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SWITZERLAND EXPLAINED

Why are so many international sporting organisations based in Switzerland?

Switzerland has been rocked by the news that FIFA has amended its rules to allow the possible moving of its headquarters from Zurich. However, it’s hardly the only international sporting organisation based in Switzerland. Why is that the case? 

Why are so many international sporting organisations based in Switzerland?
The headquarters of the International Olympic Committee in Lausanne. Photo: Fabrice Coffrini / AFP

Swiss media reports that FIFA laid the groundwork for a potential exit from the city via a vote held Friday, May 17th, during the body’s congress in Bangkok, that changed its governing statutes. 

Despite this move, FIFA has announced it’s ‘happy’ to remain in Zurich.

Even after a potential departure, Switzerland would still claim to be the world’s centre for sports.

In all over 70 organisations overseeing international sports have headquarters in the country. 

Of course, the most famous is the International Olympic Committee (IOC), which was founded in Lausanne by Pierre de Coubertin, the founder of the modern Olympics, in 1915. 

READ MORE: What is the secret to Switzerland’s Olympic success?

In the century that followed, several other organisations related to the Olympics and the governing bodies of several popular sports have also based themselves in the lakeside city. 

The World Archery Federation, the International Boxing Association, European Gymnastics, World Triathlon, and several other bodies are based in Lausanne, which is close to the IOC. 

Lausanne is also home to the Court of Arbitration for Sport, which seeks to mediate sporting disputes. At the same time, the World Anti-Doping Agency was headquartered there until 2002. 

Outside of Lausanne, the International Ice Hockey Federation is headquartered in Zurich. Basketball’s peak body, FIBA, is based in Basel, as is Europe’s football governing body, UEFA. 

An attractive base

Switzerland is the logical base for world sporting associations for the same reasons international diplomatic and scientific bodies such as the United Nations, the International Red Cross, and the World Health Organisation call the country home. 

First and foremost, Switzerland is the world’s oldest completely neutral country, recognised as such by the international community in 1815. It is not allied with any other significant power. It has stayed out of all the major world conflicts of the twentieth century. 

Switzerland also enjoys an attractive location at Europe’s ‘crossroads’, centrally located and with land borders adjoining several European powers. 

With four official languages, operating an international body within the country is more accessible, thanks to existing linguistic resources. 

In the end, however, money talks. 

The canton of Vaud, where Lausanne is located, does not tax international sporting organisations. Swiss law ostensibly treats them in much the same way as amateur sporting clubs.

There are no requirements to publish financial records, and there are very few other statutes to which they must adhere in their day-to-day operations.

Of course, this has raised the spectre of corruption – in just the last few years, the International Fencing Federation, the swimming governing body FINA and the IOC have been scrutinised over alleged bribes, kickbacks and links to Russian oligarchs. 

Most notably, FIFA itself was the centre of a corruption scandal in  involving its former head, Sepp Blatter, in 2015, 

While the Swiss government has yet to respond with legal changes to help preserve its image, some organisations are already working to prevent scrutiny. 

Most notably, the IOC and related bodies began publishing their financial accounts in 2015, while FIFA introduced a new ‘Code of Ethics’ last year. 

Several individuals also thought to be linked to bribes have also been disqualified from serving with their assoicated organisations. 

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SWITZERLAND EXPLAINED

Why German-speaking Swiss cantons will pay money to French-speaking ones

Nearly every one of Switzerland’s French-speaking cantons will be receiving financial support from German-speaking cantons in 2025. How does this happen, and why is there such a wealth disparity between certain parts of Switzerland?

Why German-speaking Swiss cantons will pay money to French-speaking ones

As outlined in annual data published by the Federal Finance Administration this week, six of the seven cantons where French is recognized as an official language will be receiving support from German-speaking cantons in 2025.

Geneva will be the sole exception – in fact, it’s contributing. 

Overall, 18 out of Switzerland’s 26 cantons will receive money – including many German speaking cantons (see map below) – and 8 will pay out to other cantons. In all the total transfer between cantons next year will add up to 6.2 billion Swiss francs.

