10 good reasons to place your trust in Switzerland

31 Jan 2022

switzerland

Switzerland, recently named the world’s strongest ‘nation brand’ of 2021, is more than just a land of pristine snow-capped peaks and silky chocolate. This alpine state has a number of important attributes and advantages which have attracted generations of the world’s wealthiest individuals and families.

These have only been further enhanced in recent years and, for us, can be summarised into ten reasons for Switzerland continuing to be a highly attractive destination for those looking to establish suitable trust structures to manage and protect their wealth and assets.

1. A strong reputation for trusts

Switzerland has enjoyed a reputation as a trust-friendly destination for decades.

Its regulatory regime has adopted globally recognised standards, including FATCA (Foreign Account Tax Compliance Act) and global data protection regulations with EU equivalency. But the Swiss Federation is also able to set its own agenda to create advantages for those looking to place their wealth, their trust structure, or even to move here.

2. Total flexibility

Switzerland is a civil law jurisdiction, but since 2007 it is also a signatory to the Hague Convention on the law applicable to trusts and their recognition which has clarified the treatment of trusts in Switzerland.

The Hague Convention gives the settlor (the individual who settles assets into the trust for the beneficiaries) the freedom to choose the governing law of the trust.

This means that those who choose a Swiss trustee have the best of both worlds: an ability to select the trust law and court system from a jurisdiction of their choice (such as any well- known trust jurisdiction), whilst offering unique advantages to those choosing to locate their trustees here.

3. Favourable treatment of trusts

One of these advantages is the treatment of trusts as transparent entities for tax purposes. Put simply, where the settlor is not taxable in Switzerland, the trust’s assets are not taxable in Switzerland. This makes it simple for Settlors setting up a trust with legal tax planning advice from their home jurisdiction (always recommended). They do not have to worry about any additional tax complexity if appointing a Swiss trustee for their trust even when their assets are held in a Swiss bank.

It is also possible to get advanced tax rulings on trusts in Switzerland. This means that anyone planning to relocate to Switzerland is able to settle trusts before their arrival as part of their tax planning. Appointing a local Swiss trustee to a pre-immigration trust incurs no negative tax penalty, regardless of whether the assets are with Swiss banks or elsewhere.

4. Growing recognition and regulatory support

The appeal of Switzerland has been strengthened in recent years with key reforms to the law applying to trustees, which have been seen as a real vote of confidence from the Swiss authorities in the trust industry.

In January 2020, the Swiss Federation introduced the Swiss Financial Institutions Act (FinIA) and the Swiss Financial Services Act (FinSA) which established a specific regulatory regime for trustees operating in Switzerland, in addition to the existing Anti Money Laundering (AML) regulations.

The Acts mean that from January 2023, all professional trustees will require a licence to carry out their activities in Switzerland. This gives clients peace of mind that their trustee has to meet the highest possible standards under the supervision of a respected financial authority.

Finally, and most recently, the Swiss Federal Council announced new proposals, and an associated consultation, which would introduce trusts into Swiss law. The consultation closes in Spring 2022. This would be a significant step, further reinforcing the important role trusts play for clients and providing a welcome alternative structuring solution.

5. Pioneering legislation

But recent reforms have not been reserved for trusts alone. Switzerland is also leading the way in terms of establishing a solid legal framework for cryptocurrency, and has supported crypto industry infrastructure including licensing crypto banks and a crypto stock exchange. With more individual investors and families increasing their interests in digital assets (a recent Goldman Sachs survey found that 50% of its Family Office clients wanted to add digital currencies to their portfolios), Switzerland is establishing itself not just as a haven for traditional wealth management, but one which is certainly moving with the times.

Taken together, this innovation in regulation is further enhancing the country’s reputation and competitiveness in the financial industry, bringing added quality, accountability, and trustworthiness.

6. A steady ship in troubling times

Over the 160 year history of Saffery Champness we have seen much political and economic change, and none more so than during the last two years of experiencing the global pandemic. Amid this flux, Switzerland has been and remains a pillar of strength and resilience, providing significant benefits to families and individuals choosing to use Swiss trustees to administer their wealth and assets.

7. Ease of doing business

Switzerland consistently ranks amongst the best countries in the world for ease of doing business and trustworthiness.

8. A long history of expertise in the wealth industry

The Swiss wealth industry boasts 250 years of expertise in providing outstanding services to ultra-high net worth and entrepreneurial clients from around the world.

9. The centre of Europe

It benefits from great travel links with the rest of the world, meaning clients can meet their trustees with ease, while also using Switzerland as a ‘gateway’ city to other international destinations. In addition, the Central European time zone (CET) means the working day overlaps with both the Far East and the Americas, facilitating communication between clients and advisors.

10. Diverse and highly skilled workforce

A world-renowned education system and private school network attracts families from around the world, so it is no surprise that Switzerland has a highly trained and ethnically diverse workforce which helps establish long-term rapport and cultural affinity between clients and trustees. A microcosm of Switzerland itself, across Saffery Champness Switzerland, the 30+-strong team in Geneva and Zurich, speak 14 languages overall.

Take these 10 factors together and it is little wonder that, according to Knight Frank, the wealthy population in Switzerland is set to increase by 13% between 2020 and 2025 and that its popularity as a location for family offices has exploded. As the new trustee regulations come into effect we expect to see many more individuals and families looking to Switzerland as a jurisdiction of choice, and would encourage anyone interested in learning about what Switzerland has to offer to get in touch.

Want to learn about Saffery Champness (Suisse) S.A. services in Switzerland? Click here to hear more from Andrew Everton and Judith Chatoo in our New Horizons video series.

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