• GLOBAL MOBILITY
SWITZERLAND
MY ADVICE...
The Law and Politics of Swiss Immigration
In general, Switzerland is still quite liberal in terms of employment laws
Any relocation, whether by a company as a whole or for an individual, needs to be carefully planned. Particularly, legal and tax advice should be obtained prior to deciding and implementing such measures and ensure that any permits required are obtained in time prior to setting up shop.
of, which could lead to tax and social security issues, where there are no treaties in place. Switzerland has not yet passed specific legislation for digital nomads, but there are certain visa options available for high-net-worth individuals or entrepreneurs. Q2 Climate concerns are increasingly becoming a decision-making factor in global migration – how is this impacting your jurisdiction? Certain parties contend that millions of climate refugees will migrate to Europe in the next 25 years. They argue that the population explosion will lead to a Swiss population of 10 million, negatively affecting quality of life, straining infrastructure and supplies, and leaving locals alienated. Those parties are pushing for more restrictive rules, and campaigning against the renewal of the bilateral treaties. Others are more relaxed and do not believe that Europe will be severely affected by climate refugees, because those most affected by climate change do not usually have the financial resources to flee over long distances to Europe. Currently, climate change is not an accepted reason to grant refugee status. Given the rise in popularity of conservative politicians through-out the world, this will not likely change in the short term. Thus, in Switzerland, the normal immigration restrictions for third country nationals remain in
and immigration, despite the restrictions outlined above. However, legislation and its implementation are becoming stricter, particularly with regard to international mobility of the work- force, with protectionist tendencies on the rise.
force. Individuals from these countries require a residence, a work permit and a visa. The residence and work permits are divided into different categories and are of varying duration. They are restricted in number by annual quotas allocated to the individual twenty-six Cantons by the Federal Government. To obtain a work permit for a third country national, an employer needs to show and document that despite their best efforts, no suitable Swiss, EU, or EFTA national could be found to fill the vacant position. There are detailed regulations regarding the type of documents need to be submitted to obtain a valid permit, and processing time is usually between four to eight weeks. Q3 How is government policy influencing mobility in your jurisdiction – particularly in regard to employment relocation? Switzerland boasts a stable political environment, a reliable tax regime, and good infrastructure, which make it an attractive venue for companies to set
up operations and for people to want to live. One of the current issues that the country is facing is a shortage of skilled workers and specialists. This has led to the use of cross-border workers for individual assignments for projects. To avoid salary dumping, undercutting the high salaries in Switzerland, legislation forces such providers to abide by minimum salary and minimum working conditions. Foreign providers of services and goods who do not comply can be fined and blacklisted. Additionally, high labour, material, and energy costs in Switzerland have also forced many industries, particularly in the manufacturing space, to outsource their operations to more affordable third countries. When restructuring or downsizing, there are several legal challenges, such as the rules on mass dismissals, which require negotiations with the employee representatives. Current legislative changes are affecting the high cost base in Switzerland even further. As of January 1, 2024, the VAT rate has increased to 8.1% (from 7.7% in 2023) in order to finance the state social security for old age and survivors’ pensions. Several Cantons have introduced minimum wages above those set out in any collective bargaining agreement.
Monika Naef Partner DUFOUR – Advokatur
Q1 How are global geopolitical events affecting mobility in your jurisdiction? Switzerland is the highest ranked country in terms of average wealth per adult, surpassing even the USA. Its unemployment rate is low, less than 2.5% in 2023. In addition, the average tax wedge on labour income in Switzerland for individuals is quite low in comparison to the OECD average. Switzerland has opted for permanent neutrality as a guiding principle for its foreign policy. However, recent geopolitical events are challenging this. With the outbreak of the war in Ukraine, Switzerland registered a spike in the number of asylum seekers. As a rule, refugees are not permitted to work until their request for asylum has been granted. However, in 2022, more than 75,000 refugees from Ukraine were granted special status “S”, allowing them to enter the workforce immediately. This special status was introduced into legislation in 1998 as a reaction to the refugee flows from the wars on the Balkans, but has never previously been activated. The current special refugee status “S” will expire in March 2024. According to the UN Refugee Agency, in mid-2023 more than 110 million people have been forcibly displaced, including for reasons of climate change. Half of these dis- placed persons originate from just three countries: Syria, Afghanistan and Ukraine. The number of displaced
persons is on the rise and were expected to reach 130 million by the end of 2023. In total, in the year 2022, Switzerland registered 100,000 new refugees in total. 2023 figures are not yet available. In addition to the migration of displaced persons, Switzerland allows the free movement of EU or EFTA nationals, though these agreements are currently being renegotiated. The number of immigrants is a contentious matter in Swiss politics. Being an attractive country to work and live in, with high incomes, low tax rates, a well-functioning infrastructure and political stability, many people chose to live here. Of the approximately 9 million people living in Switzerland, about one quarter are foreign nationals, two thirds of which are EU/EFTA nationals (about 1.59 million). Roughly 700,000 have nationalities from other countries, so called third countries. Post Brexit, UK nationals are now also considered as nationals from third countries and require a work and residence permits to live and work in Switzerland. UK nationals residing in Switzerland prior to Brexit, benefit from the safeguard of their prior rights under the EU freedom of movement agreements. Strong immigration has led Switzerland to become very restrictive in issuing residence and work permits, with fixed quotas granted by the Swiss federal government every year. Since the Covid-19 Pandemic, home working has flourished. Foreign employers are employing Swiss or EU/ EFTA nationals and sometimes third country nationals living in Switzerland who work remotely. There are a number of challenges in this arrangement that an employer needs to be aware
Monika E. Naef is Partner & Owner of DUFOUR Advokatur AG (Dufour Attorneys). Her focus areas are employment and business law, business development and M&A, international business relations and trade law. After earning her law degree from the University of Basel and passing her bar exam in Basel-Land, Monika became in-house legal counsel for a multinational pharmaceutical and chemical group, with global leadership responsibilities. She also headed the multifunctional M&A review team as well as the Trademarks Department. In 2005, she moved into private practice by establishing DUFOUR Advokatur together with other partners at its current domicile. Monika attended INSEAD (International Executive Programme) and is a Certified Global Negotiator (CGN-HSG).
About us... dufour-advokatur.ch DUFOUR Advokatur AG wanted to offer more than just legal advice from the beginning. We created a quite unique consulting culture – with unconventional ideas, an excellent team spirit and competence that extends beyond the legal view to include the social and emotional aspects of a mandate. Today DUFOUR successfully advises many
funds, charitable funds, foundations and NPOs, DUFOUR has established itself as the top specialist in Switzerland. We offer comprehensive legal advice and have a team of recognised experts with core skills in employment, corporate, licensing and trade law as well as matrimonial property and inheritance law. In addition, DUFOUR has excellent knowledge in the legal aspects related to the following industries: pharmaceuticals, chemicals, medtech, trade & logistics, construction and the art market.
+41 6120 503 03 monika.naef@dufo.ch irglobal.com/advisor/monika-naef
companies, private individuals, foundations, non- profits, and pension funds. In the field of pension
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