Brexit – Is it time to move to Switzerland?

Brexit – Is it time to move to Switzerland?


On June 23, 2016, the United Kingdom voted to leave the European Union and Brexit was born.

The British referendum on European Union Membership and the resultant “leave” decision has dominated headlines and political talk-shows for months. The appropriately named Brexit, has created uncertainty amongst not only the British public, but has caused national and foreign businesses to question their relationship with the United Kingdom. In times of uncertainty, it is time to look for more viable and stable options. One of these options should be Switzerland. This article will not only clarify the current situation, the implications of Brexit, but also introduce the possibilities of moving your family and/or business to Switzerland.

As a highly specialised Relocation, Advisory and Concierge Company, native to Switzerland – this is what we do.

While the notice period required means that the actual British exit date is unlikely to be before 2019, there will be both long and short term implications for UK and international businesses based in the UK. Some of the immediate challenges for businesses will arise from the impact of Brexit on the free movement of goods, services and employees and the also on the on-going protection of Intellectual Property rights.

Forward planning is, therefore, key.

Brussels EPEK

The Swiss Membership Model

The British Government and the EU now face several key decisions in the defining the nature of the relationship that Britain will have to the EU. One of these options is the renowned “Swiss Membership Model”.

The details of this model are as follows:

  • Switzerland is a member of EFTA (European Free Trade Association), but is not party to the EEA (European Economic Area) Agreement. Switzerland is officially a so-called Former Signatory.
  • Switzerland accesses the EU single market via a regularly updated bilateral agreement.
  • This bilateral agreement between Switzerland is highly individual and tailored towards Switzerland – an agreement that contains 120 individual points and took over 10 years to finalise.
  • Switzerland contributes billions of euros towards the EU annually.
  • Crucially Switzerland profits from the free movement of people within the EU.
  • It is unlikely that the UK will be able to cherry-pick benefits such as market access.

The EU has, continuously, called the Swiss model unwieldy and indicated that further arrangements of this kind may not be tolerated. In summary, it is fair to say that Britain is unlikely to adopt the Swiss Membership Model, and if it does, there will be a minimum of 10 years of negations before it is active.

The forthcoming sections of this article will look at individual relevant industries and how they will be impacted by the Brexit decision in the years to come.


Financial Services an FinTech

Currently, a financial services provider (a bank, insurance company or an investment firm) established in any EU member state or EEA member state my exercise a ‘passport’ to provide its services from its home state to any other EU member state or EEA member state. It is for this reason that many non-EU financial services providers have established subsidiaries in a member state of the EU so that they can access the markets of the EU and EEA.

Once Brexit occurs, unless the UK has secured the status of an EEA state or negotiated a regime equivalent to the current ‘passport’, financial service providers in the UK will not be entitled to exercise the passport into EU and EEA markets and financial service businesses outside the UK will only be able to access the UK markets to the extent that arrangements are made by the UK to allow access by non-UK regulated persons.

At present, it is unclear whether the UK will become an EEA state. To date, such status has required the acceptance of ‘freedom of movement’ and a financial contribution. The ability to clear euro-denominated payments in the UK may also be affected.

If the UK leaves the EU but attains the status of an EEA state, then there is likely to be very little change and the UK’s legislation and regulation would evolve to ensure continued compliance with the requirements of the EU. If the UK does not have the status of an EEA state, then the UK will be free to depart from the current position. UK financial services firms may, as the situation becomes clearer, need to contemplate creating a subsidiary which becomes independently authorised in a continuing EU state in order to continue conducting their European business so far as possible; others may contemplate moving their place of authorisation from the UK.



Currently, an incumbent (bank, insurance company or asset manager) established in any EU or European Economic Area (EEA) member state may exercise a “passport” to provide its services from its home state (where it has obtained authorisation to carry on permitted activities) to any other EU or EEA member state. This means, crucially, that it does not have to obtain individual authorisation in each state.

London’s status as a world-leading FinTech hub has taken years to build, with over half of European FinTech “unicorns” (e.g. Transferwise and GoCardless) based in the UK. It is based on a number of factors that are difficult to replicate elsewhere: strong government backing, a pragmatic regulator, excellent workforce, stable legal system and access to liquid capital markets. Consequently, many international banks (EU and non-EU) have established in London, utilising passporting rights to provide services across the EU and EEA.

EPEK - Canary Wharf

EPEK – Canary Wharf – Banks


One of the most important pieces of EU legislation in the world of finance is the Markets in Financial Instruments Directive (MIFID). MIFID allows banks in an EU member state to carry on business and sell services throughout the EU without having to obtain individual banking licences in each state. As a result a lot of international banks (EU and non-EU) have set up in London – they can then access the single market by relying on their UK authorisation.

