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Financing, investment and government support

Government support

Does the government provide any incentives or support programmes to promote fintech innovation in your jurisdiction (eg, tax incentives, grants and regulatory sandboxes)?

Yes.

Regulatory sandbox In order to develop the fintech business model, the Federal Council has created an innovation area. Accordingly, the acceptance of public funds up to Sfr1 million will no longer trigger a licence requirement under the Banking Act (subject to certain conditions being fulfilled). This change enables firms to test a business model before they are finally required to obtain a bank authorisation from the Financial Market Supervisory Authority (FINMA).

New banking licence ‘light’ Fintech business models also may profit from the new banking licence ‘light’, which enables the commercial acceptance of public deposits of up to Sfr100 million (subject to certain conditions being fulfilled).

Tax incentives Start-ups profit from a more lenient taxation regime in many parts of Switzerland. Accordingly, start-ups are taxed only on net asset value “until representative business results are available” (see the Financial Directorate on the Valuation of Securities and Balances for Property Tax directive – available in German only). However, the tax office has wide discretion to assess whether and when representative business results are available. According to the tax office, the following points are crucial:

  • whether a positive cash flow exists;
  • whether the company has established itself in the market; and
  • whether it can prove a regular turnover with a marketable product.

Grants Innosuisse, the Swiss Innovation Promotion Agency, promotes science-based innovation in the interests of industry. Accordingly, it supports start-ups in the development of their projects. Moreover, numerous cantons have their own programmes that support fintech start-ups financially, but also in terms of know-how and office space.

However, most of the fintech-specific financial support comes from private associations, which are primarily financed by major financial institutions. Such associations and accelerators provide significant support to the fintech industry and have supported numerous successful and independent start-ups.

Has the government concluded any international cooperation agreements to promote and facilitate the cross-border expansion of fintech businesses?

Yes, with Singapore, Israel and Hong Kong among others, which are also major fintech hubs.

Financing and investment

What private financing and investment schemes are available and commonly used for fintech start-ups in your jurisdiction?

The following private financing and investment schemes are commonly used by fintech start-ups in Switzerland:

  • friends and family;
  • grants from private fintech incubators and accelerators (eg, F10);
  • business angels;
  • investment clubs;
  • family offices;
  • seed funds;
  • venture funds; and
  • corporate ventures.

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