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With an emphasis on high value creation rather than volume, the Greater Zurich Area is an ideal Swiss location to centralize and consolidate vital business activities such as international management and headquarters’ functions in a cost-effective way. http://www.greaterzuricharea.ch/
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Greater Zurich Area AG, May 2013: Corporate Structures 1
Switzerland and the Greater Zurich Area are situated
in the heart of Europe and offer international corpora
tions and businesses some of the best operating condi
tions available.
Highly attractive tax structures and liberal labor laws,
plus a greatly qualified and specialized workforce sug
gest that Switzerland and the Greater Zurich Area are
particularly suited to serve as a central gateway to the
European and global market.
International management and headquarters functions
in the Greater Zurich Area
Which corporate structure is best suited for an expan
sion and consolidation project in the Greater Zurich
Area depends heavily on individual business models and
strategies.
Following is a compilation of the most common and
most beneficial corporate structures that international
companies have successfully adapted in order to con
solidate vital corporate functions in the Greater Zurich
Area.
Please note: Swiss regulatory and fiscal authorities
provide highly sophisticated solutions for various
business models. Make sure to contact your personal
consultant at Greater Zurich Area AG for individual
quotes!
Global Management Operations from the Greater Zurich Area – Sophisticated Solutions for Individual Requirements
The most frequently chosen corporate structures per
form headquarters and/or management functionalities.
While highly diverse and flexible in order to offer the
best possible solution to a company’s specific business
needs, they are all made possible by one of the highest
quality business environments in the world.
Switzerland and the Greater Zurich Area are setting the
benchmarks in virtually every crucial area such as gen
eral level of service, corporate and individual taxation,
technological and logistical infrastructure, education,
research, business, culture, labor law and ethics. This is
why business in the Greater Zurich Area is truly thriving.
With an emphasis on high value creation rather than volume, the Greater Zurich Area is an ideal Swiss location to centralize and consolidate vital business activities such as international management and headquarters’ functions in a costeffective way.
Greater Zurich Area AG, May 2013: Corporate Structures 2
Benefits of consolidating management operations
in the Greater Zurich Area
• Central location in the heart of Europe, ideal
gateway to the European marketplace.
• First-rate international connectivity by air, road
and rail.
• Attractive tax environment.
• Multilingual and highly qualified workforce.
• One of the most liberal labor laws in Europe,
ease of doing business.
• Swiss have excellent international management
skills.
• English is an unofficial second language and
standard business idiom in most corporations.
• Great international schools and excellent quality
of life make it easy to attract and retain
international managers.
Corporate structure: Management and Principal
Headquarters
The most attractive corporate structures for internation
al companies to settling in the Greater Zurich Area are
headquarters.
Establishing regional (EMEA or European) and world-
wide headquarters in the Greater Zurich Area has been
a favorite with international companies ever since
Switzerland’s gilded age. Following Brown Boveri & Cie
(today’s ABB), famous examples included DuPont in
the 1960s, Hewlett-Packard and General Motors in the
1990s. Other arrivals were Kraft Foods in late 2006 and
Ecolab in 2008, among many others. More recently, the
Greater Zurich Area has also seen an uptick in Asian cor
porate settlements, like Chinese solar companies YINGLI
Green Energy Holding and LDK Solar.
Studies by Arthur D. Little and the Swiss-American
Chamber of Commerce demonstrate the highest satis
faction among companies who have chosen Switzerland
as their headquarters’ destination. 90% of these compa
nies would pick Switzerland again.1)
In general, a distinction is made between two main
types of headquarters: the Management Headquarters
and the Principal Headquarters.
Management Headquarters
DescriptionThe main function of a Management Headquarters is to perform business and financial management of the group.
In addition to these core functions Management Headquarters can take on additional functions and services along the value chain such as human resources, marketing & sales, IT services as well as Intellectual Property (IP) development and utilization, patent and trademarks management.
Depending on the group structure, this can be expanded to a Shared Services Center (SSC).
Advantages/opportunities:• Management Headquarters enjoy privileged
tax regimes of the Holding or the Mixed Company, if their business is mainly outside of Switzerland. With that, effective tax rate varies from 8 to 12%.
• Swiss domiciled headquarters are usually taxed on a cost-plus basis. Mark-ups of service companies must be determined in accordance with the arm’s length principle of the OECD transfer pricing guidelines.
When shifting tax bases to Switzerland exit taxes in the source countries may apply.
Principal Headquarters
DescriptionPrincipal Headquarters are different from Management Headquarters in one crucial aspect: A Principal Headquarters within an international group assumes risks and responsibilities with respect to the entire supply chain such as development, production, procurement, sales & marketing. Group companies become limitedrisk service providers of the Principal Headquarters.
