
A unique feature of Swiss arbitration law is the direct and only recourse to the Swiss Supreme Court for any challenges against an arbitral award. This setting-aside procedure typically takes less than six months, with less than 7% of all awards being vacated.
c) Do local courts respect foreign judgments and are international arbitration awards enforceable?
Switzerland enforces and recognizes foreign arbitral awards based on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Under the condition that an applicant can establish prima facie that an arbitral award is enforceable, Swiss courts even issue freezing orders prior to an exequatur.
Foreign judgments are regularly enforced in Switzerland based on the Lugano Convention and the Swiss Private International Law. Switzerland follows the principle of favor recognitionis and may only deny recognition and enforcement based, among others, on a violation of the ordre public, the foreign court’s lack of jurisdiction, or a violation of the right to be heard.
d) Are local judgments and arbitration awards from Switzerland generally enforceable in other jurisdictions?
More than two thirds of the parties arbitrating under the Swiss Rules of International Arbitration are non-Swiss, in line with the average percentage of foreign parties in all international proceedings in the country. As a result, Swiss arbitral awards are not only highly respected in other jurisdictions, they are also regularly enforced, based on agreements such as the New York Convention.
Swiss local judgments, are also regularly enforced in foreign jurisdictions based on the Lugano Convention signatories’ international treaties or the respective local legislation.
Dieter Gericke heads Homburger’s Corporate | M&A practice team and, since 2010, the Homburger China Group. He focuses on M&A (including public takeovers and defense), equity capital markets (including IPOs), private equity and financing. He advises in matters of corporate law and governance, as well as securities regulations.
Gregor Bühler is the Deputy Head of the IP | IT and partner in the Competition & Regulatory practice team. He focuses on intellectual property law, information technology and unfair competition law (advisory work as well as representation in contentious matters).
Felix Dasser heads the Litigation | Arbitration practice team. He advises and represents companies in international commercial disputes in litigation and arbitration proceedings, as well as on white collar crime and regulatory compliance. He also sits as an arbitrator. As an Adjunct Professor of the University of Zurich, he also teaches international dispute resolution and acts as expert on Swiss law.
Marcel Dietrich is a partner in the Competition | Regulatory and Corporate practice teams as well as in the White Collar | Investigations and Real Estate working groups. His practice focuses on Swiss and European competition and antitrust law as well as on administrative law and regulated markets.
Martin Grod is a member of the Financial Services practice team. He focuses on corporate law, banking regulation, capital markets, insolvency laws, and financial markets infrastructures. Martin Grod joined Homburger as an associate in 2012, is a member of the Homburger China Group and obtained an LL.M. degree from the University of Hong Kong in 2016.
Reto Heuberger is a partner in the Tax practice team. He focuses on tax planning and the structuring of M&A transactions, reorganizations, relocations, investment management structures, family offices, and trusts.
Dieter Gericke﹑Gregor Bühler﹑Felix Dasser﹑
Marcel Dietrich﹑Martin Grod 和 Reto Heuberger
瑞士对中国的投资一向采取支持态度，且总体来说都是欢迎外商投资的。除了宽松的立法之外，瑞士联邦和地方政府为本地和国际企业提供了若干税务优惠。各州政府在某些情况下还提供其他的优惠。此外，瑞士政府委托瑞士贸易与投资促进署(Switzerland Global Enterprise)通过全球21个商务促进中心(包括设于瑞士驻北京大使馆，驻上海、广州和香港领事馆的中心)促进对瑞士的外国投资。
2016年： 海航集团有限公司出资14亿瑞郎收购瑞士航空服务商Gategroup Holding AG。
2015年： 海航集团有限公司出资28亿美元收购Swissport International Ltd.。
2015年： 大连万达集团股份有限公司出资12亿美元收购Infront Sports & Media AG。
第一阶段(初步调查 — 一个月的等待期)：收到完整通知后，ComCo须在一个月内通知当事方它是否展开深入调查。如果没有在一个月内收到通知，并购则被视为获得通过。
第二阶段(深入调查 — 四个月)：随后的深入调查必须在另外的四个月内完成。第二阶段可以下述方式终结：无条件批准、有条件和义务的批准、禁止或撤销通知。
Dieter Gericke是Homburger律师事务所公司/并购业务组的主管，并自2010年起主理Homburger中国业务部。他的业务重点是并购 (包括公开收购和防卫)、股票资本市场 (包括首次公开募股) 私募股权和融资。他就公司法和治理以及证券监管事项提供法律意见。
Gregor Bühler是知识产权/信息技术业务组的副组长，以及竞争监管业务组的合伙人。他的业务重点是知识产权法、信息技术和不正当竞争法 (作为法律顾问以及在诉讼中担任代表律师）。
Martin Grod 是金融服务组的成员。他的业务重点是公司法、银行监管、资本市场，破产法和金融市场基础设施。他于2012年加入Homburger担任律师，是Homburger中国业务部的成员，并于2016年在香港大学取得法学硕士学位。