Why Relocate to Switzerland?
A potent combination of high marginal income tax rates, an increasingly hostile approach to non-domiciled individuals and the proposed Directive on Alternative Investment Fund Managers (the AIFMD) is causing a number of managers based in London to consider relocating to a non-EU jurisdiction. Whilst there are a number of options, including going fully “offshore” and setting up in the Channel Islands or the Caribbean, most managers are looking at moving to onshore jurisdictions where they will be subject to a degree of regulation and tax but also benefit from the infrastructure and facilities of an onshore jurisdiction. Those who wish to stay in continental Europe are likely to consider Switzerland which combines not only physical proximity to the EU but also stability, favourable tax conditions and an established financial services sector.

This article looks at the practicalities of relocating to Switzerland, focusing on Geneva and Zurich as chosen destinations.

Do I need to obtain a regulatory licence?
There is no obligation under Swiss law to obtain a licence to manage an offshore fund, although an offshore fund manager based in Switzerland may, if it wishes to, apply for a licence if (i) the laws of the offshore fund’s place of incorporation permit the manager to be located in another jurisdiction but require that the manager is subject to a foreign supervisory authority and (ii) the offshore fund is subject to supervision comparable to that of Switzerland. Application for the licence must be submitted to the Swiss Financial Market Supervisory Authority (FINMA). The fund manager must fulfil certain obligations, notably (a) insuring an adequate organisation, particularly in areas of risk management, internal controls and compliance, (b) offer sufficient financial guarantees, and (c) run its activities with due loyalty, care and transparency to investors. The principals must also have sufficient professional qualifications to perform their activities and enjoy a good reputation. Major shareholders of the manager must also be able to demonstrate their good reputation and that their influence is not likely to detract from prudent and sound management. Managers will also need to comply with Swiss anti-money laundering procedures by registering with the relevant self-regulatory organisation.