FinTech Start-ups

Whilst access to the single market is undoubtedly a priority, it is more of a concern for incumbents. Many FinTech start-ups operate business models that are not reliant on passporting: they operate in domestic or non-regulated markets (or in sectors that are subject to a light-touch regulatory regime such as peer-to-peer lending ) or are reliant on selling products or services to incumbents rather than on being regulated themselves.

A lack of access to the single market is not great news for FinTech start-ups. During this period of uncertainty, many of these businesses may turn their attention to geographies outside the EU, such as Asia-Pacific or the United States, to continue to grow.

Some FinTech start-ups operate more regulatory driven business models. For example, “regtech” start-ups that provide services to banks to ensure they stay on top of their regulatory requirements. If their customers relocate to EU financial centres, these businesses may need to relocate as well to be close to their customers. The silver-lining may be that the uncertainty triggered by Brexit leads to more compliance requirements on their customers, hence more business for the reg-tech start-ups (albeit unanticipated!).

The UK start-up scene has been nurtured by skilled workers’ willingness to move to London. Continued access to talent is important for London FinTech businesses to compete with other hubs across the world including New York, San Francisco and Berlin to provide high quality products and services to customers. Zurich is also an avid member of the FinTech scene.

In the short term, the uncertainty over the UK’s access to the single market will cause disruption and negatively impact the FinTech market. Uncertainty is never good for businesses and/or regulators and the best option is for the UK Government to lobby for access to the single market and passporting rights in financial services. This means choosing (and agreeing with the EU) the right model to maintain this access and right.

The risk is, if the chosen approach is not advantageous for UK-based FinTech, the UK’s competitive advantage will be lost.

Life Sciences

As the UK will remain within the EU for at least the next 2 years and the anticipated effect of the Great Repeal Bill is to maintain the status quo as much as possible, the answer is that it should be “business as usual” for the Life Sciences.

If the UK remains in the European Economic Area (EEA), then the effects are likely to be minimal on the sector. This is because the UK would keep access to many of the benefits of the EU system, such as the centralised procedure for marketing authorisations, the EU portal for clinical trials and the Pharmacovigilance database. Similarly, if the UK joins the European Free Trade Association (EFTA) and negotiates sector specific access to the single market, then, depending on the exact nature of the relationship, effects may again be limited. If, however, the UK choses to move further away from the EU, or cannot agree the terms of a continued close association with the EU, then the effects may be more severe.


The Life Sciences sector is one of the most highly regulated and globally harmonised industry sectors, especially in terms of the development of pharmaceutical products. A large amount of the regulation originates from membership of the EU in the form of Directives or Regulations. In the case of Directives (e.g. Directive 2001/83/EC governing medicinal products) these have been implemented into national law and will therefore remain in place (subject to amendment). Regulations, in contrast, are directly applicable in the UK without the need for national implementation and therefore, in theory, when the UK leaves the EU regulations will no longer continue to apply. The Great Repeal Bill should go some way in buffering the effect of a lapse in applicability of regulations; if the bill serves as a way of incorporating existing regulations (subject to amendments) into UK law then the effect should be to fill the vacuum left if a regulation were to just cease to apply.

There is no reason why the UK Government could not enact further equivalent rules into UK law (in some cases this will not be required if we are part of the EEA/EFTA).  If, however, the UK Government decide to no longer align themselves with European law and therefore distance our future legislation from European laws the administrative burden of life sciences companies could increase significantly because regulatory requirements, for example clinical trial authorisations and marketing authorisation applications, may need to be obtained under a new and different legal framework.

However, realistically even under a “Swiss type”, hybrid situation, the Regulations and standards are unlikely to change substantially as the UK will wish to continue to facilitate free trade both within Europe and globally and would not wish to build artificial barriers.

Clinical Trials

The new Clinical Trials Regulation 536/2014 was adopted on 16 June 2014 but has not yet been implemented (it is expected to be in force by October 2018). The new Regulation provides for a single application for clinical trials across the EU (through a single portal) with an associated EU wide database. This Regulation will apply to clinical trials for medicinal products and, if it comes into force before Brexit, the UK will be bound by it until its departure. Depending on both timing and the implementation of the Great Repeal Bill, it is possible that specific provisions of the Clinical Trials Regulations will be converted into UK law.

If the Clinical Trials Regulations are converted into UK law then, subject to necessary amendments and negotiations with relevant EU regulatory bodies, the UK may see an approach to Clinical Trials that is harmonised with the EU approach. However, if the UK adopts significantly different national legislation to Regulation 536/2014, this is likely to make the clinical trials procedure increasingly complex with greater administrative burden and cost for companies wishing to conduct multi-centre clinical trials in the EU and the UK.  In particular, UK companies will not have access to the single portal for applications for clinical trials, or if they do there may be a substantial fee, and separate centralised and national clinical trial authorisation procedures will need to be followed.  Furthermore, companies will have to ensure that sponsors of a clinical trial have legal representation established in the EU but, for large life science companies at least, this is unlikely to pose a significant administrative issue.

