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DatabankNovember 1 2012

What matters when choosing a location

Insch Capital Management's CEO, Christopher Cruden, explains the benefits of the asset management firm's relocation to Ticino in Switzerland.
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What matters when choosing a location

There are two obvious considerations when relocating a business, the emotional and the rational. Insch Capital Management has just relocated its business to Lugano in the canton of Ticino, Switzerland, and while relocating can be a difficult process, if an area has the right frameworks in place, then making the move can be both beneficial to a company and the quality of life of its employees.

The rational

When considering doing business in Switzerland, tax is often one of the first factors that springs to mind. Ticino has a moderate taxation system in place and the canton helps to promote and support businesses such as Insch Capital Management.

Ticino's tax system also compares favourably with some of the better known financial centres in Switzerland and elsewhere in the world. According to an international taxation index report by BAKBasel, the effective average tax rate for Ticino in 2011 was 18.3%, substantially lower than 21.5% in Geneva, 22.6% in Stockholm and 26.3% in London.

Insch took into account other factors when choosing where to locate. These are:

Simplicity: relocating a business is always complicated, but Ticino's government provided quick responses to requests and simplified complex business procedures. The government procedures made it relatively easy for us to relocate our business in the area. Also, direct access to the authorities made it easy to quickly find ad hoc solutions to any obstacles. Finding an appropriate business location was an extremely simple procedure in Lugano and there were no restrictions on access to the market.

Transparency: in part, the move to Lugano and our decision to restructure was in preparation for the new Swiss Financial Market Supervisory Authority (Finma) rules that will apply to Insch Capital Management business in the near future.

Despite industry concerns that the introduction of Finma regulations and the recently reviewed draft of the 2006 Collective Investment Schemes Act, or CISA, bill would have a negative impact on alternative asset managers operating in the area, we have always believed that these regulations should be considered a positive for the industry. It is easy to see the benefits that tighter regulation will bring. Across the financial spectrum, there has been a call for better regulation and increased transparency.

The introduction of new Finma rules bring Swiss regulation in line with the rest of Europe, and we see it as a positive introduction that will make our business more attractive to investors. It is crucial to be able to benefit from standards and requirements that are well documented and respected, and the introduction of the CISA bill will help to build investor trust. Furthermore, Finma is well respected, has a good reputation and is highly qualified.

Lugano also benefits from the presence of the Swiss Funds Association that works alongside the European Fund and Asset Management Association to ensure that our sector's interests are represented both domestically and in Europe.

Services and infrastructure: We have found that one of the benefits of operating out of Ticino is access to a variety of specialists that provide expertise to hedge funds operating in the area. This includes boutique business attorneys, corporate law and accounting experts, and insurance companies, whose focus on finance helps provide a global profile for operations conducted in Lugano.

A talented workforce: Finding the right workforce is crucial for any growing business, and Ticino is a great market in which to hire talented and qualified people. The canton has access to a large talent pool and is definitely an employer’s market when it comes to hiring finance professionals.

The emotional

The quality of life in Switzerland has been rated internationally as one of the highest in the world. Furthermore, a recent report showed that of the three major financial centres in Switzerland, only Ticino had an average disposable income higher than the national average per canton, meaning that it is a more affordable place to live.

The disposable income figures released not only look at tax, but also look at regional mandatory charges such as the cost of real estate and health insurance premiums. Given that Ticino has favourable tax systems in place, business-friendly processes and a strict legal framework, as well as great infrastructure and a wide talent pool, it made perfect business and personal sense for Insch to relocate to the area.

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