A number of Swiss owned captives that were previously domiciled in Liechtenstein are now launching new captives or re-domesticating back to Switzerland.
Switzerland and Liechtenstein are heavily intertwined, and Swiss companies have historically registered their captives in Liechtenstein as a means of accessing freedom of services as Liechtenstein is in the European Union, while being able to write in their home country.
Daniele Zucchi, managing director at Sigurd Rück, said that one reason for this new trend is because the business models that these companies have no longer requires cooperation with the EU market.
“We have seen a wave of re-domiciliation from Liechtenstein, but we have also seen a wave of captives redomiciling from other places like Bermuda.” Zucchi told Captive Intelligence.
Captive Intelligence reported last year that telecommunications company Swisscom had re-domesticated its Liechtenstein reinsurer to Switzerland, first establishing a new subsidiary and then merging in the existing vehicle.
Swisscom Re AG has received a C1 reinsurance licence, rather than a C3 typical for a Swiss captive, and is self-managed.
Matthias Rittmeier, senior captive insurance consultant at Marsh Captive Solutions, said that some Swiss companies that are or were previously active in Liechtenstein, or other domiciles, are under a lot of public scrutiny, and must be seen to be doing everything in best practice.
“I think the base erosion and profit shifting (BEPS) initiative and this public scrutiny have contributed to internal re-evaluations of the captive’s location and supported the board decisions to move their captives back to Switzerland or at least to consider it as a serious alternative to the status quo,” he said.
Despite some captives looking to leave the country, Rittmeier said Liechtenstein is still in demand.
“It’s a very small domicile, but it is very good at filling a particular niche for direct writers, not just captives, as it’s the only country where you can direct write without any issues straight into Switzerland and into the European Union,” he told Captive Intelligence.
“If you have a company in Switzerland, you need to open branches in the various EU member states.”
Rittmeier said that as far as he is aware there are no new captives from Switzerland setting up in Liechtenstein.
“If anything, it’s on the reverse, but there are other companies that are still interested in Lichtenstein.”
Captive intelligence published a long read in February detailing that Switzerland has all the infrastructure to be a leading European captive domicile, but the jurisdiction could benefit from greater self-promotion on the international stage.