WHEN I received the invitation to attend the UK BioIndustry Association’s biotech fact-finding mission to Switzerland to see how the biotech sector might interact in a post-EU UK, I was intrigued to see how it could work for tax.
If you indulge in lazy comparisons then you could muse on whether a devolved UK of England, Scotland, Wales and Northern Ireland could operate in internal competition as do the regional cantons within Switzerland. After returning from the mission last week, however, my view remains that this is nonsense.
Switzerland operates on a completely different basis to the UK at all levels of rules and governance. This is what I picked up from my trip round Switzerland taking in Basel, Zug, Zurich and Bern.
If you are looking to establish biotech and technology activity in Switzerland then you will be having a lot of conversations to do deals, rather than the UK system of applying rules. For example:
- The UK has open calls for funding via Innovate UK; Switzerland has a scheme for discussing whether they will fund a particular university’s costs of doing your research project.
- The UK has the patent box to make its corporation tax rate more competitive at 10%; each canton of Switzerland will engage in individual dialogue on its rate.
There are also a couple of key advantages to the UK:
- The UK R&D tax credit regime, where tax losses can be turned into cash receipts from HMRC on an annual basis, does not exist in Switzerland.
- The referendum approach to big policy changes has created risk for Switzerland. There is a need for the Swiss tax regime to be reformed to comply with new OECD rules, but the public has already rejected the first stab at the changes and there are three years in which to get the reform completed.
During the course of advising companies on tax issues, I have been interrogated by venture capital firms over why I consider the UK a good place to set up a business. There is always the concern that, as a UK-based tax advisor, I am motivated by self-interest. I can report that while Switzerland has many charms it does not beat the UK on a dispassionate analysis.
You may also be interested in this post on tax post-Brexit