HZ Handelszeitung, How Swiss companies attract foreign executives
For top executives, additional benefits are in completely different spheres. US-Americans pay the most.
Handelszeitung, Martin Schmidtim in an Interview with Erik Wirz
Normal office workers can only dream of such benefits: depending on the employer, those who have made it to the top of the career ladder can look forward to a substantial bonus towards their children's private schooling or housing costs. This is particularly true for top foreign executives who are lured to Switzerland. And even more so for US citizens.
If a Swiss company wants to sign up top US talent, it has to dig deep into its pockets. Pharmaceutical giant Roche, for example, paid 513,000 francs for tax advice and taxes for its Executive Committee member Cristina A. Wilbur last year. Her basic salary including bonuses and share options totalled 3.44 million francs. For the three other members of the Executive Committee excluding the CEO, Roche paid around 72,000 francs for tax advice and taxes. For former Executive Committee member Bill Anderson, Roche paid almost two million francs for 2020 and 2021.
"Nobody changes for the same salary"
Wilbur and Anderson are both US citizens who, despite the double taxation agreement, have to transfer huge amounts to the US tax authorities in some years. "The agreement between the USA and Switzerland actually absorbs a lot. However, high taxes can be incurred on bonuses in the form of share packages. If top executives suffer a tax disadvantage as a result of working in Switzerland, this is often offset," explains headhunter Erik Wirz. He is a managing partner at Wirz & Partners, which searches for top managers around the globe on behalf of companies.
For most top foreign executives, however, tax equalisation is not even necessary due to the lower marginal tax rate in Switzerland, as there is no disadvantage, says Wirz. "Then it's much more a question of offsetting the higher school costs for the children and the often significantly higher housing costs." This is done with so-called relocation packages, additional benefits that fully compensate for the disadvantages of moving to Switzerland. This can quickly add up to high 5 or even 6-figure sums. But that alone is not enough: "Top people cannot be persuaded to move for the same salary," says the headhunter.
Manageable number of candidates
Companies are by no means put off by the additional costs for foreign top managers. "The number of candidates for these positions is very limited worldwide once a company reaches a certain size. There's no getting round foreign managers. And there are many top people in the USA, especially in the pharmaceutical and tech sectors," says Wirz.
Roche confirms on enquiry: "What counts for us is the suitability and performance of the person in question. We want to attract the best talent, regardless of their origin." In addition, all new employees would receive support during the start-up phase.
Top US managers are highly sought after. They facilitate access to the American market. Or they have specialised knowledge about their home country, which is why, for example, the large Swiss management consultancies also rely on lucrative relocation packages.
Even specialists without a management role benefit
Vas Narasimhan, a US citizen, sits in the executive chair at major Roche competitor Novartis. However, Novartis says on enquiry that the Group does not pay tax equalisation to its Executive Board members. Narasimhan therefore had to pay the taxes on his salary of CHF 16.2 million last year himself. Only when US citizens spend working days in the USA is the tax due for this paid. Together with benefits such as partial coverage of housing costs, school fees and international health insurance, the pharmaceutical company paid its Executive Board members 6.7 million francs for last year.
"Such relocation packages can also be enjoyed by sought-after specialists who do not have a management role, but who play a central role in research, for example, or who are proven specialists in their field, e.g. in software technology," says Wirz.
US citizens hand in their passports
For once, the Swiss financial centre is more stingy than the pharmaceutical industry. UBS, for example, states that foreign executives who move to Switzerland are only supported with relocation costs. In the financial sector, the supply of top people is greater.
Those who are not compensated for tax disadvantages by their employer sometimes take a drastic step. Several thousand Americans give up their citizenship every year.