Consequentially, manufacturing group companies are converted to contract manufacturers, sales & distribution companies are converted to commissionaires.
Advantages/opportunities: • Taxation as a Swiss principal: The overall
income tax burden of a Swiss principal in a cost sharing structure can generally be limited to 5 to 8%.
When shifting tax bases to Switzerland exit taxes in the source countries may apply.
1) Foreign Companies in Switzerland; Joint Study by the Swiss-American Chamber of Commerce and the Boston Consulting Group; Zurich January 2006; Headquarters on the move; Study commissioned by Arthur D. Little (Schweiz) AG, Zürich 2004, both documents available upon request. For uptodate information on multinationals, please visit Swiss Holdings, Federation of Industrial and Service Groups in Switzerland (http://www.swissholdings.ch).
Greater Zurich Area AG, May 2013: Corporate Structures 3
Business Control Center
A Business Control Center (BCC) is a business model to
centralize regional or worldwide management respon
sibilities and risks. A BCC is an operative model used to
streamline group processes and to facilitate principal
trading and coordination between all the different enti
ties of a corporation (manufacturing, sales, distribution,
logistics, marketing finance, R&D, etc.). A BCC is often
set up to centralize global Intellectual Property Rights
and Supply Chain Management.
In order for tax privileges to apply, it is recommended
that a Swiss BCC of an international group be set up
as a Swiss principal i.e. responsible for and exposed to
the risk of its service providing companies. These group
companies have a contractual agreement with the
principal company for manufacturing and production,
while sales and distribution are effected on a commis
sion base.
Benefits
• Applying a BCC business model effectively shifts the
company’s international profits into the Swiss BCC.
• Income tax rate for a BCC in the Greater Zurich
Area is 5 to 8%.
• A Swiss BCC significantly drives the group’s tax rate
down.
• A BCC allows for greater control over operational
business flow.
Shared Services Center
A Shared Services Center (SSC) is an independent entity
that provides support and/or operational services to
multiple business units of a corporation. As a center of
excellence, it is a service provider to its internal custom
ers according to universal service level agreements,
typically through contractual arrangements.
Activities and services performed by an SSC may include
finance, accounting and IT support, and can extend to
sales & marketing support, human resources, supply
chain management and more recently frontoffice
activities such as call centers.
As mentioned above, an SSC often operates in combina
tion with a headquarters function.
Benefits
• An SSC enables local operations to concentrate on
their core skills and adapt fast to market changes,
heightening the company’s flexibility during
periods of growth and retraction.
• An SSC improves service level and quality while
consolidating knowhow and other crucial company
information.
• By doing so an SSC increases efficiency and reduces
costs.
• If located in a low tax jurisdiction such as the
Greater Zurich Area, tax privileges may apply
(mixed company status on cantonal level and/or
Swiss principal on federal level).
• Effective tax rate may vary from 5 to 12%.
Its multilingual and highly skilled workforce, as well as its liberal labor laws allowing e.g. for flexible night and weekend shifts for 24/7 service and operation, and its superior infrastructure (e.g. for IT services), make the Greater Zurich Area a natural choice and ideal location for a Shared Services Center.
The Greater Zurich Area offers the complex and diverse skills required to run a successful BCC. In addition, a BCC in the Greater Zurich Area is a guarantor for one of the most advantageous tax optimizations possible to multinational corporations.
SwITZERLANDGreater Zurich Area AGLimmatquai 1228001 Zürich / SwitzerlandPhone +41 44 254 59 59Fax +41 44 254 59 [email protected]
USAGreater Zurich Area Inc. swissnex building 730 Montgomery Street San Francisco, CA 94111 / USA Phone +1 415 912 5909
CHINAJianping Gao Representative China Phone +86 21 6149 8208
Have we sparked your interest?
Would you like to get to know your options in the Greater Zurich Area in more detail?
If yes, please contact your nearest Greater Zurich Area representative for more information.
We are happy to assist you in every aspect of expanding your business to the Greater Zurich Area!
The Greater Zurich Area is an ideal location to set up a highly effective, successful and costefficient corporate structure with central management functions.
Realizing these business models in the Greater Zurich Area guarantees international corporations to taxefficiently manage commercial operations in the European or global market under privileged tax regimes.
Please note: Specific conditions (e.g. special legal or fiscal constraints, and exit taxes) may apply depending on the country of origin of a company.
We strongly recommend discussing your project with specialists from the Greater Zurich Area AG and their fiscal, legal and administrative affiliates. This will help you to optimize, harmonize and finetune the many different aspects involved in a relocation or expansion project to the Greater Zurich Area.
Greater Zurich Area AG, May 2013: Corporate Structures 4