September 2021 / Switzerland

Nearly two-thirds of Swiss voters have rejected an initiative to tax passive income — possibly including all capital gains — at 150 percent of the rate normally applicable to an individual taxpayer's income.

Nearly two-thirds of Swiss voters have rejected an initiative to tax passive income — possibly including all capital gains — at 150 percent of the rate normally applicable to an individual taxpayer's income.

Just under 65 percent of voters and all 26 cantons voted against the measure September 26. The Swiss Socialist Youth Party, which proposed the initiative, said it was needed because tax breaks for the richest 1 percent have led to a record level of inequality in recent years.

Initiatives are put to a vote in Switzerland if at least 100,000 voters sign a petition supporting the proposed measure. If the initiative involves a constitutional issue, it must be approved by majorities of those casting ballots and of the country’s 26 cantons.

Finance Minister Ueli Maurer reportedly told a news conference that the vote demonstrated that a majority of Swiss voters are content with the existing tax regime. The Swiss Broadcasting Corp. quoted Maurer as saying that the combination of progressive income tax rates, wealth tax, and social security benefits is "obviously sufficient to prevent a further opening of the gap between the rich and the less well-off."

The Swiss Bankers Association, which campaigned against the initiative, welcomed the result, saying it would have hurt many small- and medium-size companies, start-ups, small investors, and homeowners. “As the Federal Council explained in the run-up to the referendum, the heavier taxation of income from invested capital would have detracted from Switzerland’s international appeal as a business location and reduced incentives to save, both of which are key drivers of the Swiss economy,” the association said September 26. “The rejection of the initiative can be seen as a sign that Switzerland’s population has faith in its existing tax system. One of the main reasons cited for voting against the initiative was the fact that its wording was open to interpretation, making the impact on the economy and society . . . hard to gauge.”

Switzerland is one of the most attractive locations for biotech companies and benefits from a very high influx of venture capital. At the same time, Switzerland has excellent prerequisites for further expanding its strong position in manufacturing complex biopharmaceuticals, as illustrated by numerous reports, presentations and panel discussions at the leading Swiss biotech industry conference.

At the Swiss Biotech Day, KPMG presents its latest report «Site Selection of Life Sciences Companies in Europe». The study analyzes the attractiveness of European countries as locations for pharmaceutical, biotech and medtech companies. «Switzerland is an attractive location in important comparative categories such as the size of the cluster, attractiveness for qualified employees and competitive taxes. However, the EU is also investing heavily in expanding the life sciences industry. Thus, competition for investments and talent are likely to increase further» explains André Guedel, expert in site evaluation at KPMG Switzerland. Economic parameters such as general competitiveness and innovation power, the financing environment, or the size of the talent pool are critical when choosing a location for biotech companies. Quality of life and a general work-life balance, R&D infrastructure and political stability also play a major role.

A global leader with a long list of successes

Thanks to this excellent environment coupled with continuous investments in research and the strong ability to innovate, the Swiss biotech industry has been one of the leading biotech hubs for many years. Together with the pharmaceutical industry it contributes to more than 40 percent of Swiss exports.

Brought to public attention by the Covid pandemic, the biotech industry has become very popular among investors. «By July 2021, investors invested around 2 billion Swiss francs in Swiss biotech companies. 80 percent thereof was raised by IPOs and companies listed on the stock exchange. In the first seven months of this year alone, five Swiss biotech companies successfully went public» says Jürg Zürcher, expert and EY Senior Advisor Biotechnology, in his update on this year’s Swiss Biotech Report.

The success stories of Bachem, Basilea, Esbatech, Lonza or Novimmune demonstrate the broad-based success of this industry. Consequently, these companies are honored with a «Swiss Biotech Success Stories Award» at the Swiss Biotech Day. In his keynote address, Roger Nitsch, CEO of Neurimmune, explains the important role Switzerland plays in the development of new drugs, such as Aducanumab. Aducanumab has recently been approved by the U.S. Food and Drug Administration for the treatment of Alzheimer’s disease. It was discovered by Neurimmune in collaboration with the University of Zurich and will be marketed by Biogen. Biogen will produce Aducanumab at its new manufacturing site in Luterbach in the canton of Solothurn.

International cooperation as the key to success

The fact that Switzerland is a major player in biotechnology is also reflected in its important contribution to combat the Covid pandemic. However, the performance of individual countries is not critical to overcoming the pandemic, as Michael Altorfer, CEO of the Swiss Biotech Association, emphasizes: «The success in developing new vaccines, diagnostics and a growing range of therapeutic options are ultimately the result of a fantastic international cooperation.»

Paradoxically, this cooperation is suddenly under severe pressure at a time of its greatest success. A wide variety of countries have realized how dependent they are on global supply chains, which have proven to be politically susceptible under time and demand pressures. Many countries therefore wish to become more independent in the development and production of active ingredients for their own supply and to establish their own supply chains. The retreat to national supply chains and national, isolated research programs would be a massive set-back for global research networks. As Switzerland only has a very small local market it can focus and dedicate its capacity to the needs of foreign countries and thus has the opportunity to further expand its strong position in pharmaceutical manufacturing for the world.

