Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

Based on the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) treaties, bilateral treaties with the European Union and further Swiss legislation, foreign participants are no longer excluded from public projects, etc, and their tender offers must be considered in competition with those of Swiss companies. If real estate is subject to Swiss rural and land protection legislation, approval might be sought from the appropriate authorities for an investment by foreign nationals. There are few other restrictions as to foreign ownership, for example, on projects relating to the exploitation of oil (see question 17). The Swiss Federal Council has recently decided against the introduction of (general) foreign investment controls in Switzerland. This is in contrast to the wave of new or strengthened foreign investment control regulations recently enacted in a number of countries.

The greater question, however, is whether private investment and ownership as such are permitted. This basically depends on whether a sector is subject to a state monopoly. Some sectors such as telecommunications, aviation, transport or energy have been privatised and liberalised (see question 16). So private entities are basically free to engage in these areas, but they need a government concession and may be subject to state supervision. The state may also act as a competitor in certain markets (eg, in telecommunications through Swisscom).

Other sectors are not open to private entities. For example, the Federal Reserve System is handled exclusively by the Swiss National Bank (SNB), a stock corporation subject to special legislation. The New Rail Link through the Alps, one of the world’s largest railway tunnel construction projects, was led by AlpTransitGotthard, a private corporation subject to special legislation and wholly owned by the Swiss Federal Railways (SBB), which itself is a private corporation subject to special legislation and wholly owned by the Swiss Confederation. Large companies that are private stock corporations subject to special legislation operate in other sectors as well, with the Swiss Confederation, the cantons or the communities holding, directly or indirectly, at least a controlling stake in these corporations. Here, the possibility for private persons for equity investment is excluded, or permitted only to a certain extent; for example, AlpTransit Gotthard and the SBB are not open to private shareholders and the SNB has tight restrictions on private shareholders. Under the Federal Electricity Supply Act, Swissgrid, the owner and operator of the nationwide electricity transmission grid, is expressly excluded from stock exchange listing but, within limits, open for private shareholders. On the other hand Swisscom is stock exchange-listed, although controlled by the Swiss Confederation.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

Based on the Swiss Insurance Supervisory Act, in principle, foreign insurers may only offer insurance relating to risks situated in Switzerland through a Swiss branch or subsidiary. Apart from this, there are no major restrictions on insurance policies over project assets.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

Citizens from the European Free Trade Association (EFTA) member states and the EU countries are granted easy access to the Swiss labour market based on bilateral treaties. New rules on unemployment that limit the impact of foreign workers on the domestic job market have recently been implemented in Switzerland. These rules do not, however, limit EU/EFTA immigration in general. Apart from nationals from EU and EFTA member states, foreign workers need work and residence permits. The Swiss government has allocated quotas per nation. Workers are admitted if their skills are urgently required and they are well qualified. The employer must demonstrate that in spite of considerable efforts no suitable Swiss national or citizen from an EU or EFTA member state has been found to fill a particular vacancy. EU and EFTA nationals taking up a job in Switzerland for up to three months may stay in Switzerland even without a residence permit. They only have to register with the authorities.

Equipment restrictions

What restrictions exist on the importation of project equipment?

There are no major restrictions on the importation of project equipment.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

Expropriation is permissible, but in each case subject to a statutory basis, sufficient public interest, appropriateness and compensation. The expropriation procedure is governed by the Federal Expropriation Act. Decisions by the administration on expropriation and compensation are subject to appeal to the Swiss Supreme Court.