EPEK - Research and Development

EPEK – Research and Development

R&D and Funding

The EU currently provides funding and coordinates research collaborations through funding programmes such as the Innovative Medicines Initiative and Horizon 2020 (a 7-year programme with €80 billion to provide public/private sector collaborations and encourage innovation). If the UK is not part of the EEA following Brexit, access to this funding will be lost to UK-based companies without research facilities in other EU countries. UK based research facilities may well see the loss of a number of talented researchers to research facilities in the EU.  It is also unclear whether the UK Government will supplement the lost funding and seek to establish bilateral agreements with other nations in order to access other funding/collaboration options.

Pharmacovigilance & Regulatory Authorities

The EU pharmacovigilance system is coordinated by the European Medicines Agency (EMA) which, may need to be relocated following Brexit. UK companies will therefore need to revise their pharmacovigilance reporting system as a single person cannot perform the pharmacovigilance function for the EU and UK as the appropriately qualified person should reside and operate in the EU. The EMA (European Medicines Agency) is based in London and currently employees 890 people. When discussing the implications of Brexit the EMA website that “Its implications for the Agency’s location and operations depend on the future relationship between the UK and the EU, which is unknown at present,” a “soft Brexit” involving continued affiliation with the current system was rejected by the government so this area is particularly uncertain. It is understood that Sweden, Spain, Denmark and Italy have already expressed interest in providing the EMA a new home.

Should the UK not become part of the EEA, the EMA and MHRA (Medicines & Healthcare products Regulatory Agency) will be significantly affected. The MHRA has stated their need to increase employee numbers to carry out the regulatory work, which would have previously been handled by EMA. In addition, where previously the EMA cooperated with the ICH, FDA, Japanese PMDA and other competent authorities, the MHRA will now need to negotiate its own cooperation agreements to replace those agreed by the EMA.

Specific Impacts on Intellectual Property Rights

The new EU patent regime will provide patentees with the option to apply for a single pan-EU Unitary Patent (UP) covering most of the EU. It will also create the Unified Patent Court (UPC) to hear and determine patent disputes on an EU-wide basis.

This new regime, whose future was uncertain after the Brexit vote last June, is now expected to begin at the end of 2017. This has been confirmed with the announcement by the UK on 28 November 2016 that it will proceed to the ratification of the UPC Agreement. To come into force, the UPC now only requires ratifications by the UK and Germany, the latter having already announced earlier this year that it will ratify it.

The UK will thus take part in the UP/UPC system before it leaves the EU and the London Unitary Patent Court Central Division, which will hear cases related to chemistry including pharmaceutical and human necessities, will remain in London.

When the UK does leave the EU, European Union trademarks (EUTMs) and Registered Community designs (RCDs) will cease to be in force. However, it is likely there will be some mechanism for these to be converted into UK rights. As a result, owners of existing EU-wide registered rights should not without further advice immediately react by filing new UK applications, as it is likely that the filing dates of their existing rights for UK will be maintained in some way. However, it is unclear how this conversion mechanism will operate, or whether there will be a fee payable to the UK IPO.

In general, for trademark and design owners filing new applications now, there is a choice: apply EU-wide and hope to be able “convert” those rights into UK rights later; or file both UK and EU-wide applications now, to avoid having to rely on any conversion mechanism. Which option to take is likely to depend on the particular circumstances.

EPEK - Law

EPEK – Law

Commercial Law

While the precise details of the terms of a Brexit will be worked out in the coming months and years, businesses likely to be affected by a Brexit should start to identify potential areas of risk and impact and plan staff and customer communications. Those businesses will need to set aside time and resources for further analysing how they will be impacted as the picture becomes clearer.

Corporate Implications

If Britain leaves the EU, UK companies may find that they are unable to take advantage of the process for effecting the merger of European companies pursuant to the Cross-Border Mergers Directive and the associated implementing UK Regulations. These regulations allow mergers of EEA companies, provided that the merger includes at least one UK company and at least one company from another EEA member state.

Aside from the impact on cross-border mergers, the greatest impact on corporate transactions is likely to result from changes to market conditions and currency exchange rates caused by the Brexit referendum, the vote to ‘leave’ and the uncertainty created by these events.