Switzerland as a global producer of biopharmaceuticals and novel therapies

The competitive advantages of Switzerland, such as global networks, highly qualified talent, political stability and neutrality are being used by both multinational pharma companies as well as contract manufacturers to produce highly complex biopharmaceuticals and products in the field of novel gene and cell therapies. The rapid expansion of companies such as Lonza, Bachem, Siegfried, Dottikon and Celonic, demonstrate the potential of Switzerland to produce for a global demand. «The Swiss biotech and pharma industry covers the entire value chain and has significant – and growing – production capacities. For example, Merck has invested more than 400 million Swiss francs in new production capacities in Switzerland over the past two years, Biogen more than 1 billion Swiss francs in its site in Luterbach, and Lonza has built three new vaccine production lines in Visp,» emphasizes Michael Altorfer.

Well equipped for the future

In conclusion, Switzerland is well equipped for the future. Next to the expansion of industrial parks and production facilities, Switzerland offers a broad-based commitment to strong patent protection, a well-filled product pipeline and a strong start-up scene, which has contributed significantly to industry growth, as Jordi Montserrat, CEO of Venturelab, confirms at the Swiss Biotech Day: «The life sciences alumni of Venturelab and Venture Kick are among the biggest Swiss success stories in this area and have attracted several billion Swiss Francs in investments.»

You can read more and download Swiss Biotech Report 2021 here

Switzerland has once again topped the Global Innovation Index for this year. In so doing, the world intellectual property organization has determined that no coronavirus-related slump has been observed in relation to financing innovation.

Switzerland has successfully defended top spot in the Global Innovation Index, further details of which can be found in a press release issued by Wipo, the World Intellectual Property Organization. As was the case in the previous year, the places immediately behind Switzerland are again occupied by Sweden, the USA and the UK. Having previously taken 10th place, South Korea has risen five places to claim 5th spot. However, Germany fell one place to 10th in this year’s rankings, although France (12th up to 11th) and Austria (19th up to 18th) both recorded an improvement of one place respectively.

Sectoral variations

Despite the coronavirus crisis, global innovation investments have proved to be highly resilient, Wipo writes in the press release. However, industry-related differences have been observed over the past year. In this respect, companies operating in the fields of IT and electronics as well as pharma and biotechnology firms have scaled-up their investment activities, while companies from sectors including tourism have evidently been impacted by the crisis to a greater extent.

Switzerland boasts huge number of patents

Switzerland topped not only the overall rankings but also the assessment for Europe and high-income countries. In the overall rankings, Switzerland took top spot for the eleventh year in succession, with this excellent record primarily attributable to the country’s huge number of patents. In the Knowledge and Technology Output category, Switzerland is again ranked first on a global basis in addition to taking second place for both the Creative Output and Infrastructure categories. However, in terms of Institutions, Switzerland ranks down in 13th place. In the current edition of the index, Switzerland’s strengths are noted in particular as its political framework conditions, the use of IT applications and knowledge creation. For the latter two categories here, Switzerland is again ranked first globally.

This year, Wipo produced the fourteenth edition of the Global Innovation Index in conjunction with the Portulans Institute and several other partners. For this, more than 130 countries around the world are evaluated in a process that takes into account data related to just over 80 indicators.

The UK and Switzerland have signed a landmark agreement which will benefit citizens who live and work abroad in either country.

• UK and Switzerland deal will ensure citizens living or working in either country can receive healthcare and an uprated state pension
• UK and Swiss citizens will have access to necessary healthcare when visiting either country

The UK and Switzerland signed a landmark agreement today which will benefit citizens who live and work abroad in either country by ensuring they are able to receive healthcare cover and uprated state pensions, amongst other social security entitlements. It will also allow eligible individuals travelling to either country to access necessary healthcare when abroad using a European Health Insurance Card (EHIC) or its UK successor, the Global Health Insurance Card (GHIC).

The Convention on Social Security Coordination, which benefits citizens of both countries also supports business and trade by ensuring that cross-border workers and their employers are only liable to pay social security contributions in one state at a time.

Foreign, Commonwealth and Development Office Minister, Nigel Adams who signed the agreement today said:

I am pleased to be able to sign the UK-Switzerland Convention on Social Security Coordination. This will help give people certainty over their future incomes, ensure our citizens can continue to receive reciprocal healthcare and support business and trade links between our two countries.

The agreement covers a wide range of social security benefits for eligible individuals. Those living abroad in either country will be able to receive healthcare, uprated pensions and other benefits. This includes healthcare cover for UK state pensioners, those exporting maternity allowance, and certain categories of cross-border workers.

The Convention will come into force later in the year.

Source: Foreign, Commonwealth & Development Office