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ANALYSIS: Is Switzerland actually a tax haven?

In many people’s minds, Switzerland is where wealthy foreigners stash their money to avoid the glaring eyes of the tax man. But is this reputation justified?

A pile of Swiss francs next to a stack of red apples.
Can Switzerland realistically be considered a tax haven? The amount of Swiss francs needed to buy a certain amount of apples. Photo: FABRICE COFFRINI / AFP

On April 28th, in his first State of the Union address as US president, Joe Biden referred to Switzerland as a “tax haven”.

His exact words were: “A lot of companies also evade taxes through tax havens in Switzerland and Bermuda and the Cayman Islands”.

The comment took Swiss authorities by surprise, especially since, as Finance Minister Ueli Maurer pointed out in an interview, Switzerland “fully respects all its international obligations and is very transparent”.

“I don’t think that’s the position of the US government, but the speech writers didn’t know the real facts”, he added. 

What are ‘the real facts’?

It is perhaps not surprising, given its long history of banking secrecy, that Switzerland is sometimes still perceived as a place where rich people park their money to avoid paying taxes in their own countries.

This was brought to light again with the recent publication of “Pandora Papers” — about 12 million leaked documents revealing the shady financial dealings of some of the world’s richest and most powerful individuals.

While many countries were implicated, in Switzerland 90 tax, legal, and consulting firms were found to be involved as well.

Additionally, another source, a Lausanne-based NGO Public Eye, also revealed recently that Swiss lawyers and trustees continue to create “shell” corporations.

These “letterbox companies”, active mostly in finance, real estate or commodity trading, are registered in “ghost” buildings, where law firms and trustees administer day-to-day affairs and telephones are answered by a concierge service.

Have your say: What are the best banks for foreigners in Switzerland?

The Public Eye survey reveals that nearly 33,000 companies that exist only on paper are based in the cantons of Geneva, Zug, Fribourg and Ticino.

These companies are not necessarily engaged in illegal activities but this type of arrangement is most often used to conceal questionable transactions and is responsible for almost half of suspicions of corruption and money laundering transmitted to the Swiss authorities, the NGO found.

How has Switzerland become known as a tax haven in the first place?

Switzerland is the largest offshore wealth manager in the world, handling a quarter of all cross-border assets, amounting to nearly 8 trillion francs.

Providing financial services is not illegal in itself, as long as this is done in accordance with Swiss and international laws.

But for decades, Swiss banks used (or, rather, misused) the country’s banking secrecy law, first introduced in 1934, to stash undeclared money in banks, “dummy” corporations, and trusts created especially to hide these assets. 

Because of these practices, Switzerland became known as a tax haven – or a fiscal paradise – where wealthy people from around the world hide their money.

However, this started to change in 1998, when the Swiss began to clean up their act, at least in part due to international pressure. 

Legislation passed that year made money laundering illegal, while other laws require that any suspicious deposits be reported to the authorities.

Then, in 2011, another regulation was passed, allowing the government to confiscate funds deposited in Switzerland by plundering dictators and return the money to the country of origin.

READ MORE: Why Switzerland is no longer the tax haven it used to be

And since 2017, Swiss banks have been practising automatic exchange of information with their foreign counterparts. The goal is to ensure tax transparency between countries, which basically laid the notion of banking secrecy to rest. 

So is Switzerland a tax haven or not?

The Global Financial Regulation, Transparency, and Compliance Index by the Swiss Banking Institute analysed 31 countries which are members of both the Organisation of Economic Cooperation and Development (OECD) and Basel Committee on Banking Supervision (BCBS).

It placed Switzerland in “the top-ranked group” in terms of compliance with international banking regulations in 2020 and 2021.

Also, Switzerland was removed from the EU’s list of tax havens in 2019 (after two years on it) because that year Swiss voters accepted a legislation which introduced major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.

What do the experts say?

Tax experts in Switzerland may argue over the specific definition of ‘tax haven’, but they tend to agree that Switzerland doesn’t fit the bill. 

Government experts sought to reinforce that while Switzerland maintained a competitive investment environment, it was not a ‘tax haven’. 

