The national rise of merchanting and the making of the Lugano cluster

Switzerland's trading houses after 1945

The modern Swiss trading industry was formed in the three decades after the Second World War, and Lugano entered it late. Lea Haller has identified the monetary conditions that made Switzerland attractive to international traders in the post-war years. In 1946 the Swiss National Bank declared itself ready to buy back dollars at the daily rate, which gave firms operating in Switzerland a convertible currency at a time when most European currencies were controlled. The European Payments Union of 1950 then facilitated settlements among Western European countries and the repatriation of profits.¹ In 1956 Philipp Brothers, at that time the largest trading firm for ores and metals in the world, moved its operations to the low-tax canton of Zug. In the same year the American grain trader Cargill opened an office in Geneva under the name Tradax. Between 1959 and 1961 about four hundred American multinational enterprises established Swiss operations, nearly half of them in the Geneva region, many of which conducted transit trade from there.² The Suez crisis of 1956 also brought Jewish cotton merchants from Alexandria to Geneva and Lausanne, according to an account of the sector's history broadcast by Swiss Italian public television.³

The later giants followed. Vitol was established in 1966, Marc Rich's trading company in 1974 and Gunvor in 1997.⁴ Christof Dejung explains the success of Switzerland as a trading location by its early industrialization, its exemption from the two world wars, a business-friendly taxation and an internationally oriented financial sector. In his account Zug, Geneva and Lugano became world centres of commodity trading through tax advantages and proximity to financial markets.⁵ The Federal Council's basic report of 2013 gave similar reasons: stable and predictable political, economic and legal conditions, competitive company taxation and business-friendly regulation, a well-trained workforce and quality of life, and an advanced and stable financial system.⁶ None of these factors was specific to Lugano. They explain why traders came to Switzerland. Lugano had to offer something additional to attract them south of the Alps.

The tax framework of the trading company before 2020

For six decades the tax treatment of trading companies was one of the main reasons for their presence in Switzerland. The cantons could tax companies whose activities were mainly conducted abroad at reduced rates. The Federal Act on the Harmonization of Direct Taxes of the Cantons and Communes of 14 December 1990 (Tax Harmonization Act, THA) codified this practice in Art. 28 THA, which provided for holding companies, domiciliary companies and mixed companies whose business activity was predominantly foreign-oriented.⁷ A trading company that bought and sold abroad could qualify as a mixed company and pay cantonal profit tax only on a fraction of its foreign-source profit. The Federal Act on Tax Reform and AHV Financing (TRAF) abolished these statuses with effect from 1 January 2020, whereupon the cantons lowered their general rates. Chapter F.II treats the reform and its effect on Ticino's rates in detail.

In its response to the federal consultation on Corporate Tax Reform III in 2015, the Ticino government described the canton as a "small Switzerland" with a relatively balanced presence of all main economic sectors, among them international wholesale trade (trading), fashion, banking and pharmaceuticals. It supported the abolition of the special statuses but warned that Ticino would be disadvantaged because its general corporate tax rates were high in Swiss comparison, because few of its companies could use the proposed substitute measures and because its main market, Italy, was linked to Switzerland by an outdated double taxation convention.⁸ The statement shows that by 2015 the cantonal government counted trading as a structural part of the cantonal economy, and that it regarded the special tax statuses as relevant to it.

Notes

1. Haller, "Transithandel" (above) ("die SNB erklärte sich bereit, Dollars … zum Tageskurs zurückzukaufen"; European Payments Union 1950). ↩
2. Haller, "Transithandel" (above) (Philipp Brothers, "die damals weltweit grösste Handelsfirma für Erze und Metalle"; Cargill's Tradax; about 400 American multinationals between 1959 and 1961). ↩
3. RSI, "Materie prime, Svizzera capitale del commercio", 21 May 2021, https://www.rsi.ch/info/economia/Materie-prime-Svizzera-capitale-del-commercio--1257720.html. ↩
4. Haller, "Transithandel" (above). ↩
5. Dejung, "Rohstoffhandel" (above). ↩
6. EDA, EFD and WBF, Grundlagenbericht Rohstoffe (Bern, 27 March 2013), https://www.newsd.admin.ch/newsd/message/attachments/30129.pdf. ↩
7. Federal Act on the Harmonization of Direct Taxes of the Cantons and Communes of 14 December 1990 (Tax Harmonization Act, THA), SR 642.14, Art. 28 paras 2–4 in the version in force until 31 December 2019 (paras 2–5 repealed with effect from 1 January 2020) and transitional provision Art. 78g on companies previously taxed under Art. 28 paras 2–4, https://www.droit-bilingue.ch/de-fr/6/64/642.14-28-50.html and https://www.droit-bilingue.ch/de-fr/6/64/642.14-78g-138.html; Federal Act on Tax Reform and AHV Financing (TRAF) of 28 September 2018, AS 2019 2395. See Chapter F.II. ↩
8. Consiglio di Stato del Cantone Ticino, response to the federal consultation on the Corporate Tax Reform III (2015), https://www4.ti.ch/fileadmin/POTERI/CdS/procedure_di_consultazione_federale/ 2015/15_318_DFE_Consultazione_Legge_Riforma_III.pdf. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.