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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


Myth-busters: Five things about Switzerland you should not believe

From dodgy bankers to cuckoo clocks, William Tell to Swiss soldiers, Switzerland is a country where myths and stereotypes abound. We separate the facts from the fiction.

Myth-busters: Five things about Switzerland you should not believe

When you think of Switzerland, you probably conjure up images of cheese, chocolate, Alps, cows, and watches. Add to this image the yodelling and Alphorn playing, and this somewhat idealised (but nevertheless true) picture of Switzerland is complete.

But at the same time, some common beliefs related to Switzerland are as full of holes as… Emmental cheese.

William Tell

Many people firmly believe that this folk hero and expert crossbow marksman who shot an apple off his son’s head, was a real figure who lived in Uri in the early 1500s.

Though he embodies the struggle for freedom and independence — principles that the Swiss hold dear to this day — there is no evidence that Tell actually existed.

Historians investigating the Tell legend didn’t find any evidence that such a person ever lived, or proof that anyone shot an apple off a boy’s head.

Among the arguments against Tell’s existence is that crossbows were not commonly used in the 14th century.

According to one history fact-checking site, “it seems that the origin of the story was in a myth that was popular in Europe, and which was adopted by the people of the Alpine Valleys. It later was used as a foundation myth, by successive Swiss governments, to explain the development of the Swiss Federation”.


Some people take it for granted that Switzerland has been a neutral nation, which didn’t get involved in other countries’ armed conflicts, since its official creation on August 1st, 1291.

However, in the Middle Ages, the country was a military power and its soldiers could be hired for money, fighting on the side of those who paid them the most.

That was long before the Swiss army knife was invented, and the soldiers went to the battlefields with a pike — a long thrusting spear that could inflict a lot of damage on the enemy. 

It wasn’t until 1815 that Switzerland’s “perpetual neutrality” was declared. Great powers of Europe decided that Switzerland would provide a convenient geographical buffer between quarrelling France and Austria, and its neutrality would be a stabilising  factor in an unstable region.

Just over 200 years later, in 1920, the newly created — appropriately enough, in Geneva — League of Nations, officially recognised Swiss neutrality.

READ MORE : Swiss history: When Switzerland was a nation of warriors


A common belief is that Switzerland has always been a rich and prosperous country it is today.

Nothing could be farther from the truth.

In centuries past, Switzerland was a pauper nation, where a large portion of the population in this landlocked, mountainous country with no natural resources, struggled to survive. Some people even ended up emigrating to South and North America to escape a life of poverty.

Many of those who did not go abroad moved from rural areas to the cities, where they continued to live in precarious conditions.

According to an official government document, “anyone who was not a citizen of a commune was homeless and lived on the margins of the community or was left to wander the country as a vagrant”.

Not exactly the image we have of Switzerland today.

READ MORE: Swiss history: The country was once so poor, people had to go abroad to survive


In many people’s minds, Switzerland’s financial institutions are synonymous with dirty money and illicit dealings.

As The Local previously reported, “such images are often perpetuated by Hollywood films,  in which shady characters invariably have a banker in Zurich — an equally shady individual with a thin moustache and a dark suit — who quietly stashes illegally begotten money in secret accounts”.

In reality, Swiss banks don’t quite live up to this notoriety. For instance,  there is no such thing these days as ‘anonymous’ accounts.

To open an account, you must have a valid ID like a passport, verification of your address, and a document to prove the money you are depositing comes from legitimate (i.e. non-criminal) sources.

In terms of banking secrecy, there is some truth to it:  in principle the banks can’t reveal your financial information to a third party.

However, there are some exceptions, as in order to prevent tax evasion, Switzerland has signed agreements with a number of countries to cooperate in exchange of financial information of their respective citizens.

So if you are a foreign national, the government of your country can request Switzerland to release your account(s) information and banks must comply.

READ MORE : Gold, secrecy and wealth: Six Swiss bank myths that need to be busted

Cuckoo clocks and lederhosen

A number of foreign tourists in Switzerland are looking to buy ‘Swiss’ cuckoo clocks, not realising that these clocks originally came from the Black Forest in Germany.

Now, however, many are manufactured in Asia; either way, very few, if any, are hatched in Switzerland.

By the same token, many foreigners associate lederhosen — short or knee-length leather breeches — with Switzerland.

Wrong again.

Maybe it’s because they confuse Switzerland with Austria and Germany (the three countries do look alike, especially in the dark), but whatever the reason, lederhosen is not a Swiss garb.