How are global geopolitical events affecting mobility in your jurisdiction?
Switzerland is the highest ranked country in terms of average wealth per adult, surpassing even the USA. Its unemployment rate is low, less than 2.5% in 2023. In addition, the average tax wedge on labour income in Switzerland for individuals is quite low in comparison to the OECD average. Switzerland has opted for permanent neutrality as a guiding principle for its foreign policy. However, recent geopolitical events are challenging this.
With the outbreak of the war in Ukraine, Switzerland registered a spike in the number of asylum seekers. As a rule, refugees are not permitted to work until their request for asylum has been granted. However, in 2022, more than 75,000 refugees from Ukraine were granted special status “S”, allowing them to enter the workforce immediately. This special status was introduced into legislation in 1998 as a reaction to the refugee flows from the wars on the Balkans, but has never previously been activated. The current special refugee status “S” will expire in March 2024.
According to the UN Refugee Agency, in mid-2023 more than 110 million people have been forcibly displaced, including for reasons of climate change. Half of these displaced persons originate from just three countries: Syria, Afghanistan and Ukraine. The number of displaced persons is on the rise and were expected to reach 130 million by the end of 2023. In total, in the year 2022, Switzerland registered 100,000 new refugees in total. 2023 figures are not yet available.
In addition to the migration of displaced persons, Switzerland allows the free movement of EU or EFTA nationals, though these agreements are currently being renegotiated. The number of immigrants is a contentious matter in Swiss politics. Being an attractive country to work and live in, with high incomes, low tax rates, a well-functioning infrastructure and political stability, many people chose to live here. Of the approximately 9 million people living in Switzerland, about one quarter are foreign nationals, two thirds of which are EU/EFTA nationals (about 1.59 million). Roughly 700,000 have nationalities from other countries, so called third countries. Post Brexit, UK nationals are now also considered as nationals from third countries and require a work and residence permits to live and work in Switzerland. UK nationals residing in Switzerland prior to Brexit, benefit from the safeguard of their prior rights under the EU freedom of movement agreements. Strong immigration has led Switzerland to become very restrictive in issuing residence and work permits, with fixed quotas granted by the Swiss federal government every year.
Since the Covid-19 Pandemic, home working has flourished. Foreign employers are employing Swiss or EU/ EFTA nationals and sometimes third country nationals living in Switzerland who work remotely. There are a number of challenges in this arrangement that an employer needs to be aware of, which could lead to tax and social security issues, where there are no treaties in place. Switzerland has not yet passed specific legislation for digital nomads, but there are certain visa options available for high-net-worth individuals or entrepreneurs.
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