1. Switzerland Foreign Investment Risk Assessment Nicholas Brunner

2. Background - Introduction - Geography - People and Society - Government

3. Introduction Famous for banking secrecy used for tax evasion by foreigners Peaceful Nation FTA agreements with EU and 35 partners outside of the EU Low Corporate Taxes Stable and frequently traded currency Modern Market Economy, 5 th highest per capita GDP in the world in 2011 Highly developed economy, led by financial services and production of chemicals and pharmaceuticals

4. Geography

5. People and Society Ethnic Groups: German, French, Italian, Romansch and others Population: 7.9 million Population Growth Rate: 0.85% Risk of aging population Data Source: CIA Fact Book

6. Government Type: Similar to a Federal Republic Capital: Bern Legal System: Civil Law System Judicial review of Legislative acts Federal Council elects Chief of State for a one year term

7. Political Risks - Corporate Taxes - Free Trade Agreements - Legislative Protection

8. Corporate Taxes Tax levied on federal and cantonal/communal levels. Federal tax rate of 8.5% on net income with effective rate of 7.8% Corporate losses may be carried forward seven fiscal years and counted against any capital gains or income Business expenses are deductible Unrealized gains and losses due to conversion of financial statements into Swiss Fran are disregarded Cantons compete for foreign investment through low tax rates. “Ring Fencing” Typical effective corporate tax rate between 12% to 24%

9. Source: PwC

11. Free Trade Agreements European Free Trade Association FTA with the EU of 1972 26 FTA agreements with 35 partners outside of the EU Recent FTA with China Numerous Declarations on Cooperation

12. Legislative Protection Strong protection of property rights Minimum tolerance for corruption Judicial System is independent and reliably enforces contracts

13. Financial Risks - Currency Risks - Inflation Risks - Economy - Gross Domestic Product - Current Account and Balance of Payments - Government Credit Rating

14. Currency Risks Reputation for being a safe haven during financial uncertainty due to its reliability and stability. Following fast appreciation of the Swiss Franc against the Euro the Swiss National Bank abandoned the floating rate system. Set a price floor of 1.2000 CHF per Euro SNB enforces price control through purchases of foreign currencies World’s biggest foreign exchange rate manager in 2012. Foreign Currency reserves of over 461 Billion USD in March 2013 Plan to return to a free floating exchange rate when economic conditions improve within the region.

15. Source: Yahoo! Finance

16. Inflation Risks SNB QE to prevent Swiss Franc appreciation to combat deflation Data Source: World Bank

18. Economy Unemployment May 2013 3.0% - Lowest among OECD nations 5 th highest nominal GDP per capita in the world Largest sectors of the economy are financial services, and manufacturing of chemicals, metals, pharmaceuticals, and electronics

19. Data Source: World Bank

21. Swiss Credit Rating Aaa Rating and a stable outlook by Moody’s Three Key Drivers: High financial strength and fiscal discipline. High economic strength attributed to it’s open, highly developed and diversified economy. Resilience during global financial crisis and euro area sovereign debt crisis.

22. Summarization - Leading Factors - Recommendation

23. Leading Factors Peaceful Nation Multilingual population 5 th highest GDP per capita Protection of Intellectual Property Low corporate tax rates Numerous Free Trade Agreements and Declarations on Cooperation Stable currency with National Bank focused on preventing appreciation

24. References "CHF/EUR.". Yahoo! Finance. Web. 20 Jun 2013.. “CIA Fact Book: Switzerland.” CIA, 20 Jun 2013.. Evans-Pritchard, A.. Web. 20 Jun 2013.. The Heritage Foundation. Web. 21 Jun 2013.. The International Monetary Fund. Web. 19 Jun 2013, KPMG, Web. 22 Jun 2013. <http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.asp&xgt;. "Switzerland: an excellent choice – from a tax and business point of view.". PricewaterhouseCoopers. Web. 23 Jun 2013.. "Switzerland Highlights 2013." International Tax. Deloitte, n.d. Web. 23 Jun 2013.. "Switzerland's Investment Treaty Policy.". State Secretariat for Economic Affairs SECO, n.d. Web. 24 Jun 2013.. "Switzerland: Top Choice for Foreign Investments." T Magazine. Ernst & Young, 20 Dec 2010. Web. 21 Jun 2013.. The World Bank Group. Web. 20 Jun 2013..