Valais will be receiving the most financial support per number of residents – 2,469 francs per capita, followed by Jura at 2,229 francs and Neuchâtel at 1,818 francs per capita. 

The three cantons contributing the most – Zug (CHF 3,321 per capita), Schwyz (CHF 1,520) and Nidwalden (CHF 1,081) all recognise German as an official language. The other contributing cantons are Zurich, Geneva, Basel-CIty, Obwalden and Shaffhausen. 

Image: Federal Finance Administration

Why are cantons redistributing funds?

For decades each of Switzerland’s 26 cantons was able to hold onto the entirety of the taxes levied at the cantonal level, under the country’s devolved administration. 

This changed in 2008 when the Federal Council introduced the national financial equalisation mechanism, which had two purposes – reducing inequality in wealth between the country’s cantons, and ensuring that each could fulfil their responsibilities at the same level. 

Essentially some cantons (see below) take in far more in tax receipts than others and the mechanism is aimed at reducing the inequality that creates.

The redistribution also allows cantons to pay for public services which are harder to provide in certain parts of Switzerland than others, due to geographical challenges such as the Alps.

Using a complicated formula that has undergone several revisions, the cantons giving and taking funds are identified, before funds are distributed each year. 

READ MORE: EXPLAINED: Why Switzerland’s cantons are so powerful

So why are German-speaking cantons subsidising French-speaking ones? 

The distribution of specific industries and businesses within Switzerland’s cantons plays a significant role in the disparity. 

The German-speaking cantons of Zug, Nidwalden and Schwyz, who will contribute the most, are each significant centres of economic activity across multiple sectors.

Approximately eight percent of the country’s GDP is generated between these three cantons and it has seen dramatic growth over the past decade.

These three cantons also feature the highest overall concentration of startups in Switzerland, with Zug (13.7 per 1000 residents) in the lead, followed by Schwyz (6.07) and Nidwalden (4.42). 

Additionally, it’s also worth noting that ‘Crypto Valley’ – the concentration of cryptocurrency and blockchain businesses focused on the canton of Zug – is worth approximately $611.81 billion (CHF 548 billion). 

In comparison, many of the cantons receiving funds, in Switzerland’s French-speaking west feature a more specialized economy. 

For example, the cantons of Vaud and Valais, Jura and Neuchâtel are home to a significant proportion of Switzerland’s farms. 

Neuchâtel and Jura also have economies that are focused towards watchmaking and precision engineering. 

READ MORE: EXPLAINED: Why is Switzerland so famous for watches?

There have been efforts to diversify the economies of these cantons and embrace developing industries, such as the life sciences-focused ‘Health Valley’ and autonomous vehicle ‘Drone Valley’ initiatives, centered on the country’s west but these are still in their early years. 

Cantons set own tax rates

This leads to the role played by tax policy. 

Under Swiss law, cantons can set their rates of taxation – and they’re able to use it to continuously draw an influx of business and new arrivals. 

Zug (22.2%), Nidwalden (24.2%)  and Schwyz (25.3%) can afford to set some of the country’s most competitive individual tax rates, as opposed to Valais (36.5%), Jura (39.0%) and Neuachtel (38.1%). 

While not as wide a gulf, the company tax rates for Zug (11.85%), Nidwalden (11.97%) and Schwyz (14.6%) make them a far more attractive investment proposition than Valais (17.12%) and Jura (16.0%). 

Such competitive rates are possible because these ‘richer’ cantons have a wider economic base, diversified across several sectors.

This ensures greater resilience and a continual draw of new arrivals and enterprises, more so than cantons where one particular industry dominates and is subject to fluctuations from outside factors.

So does it run smoothly?

There is a fine balance to strike in the redistribution formula.

“The greater the support given to resource-poor cantons, the lower their incentive to seek to increase their tax base, and the more the resource-rich cantons have to hand over, the less the incentive to enlarge theirs,” Andreas Stöckli of the University of Fribourg told Swiss Info.

In other words the transfer from cantons that tax-attractive to those that are less tax-attractive needs to be well-balanced.

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