Yahoo has announced that it will relocate its European head office from the United Kingdom to Switzerland. Yahoo plans to make the move to the shores of Lake Geneva within 18 months.
According to AP, Swiss media reported that Yahoo will benefit from a special tax break by moving to Switzerland.
The total number of employee’s affected by the move was not clear (5% is a figure quoted) with other reports saying that 70 employees in management roles will be told to relocate or lose their jobs.
Yahoo follows companies including EA and Cisco Systems that have relocated European Operations to Switzerland in recent times. The move would indicate business as usual for Yahoo despite Microsoft’s hostile takeover bid and rumored negotiations with other possible merger or acquisition partners.
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Hopefully the tax brakes are significant enough to offset the high cost of labor in Switzerland.
Happy trail’s, and hope they like chocolate’s
5% seems like a very low number, unless it refers to Yahoo’s total work force.
Isn’t there a town called Zug (or something close to that) in Switzerland that’s a tax-free ehaven for companies? Is there where Y! is relocating?
Oh, yeah, here: http://en.wikipedia.org/wiki/Zug (found via Google, ironically)
The new offices are going to be in Rolle which is on Lake Geneva…Just heard froma friend. Total jobs expected to be in Rolle are approx. 200…
Interesting this news breaks just as Google show off their shiny new offices in Switzerland
I don’t think Yahoo! is too keen to sell up.
We agree with Steen’s take;
Nobody ever lost any money moving to the globe’s favorite tax haven..
The Team
http://iserviceshop.blogspot.com
Why UK? Why Switzerland? It’s a global economic now. Yahoo should just build a HQ up in the space. Otherwise, it’ll another step late once Google has its HQ up there.
http://blog.inkjetoffice.com
http://www.inkjetoffice.com
yahoo should be every were
yahoo is scrambling..
Interesting move. Google already has a large office in Switzerland (Zurich), so I guess this will increase the ‘war for talent’.
“In Italy, for thirty years under the Borgias, they had warfare, terror, murder, bloodshed — they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace, and what did that produce? The cuckoo clock.”
The Third Man
Orson Wells via Graham Green
Switzerland is a strange old place for tax. Yahoo! may have great deal for corporation tax with the Geneva authorities, but I’m afraid to say Yahoo! employees won’t have it so good. Income tax is different depending on which kanton (county or state) and gemeinde (regions within the kanton) you live in and Geneva isn’t one of the best rates you can get in Switzerland due to 30% of the city not paying any tax because they work for the UN or Cern. The city needs an income through income tax so the authorities make up the short fall by raising taxes for the rest of the citizens in Geneva.
You can get your tax down to about 10% Kantons Zug and Schwyz, Geneva would be nearer 20% for the kind of salaries Yahoo! employees are on (providing the salary is healthy).
But this is where the world seems to be misled with Switzerland because on top of income tax, you have to pay health insurance, social insurance, 1st and 2nd pillar pension contributions and sickness insurance (maybe one of these is an employer contribution only, I can’t remember - but by the same token, I might have missed one too!).
So depending on where you live in Switzerland, “tax” (which includes all contributions above) can be very high, or very low. The main tax advantage over here is that not paying taxes is not a federal offense, ie., you can’t be put in jail for tax evasion, or late payment, or “misunderstandings” etc. At the end of the day, you still have to pay.
Andy (been stung by tax in Switzerland a couple of times)
@otis: Zug is *not* Tax free. (We all whish)
@many_commenters: Yahoo is going to “Vaud” (a State) which is next to Geneva (The State not the City). Taxes are lower.
Why did they go there:
- Taxes. But Ireland is better than Switzerland. So it is not the only reason.
- Swiss currency is really low for US compared to euros or pounds which will make the project cheaper!
- Employees can find a cheaper house compared as around London.
- Security.
- Quality of life.
- Google, IBM R&D are not far.
- International top rated univercities around.
- There is an international airport close to the place and it is not as much on strike, delay, overload, etc. as the ones around London.
BTW: Lake Geneva does not exist. It has been invented by the Tourism office. Its real name is: Leman Lake.
This must be a direct response to the British government raising corporation from 10% to 18%. Didn’t take long for the British government to drive their first big company out of the UK! No?
andy
Switzerland offers not only tax breaks for corporations but also the highest quality of life, which helps attract top employees - as well as a good share of major global sports and entertainment celebrities… for whom the personal tax level is lower than in any of the EU countries. Google already has its HQ in Zurich and IBM has for decades had its global R&D center outside Zurich, also the location of the HQ of Dow Chemical since the ’60s by the way.
This is a significant loss to the UK and London as a center for tech. So many things seem to confirm our decision to shift our HQ to the Bay Area in the U.S.
Dear all,
it is not all about tax, but maybe Yahoo! did the not so good move as Switzerland is well in the EU but not using the Euro as currency nor seen as a European country.
Whereas Luxembourg is as well as neutral place to grow your European business but with the full EU advantages coupled with a neutral image.
Best,
I would think this move is definitely due to tax changes in the UK.
Corporation tax is attractive in Switzerland but Switzerland is not part of the EU.
I wouldn’t say Switzerland has an abundance of technical talent though, certainly not a high liquidity.
Andy
What if Yahoo moved to Switzerland not only for tax reasons, but also because of the secure and steady electricity flow and low energy prices? I heard people speculating that this might have been a reason too as yahoo is building a new datacenter in .ch. for this they bought a piece of land equal to 600 x 600 meters it was reported last fall: http://snurl.com/yahooland (in german).
Yahoo went to Rolle because they could negotiate a favourable tax deal with the canton of Vaud. Quite a lot of companies restructure in this way — by moving strategic parts of their operations to Switzerland, they can dramatically reduce their worldwide effective tax rate.
As far as individual employees suffering, don’t worry too much. It is usually senior executives who are asked to move to Switzerland, and many of them have significant enough revenue streams of their own that they can negotiate individual tax deals. For those who can’t, the packages to relocate are generous enough to make it worth their while to move.
Finally — for those who worried about the high cost of Swiss labour, fear not. The tax and operational savings for a deal like this are typically huge, much bigger than the difference in salary.