Germany proves an attraction despite politics

Political ties have been strained but the two countries are still key trading partners Keystone

More than 1,000 Swiss moved to Germany last year, at a time when the volume of trade between the two countries fell to its lowest since 1975.

This content was published on April 19, 2010 - 08:17

The figure of 1,126 comes as a surprise because it is more than double the number who emigrated the previous year.

It also comes at a time when political strains have surfaced between Switzerland and its main trading partner, particularly over tax matters.

While much has been written about Germans who have come to settle in Switzerland in recent years, little has been said about the Swiss who have found a new home in their northern neighbour.

Germany also happens to be the most popular holiday destination for the Swiss with a total of 3.86 million overnight stays (+4.7 per cent compared with 2008).

There are around 76,600 Swiss in Germany who are registered with the authorities in Bern; the increase of 1,126 in 2009 is a 1.5 per cent rise on the previous year and easily beats the increases in the ranks of the Swiss in France (+0.8 per cent) and Italy (+1 per cent).

It even exceeds the average increase in total Swiss emigration of 1.3 per cent last year.

When it comes to age, the Swiss colony in Germany seems to be younger, with the share of pensioners less than in France or Italy. In other words, it is mainly those in employment who are emigrating.

Dynamic economic relations

All these figures are evidence, despite the crisis year of 2009, of dynamic economic relations between the two countries, says Daniel Heuer, deputy director of the German-Swiss Chamber of Commerce.

On the other side of the coin, many working Germans emigrated to Switzerland but considerably fewer than the previous year (+17,119). They represented about 15 per cent - or 250,000 - of the total number of foreigners in Switzerland, only second to Italians.

To put that figure into perspective, in 1914 when Switzerland had a population of about three million, there were already more than 200,000 Germans then.

Switzerland’s high attractiveness for working foreigners shows its healthy economy, according to Ralf Bopp, who is director of the German-Swiss chamber.

Despite the decline in foreign trade (-16.4 per cent to SFr89.1 billion or $84.1 billion), Swiss direct investment in Germany increased by €3.4 (SFr4.9 billion).

Expanding market share

This includes business by companies on the spot, such as acquisitions and takeovers, and not in an indirect form, for example as securities or shares.

Statistics show there are 1,470 Swiss companies active in Germany; they have a total annual turnover of SFr171.8 billion and employ 327,000 people. These are significant figures which are not mentioned much in the ongoing political discussions between the two countries.

In comparison, German companies in Switzerland employ “only” about 100,000 people and record sales of around SFr90 billion (figures from 2007).

The chamber of commerce says the motivation for this Swiss direct investment is primarily to be found in the expansion of market position. Out- and global sourcing activities in industry have greatly increased in recent years with the result that companies have sought to get nearer to their cross-border markets and customers.

Bopp says that German firms like the general business conditions in Switzerland, while Swiss companies are attracted by the enormous market potential and good labour productivity.

Very neutral?

The chamber is normally very neutral. However, at its annual meeting with the media and in view of the political strains and the troubled climate between the two countries, the chamber for once put its reserve to one side.

As a body, it has to be actively engaged in campaigning against existing and looming barriers to trade and services. As a result, it has made it clear that the German authorities should not make use of stolen data from Swiss bank clients.

From a strictly legal point of view it’s not a question of the handling of stolen goods. But the chamber feels that all companies should be able to rely on a system of data protection that works.

In addition, the chamber of commerce is calling for the speedy conclusion of a new double taxation agreement between the two countries, so that an orderly legal assistance system can come into force.

“The chamber also welcomes the proposal by Swiss bankers for a final withholding tax on investment income and capital gains,” Bopp said, and it hopes for a “signal of a definitive turning point in tax disputes”.

Alexander Künzle, (Adapted from German by Robert Brookes)

Foreign Trade

Swiss exports to Germany in 2009 totalled SFr35.2 billion, 15.7% less than the previous year. Imports were down by 16.9% at SFr53.8 billion.

One of the factors hampering trade was the strength of the Swiss franc against the euro.

The volume of trade between both countries fell to its lowest level since 1975 (oil crisis).

However, Germany remains Switzerland’s main trading partner. Most imported goods are from Germany (33.6%), while 19.5% of Swiss exports went to Germany.

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Double taxation agreement

A protocol of amendment to the existing double taxation agreement between Switzerland and Germany was initialled in Berlin on the fringes of a meeting on March 26 between Swiss Finance Minister Hans-Rudolf Merz and his German counterpart Wolfgang Schäuble.

The extension of administrative assistance in tax matters in accordance with the standard of the Organisation for Economic Co-operation and Development is the key element of the revision of the accord.

The text extends administrative assistance to tax evasion (in addition to tax fraud) but does not include an automatic exchange of information.

Germany acknowledged that Switzerland will not provide administrative assistance on the basis of purchased bank data.

A bilateral working group has been set up to clarify unresolved financial and tax issues.

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