“No, Switzerland is not a tax haven, but an attractive business location”, said Frank Wettstein, spokesperson for the State Secretariat for International Finance.

Wettstein highlighted Switzerland’s compliance with all international tax policy standards, in line with the rating afforded by the Swiss Banking Institute (listed above). 

“The main reason Switzerland is still sometimes called a ‘tax haven’ may be its moderate tax rates in comparison with many competitors. This tax regime is mainly due to Switzerland’s traditionally prudent fiscal and expenditure policies”.

This means that the federal government must balance finances over the long term, thus limiting excessive expenditures, public debt and tax increases.

This “debt brake” has been very effective over the recent past when debt levels and tax rates increased in many other countries, Wettstein pointed out.

“Today, Switzerland supports ongoing international efforts to achieve greater transparency and a level playing field with regard to the taxation of multinationals”, he added.

Daniel Warner, former deputy to the director of The Graduate Institute of International and Development Studies in Geneva, noted that “Switzerland is not a fiscal paradise. That’s too strong a term”.

He concedes, however, that “there are still loopholes”.

“Where due diligence and transparency have been expanded and international cooperation increased, there remain places in Swiss law that could be tightened,” Warner told The Local. 

For Francesca Amaddeo, international tax expert at the University of Applied Sciences and Arts of Southern Switzerland, Switzerland couldn’t be described as a tax haven – either now or at any time historically.

“Defining Switzerland as a tax haven has always been debatable. Switzerland has never been a tax haven, which means a jurisdiction with a low or zero tax rate,” Amaddeo told The Local. 

While the attractiveness of Switzerland financial marketplace and strong bank secrecy may have brought in some illicit funds in the past, Amaddeo said that “nowadays, Switzerland responds positively” to international regulations.

However, despite all the efforts made, Switzerland is still seen with mistrust, Amaddeo noted.

“For instance, if one looks at the Corporate Tax Haven Index, listed by the Tax Justice Network, Switzerland is still ranked in third place. Such an evaluation seems to ignore all tax reforms and changes implemented in the country”.

Regarding Pandora Papers, “the disclosed offshore structures are more American than Swiss”, she pointed out.

Therefore, the experts believe that Switzerland’s classification as a tax haven comes largely from an unearned reputation, rather than anything specific in current tax policy. 

What does this mean for me? 

Generally speaking, this is unlikely to make a significant and direct difference in the life of individual people on average incomes in Switzerland. 

In recent years however, Switzerland’s compliance with international financial norms has made life a little more difficult for Americans living in the Alpine nation, many of whom have been unable to open a bank account due to US financial rules. 

READ MORE: Why are Americans being turned away from Swiss banks?

The most important among these rules is the Foreign Account Tax Compliance Act (FATCA), which was passed by Congress in 2010 and went into effect on January 1st, 2014. It requires foreign banks to report to US tax authorities (IRS) all the assets that belong to US citizens – whether living in America or abroad.

As we looked into in our report into banks for Americans in Switzerland, while it is more difficult for Americans looking to open an account, it is far from impossible. 

Click the link below to get an overview of the best banks for Americans who live in Switzerland. 

READ MORE: Which bank is best for Americans in Switzerland? 

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For members


ANALYSIS: Is the quality of life really that high in Switzerland?

Switzerland, as well as some of its cities, regularly appear in international surveys among the nations with the highest quality of life. Why is this so?

ANALYSIS: Is the quality of life really that high in Switzerland?

In its annual ranking of 85 nations, US News & World Report has placed Switzerland in top position, based on 73 different criteria.

While it did not come up tops in all of the categories, Switzerland did sufficiently well in others to get an overall high score, as well as high scores in several individual categories.

In terms of quality of life, Switzerland ranks fourth, but it got high scores across nearly all the sub-categories. This is where the country ranks best — and not so good.

READ MORE: Switzerland ranked ‘best country’ in the world

Political stability (100 points out of 100)

Nobody can argue that Switzerland merits to get such high marks in this category.

The country has not been involved in any wars, unrests or upheavals in recent history, protected in large part by its neutrality and pacifism.

