Written by Euro Trapani
For POCKET SIZES MULTINATIONALS (shortly PSMs), we mean international groups with a turnover in the range between 300 million US$ and to 2 billion US$, with a footprint of manufacturing sites, R&D centers, business models distributed around the world and a turnover realized abroad of at least 50 %.
These groups are quite often located with corporates in small medium countries and they were “forced” to proceed with this kind of strategy having a limited domestic market, in order to have success in their businesses. Some of them have the weakness to have the corporate in countries considered risky and/ or with poor macroeconomic situation. This is particularly true in Europe for Italian and Spanish groups.
In this scenario Switzerland understood these epoch/making changes and is moving and will move in the coming years,
a) from one side omologating itself as an attractive tax country, but not anymore as a tax haven, but opening the doors to a new kind of “customers”;
b) from the other side leveraging on its secular reliability, offered as a “kind of service”, particularly appreciated in risky environments
PSMs should evaluate the opportunity to build up a Swiss Hub inside their groups, holding the subsidiaries in which it is existing the part of the whole “enterprise value” that is already distributed out of the domestic country. They should have to take in consideration several attracting characteristics that Switzerland might offer in the coming years for these groups. Italian PSMs , in particular, could be interested in this opportunity, also taking in consideration that the southern part of Switzerland speaks Italian as normal language. The following slides offer some general information to support this statement. Moreover for countries with small stock exchanges, like Madrid or Milan, even Zurich Stock Exchange might be an interested opportunity to evaluate in case of an IPO.
This kind of project is not driven by traditional tax planning goals, but it is more a risk management project with a lot of positive follow ups in several aspects. It has a strategic and transformational impact for the PSMs and is addressed mainly to the PSMs held by Private Investors (generally Family-owned investments for decades) with a long term commitment to hold and to develop the investment in the future. The best implementation requires time and a careful evaluation of the opportunities, minimizing negative impacts of the changes. Through this kind of project, other goals may be achieved, as for example the improvement of the corporate governance inside the subsidiaries or the reduction of the tax burden.
For these characteristics, an external experienced support, bringing into the Group specific competencies in these fields, may be particularly useful for the success and the quality of the results of the project.
About the author: Euro Trapani is a Group CFO with large responsabilities including IT & legal in multinational with broad international footprint with revenues over 1,2 billion Euro of which 90% abroad the domestic market. He achieved a strong reduction in net working capital and significant improvement of corporate governance of international subsidiaries. Click here to open his executive profile.