Implications for Overseas Businesses

Overseas businesses often establish operations in the UK as a stepping stone to trading with other EU countries. Government analysis in 2013 found that half of all European headquarters of non-EU firms are in the UK. The vote for a Brexit may affect decisions to establish in the UK and could lead to a relocation of the headquarters of some non-EU firms to other member states.

The value of Sterling has fallen significantly since the referendum relative to a number of other key currencies, including the Euro and US dollar.

A fall in the value of Sterling is good news for overseas businesses importing from the UK, but not for overseas businesses exporting to the UK. For overseas businesses considering an investment in the UK, the fall in the value of Sterling may offer significant opportunities to acquire UK firms cheaply. There has been a marked increase in the value of foreign company acquisitions of British firms since the referendum.


EU Directives implemented by statute will remain part of UK law unless changed by further UK statute. Directly effective EU laws, such as EU Regulations, will need to be preserved by the UK Parliament, which will in theory have freedom to make changes. This freedom will be limited to a greater or lesser extent depending on which model of EU interaction is adopted and the strength of the UK’s negotiating position (which will be weaker if Scotland and Northern Ireland break away, as they have threatened to do). Similarly, UK courts may continue to have some regard to decisions of the CJEU, and adopt its purposive approach to interpreting legislation, in relation to laws with an EU origin.

VAT, Excise Duties and other indirect Taxes

VAT is chargeable on most goods and service supplies within the EU. The law is fairly harmonised, although member states have a degree of discretion over rates and collection methods. Furthermore, the UK has been granted derogations allowing the zero-rating of certain classes of goods. Customs duties on imports into the single market are also harmonised, and EU law prevents taxes being levied on the raising of capital. Indeed, a past attempt to impose a stamp duty charge on certain share issues in the UK was ruled contrary to EU law.

A departure from the EU will simultaneously restore the UK’s sovereignty over tax-setting and potentially end its access to the single market. In theory, then, the UK will gain the power to overhaul its tax system but will become subject to additional taxes, such as duties on importing into the EU.

In reality, little may change. VAT forms a sizeable part of the UK’s tax intake and there will be little benefit in deviating significantly from the existing, EU-derived system, save perhaps creating further exemptions or rates for particular classes of goods. If the UK joins the European Free Trade Association, Switzerland, it will benefit from a special customs procedure that suspends customs and excise duties and VAT on goods that pass through the UK en-route to an EU destination. Further tax reliefs could be negotiated via bilateral trade agreements. HMRC will have more freedom to apply stamp duty to certain share issues, but moves of this kind are unlikely from a practical perspective.

Loss of influence over EU policy may impact UK business in the longer term. For example, the proposed EU-US Transatlantic Trade and Investment Partnership (TTIP) includes plans to remove customs duties and other barriers to trade between the EU and US. The US has indicated it might not seek separate UK agreements in the event of a Brexit, which could have a negative impact on UK-US trade.

Tax on Company Profits and Capital Gains

A Brexit will end the UK’s obligations and rights under various EU laws designed to reduce the burden of direct tax for companies doing business across the single market. The Parent-Subsidiary Directive simplifies profit distributions between EU group companies by preventing double taxation and abolishing withholding taxes on dividend payments. The Mergers Directive simplifies the reorganisation of groups based in more than one EU member state, while the Interest and Royalties Directive removes withholding taxes on intra-EU interest and royalty payments between associated companies.

All of these Directives are enacted via legislation which, from the UK side, is likely to remain in place post-Brexit. Additionally, tax treaties have a significant crossover with some of these rules, and will remain in place post-Brexit. However, as these tax rules will over time diverge from EU rules, taxation will inevitably become more complex and burdensome for MNEs that have group companies in both the UK and EU. The UK will also lose its protection against discriminatory tax measures being imposed by EU member states, putting it at risk of a tougher commercial environment and eroding the strategic benefit for investors of locating intermediate holding companies in the UK. The UK will be free, in turn, to amend its direct tax legislation to create a more competitive environment. But substantial divergence from the EU system might make the UK less attractive to inward investors and reduce its leverage in negotiations with the EU, so is unlikely to happen.

Take the next Step… 

As EPEK has shown, the British business landscape will face as massive amount of uncertainty over the coming years. Almost regardless of the industry, change is coming.

Switzerland, however, has seen decades of stability and unrivalled business continuity. Switzerland will be able to offer the competitive advantage that Britain may lose over the coming years. Together with EPEK and our highly expert partner network, we can introduce you to the prospect of moving your business to Switzerland.

With a short introductory meeting, we can see how Switzerland can prove beneficial to you and your business. Contact us!



This article in part refers to the Bird&Bird Brexit Series (



By |2018-09-27T08:44:20+00:00January 16th, 2017|Blog|Comments Off on Brexit – Is it time to move to Switzerland?