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Newsletter | Articles Switzerland Sees Record Company Registrations   The record number of companies set up in Switzerland during the first six months of this year, have led to the fastest rate of growth being registered in Canton Obwalden, which slashed tax rates at the beginning of 2006.Following a study by credit risk assessment company Dunn and Bradstreet, the record figures show an increase of 5.5 per cent (18,365) in new company registrations compared to the corresponding period in 2006. The previous record was 17,622 in the first half of 2004. At the same time, bankruptcies for the first six months of the year fell 4.3 per cent from the same period in 2006 to 2,252 according to official statistics. While Zurich was the canton which saw the largest number of incorporations, tiny central Canton Obwalden saw a 230 per cent rise in company registrations in the first six months of 2007 compared with last year. The canton’s decision to cut corporate tax to 6.6 per cent on January 1, 2006, following a local referendum, has helped Obwalden attract new companies. Managing director Knut Hackbarth, of relocation company Obwalden Business Promotion, told SwissInfo: “We have had a huge growth rate since taxes were lowered with 30 or 40 new businesses per month (in the first year). As long as the current rate continues we could see 50 per cent more companies in the canton within two years of the tax changes.” Last month a digressive income tax, aimed at attracting wealthy residents, had to be scrapped by Obwalden after the Swiss Federal Court ruled it unconstitutional. But the high profile court case came with a silver lining, according to Hackbarth. Mr Hackbarth told SwissInfo: “It brought a lot of attention to Obwalden and gave us a lot of visibility that we would not normally have received. This in turn has helped us attract more companies by putting us on their radar. We could never have afforded such publicity had we tried to generate it ourselves.” Despite Switzerland not being European Union member and the latest figures highlighting the success of the Swiss tax regime in attracting foreign companies, Switzerland’s system is under attack from the EU. According to Brussels, Swiss company tax laws are incompatible with a 1972 trade treaty between Switzerland and the EU, because they distort trade and competition. Under Swiss law, the cantons may fully or partially exempt profits generated abroad from cantonal and municipal company tax. The EU says this allows European companies to incorporate in Switzerland and avoid EU taxes, and it is attempting to bring proceedings against the Swiss government under EU state aid laws. However, as Switzerland is not an EU member state it is uncertain whether this strategy will succeed. Contact ILS Switzerland Director David Ashton for more information. |