It is also politically stable from within, with well established democratic processes — such as referendums — providing security against abuses of power.

Economically stable  (100)

Switzerland’s economy has withstood the Covid crisis far better than many other countries, and continues to be strong, partly due to an inflation rate that is far lower than in eurozone nations.

The reason is that Switzerland “combines world class governance with high levels of social capital and high social resilience. It also had strong financial systems, manageable debt levels and good health system resilience”. 

READ MORE: Swiss post-Covid economic recovery ‘fourth best in the world’


Various surveys have shown that Switzerland is among the top-10 safest countries in the world, and one even rated it the safest in 2022.

This is not to say that there is no crime in Switzerland, but the rate, especially of violent infractions, is relatively low in comparison to other countries.

Even large cities, though more risky than small towns and rural areas, are not crime-ridden.

READ MORE: Switzerland ranked one of the world’s ‘safest countries’

A good job market (92.2)

Switzerland’s unemployment rate has been lower than in many other countries for decades, and it recovered quicker than others from the slowdown that occurred during the pandemic.

Currently, the unemployment is 2.1 percent, versus 6.6 percent across the EU.

There are now 15.6 percent more job vacancies in most industries than at the same time in 2021.

Family-friendly (85.4)

Parents of small children who are trying to find affordable daycare in Switzerland may disagree with this assessment, as these services are expensive and good facilities may be hard to find.

However, there are plenty plenty of benefits for children and families as well.

According to The Local’s reader survey, Switzerland offers an abundance of outdoor activities, the children are safe — whether playing outside or walking to school — and both good healthcare and education system are a plus as well.

Income equality (85.2)

In this category, Switzerland is in the 5th place in the US News & World Report survey, right after the Scandinavian countries.

While there is data showing that  gender gap exists when it comes to pay, a study by the Federal Statistical Office shows that income distribution (between the highest and lowest earners) is fairer in Switzerland than in many other nations.

Public health system (84.7)

Although very expensive with costs increasing each year, in terms of quality and access to care Switzerland’s system is among the best in the world.

Like much of the European Union, Switzerland has a universal health system. However, The system here is fundamentally different in that it is not tax-based or financed by employers, but rather by individuals themselves.

Everyone must have a basic health insurance coverage and purchase it from one of dozens of private carriers.

The system is generally efficient, has an extensive network of doctors, as well as well-equipped hospitals and clinics.

Patients are free to choose their own doctor and usually have unlimited access to specialists. Waiting lists for medical treatments are relatively short.

READ MORE: How is Swiss healthcare system different from the rest of Europe?

Public education system

Switzerland has 12 publicly funded universities (10 cantonal universities and two federal institutes of technology), and a number of public Universities of Applied Sciences.

According to The QS World University Rankings, “Switzerland has the “third best university system in the world”.

The country also excels in vocational training —a three-year, dual-track programme that includes two days in a vocational school and three days getting an on-the-job training in their chosen sector (the so-called apprenticeships).

It includes a variety of fields such as business and commercial, administration, retail, tourism, construction, information technology, arts, wellness services, as well as various trades — in all, 230 professions.

This programme  “enjoys very strong support from Swiss employers, who credit it with being a major contributor to the continuing vitality and strength of the Swiss economy”

READ MORE: Why is vocational training so popular in Switzerland and how much can I earn?

These aspects all contribute to the high score Switzerland obtained for its quality of living.

Not great for affordability

However, there is one negative category in the ranking as well, and it is not difficult to guess what it is: affordability, in which Switzerland’s score is…2.7.

It comes as no surprise to anyone living here (and a shock to tourists and new arrivals) that Switzerland’s cost of living is among the highest in the world, and especially in the country’s two largest cities, Zurich and Geneva.

Everything from food and clothing to housing and public transportation is more expensive than in the EU, with the exception of electronics and lower taxes.

However, there is also another way to look at this phenomenon: that Swiss salaries, which are higher here than in the eurozone, and low inflation rate, offset the prices.

READ MORE: Do wages in Switzerland make up for the high cost of living?