Patek Philippe appears to have abandoned thoughts of quitting Switzerland for a country with a more accommodating tax regime, and will now invest 450 million Swiss francs in a new factory in Geneva.
Thierry Stern, the company’s chairman, was quoted by Swiss newspaper Le Temps in March last year saying it may need to quit Geneva or put itself up for sale if its tax burden was not reduced.
But in a statement today, he revealed: “We are very pleased to strengthen and sustain our business through this major project and thus reaffirm the commitment of Patek Philippe in Geneva. We can thus ensure the development and long-term future of our company.”
The announcement came just a day ahead of a decision by the Swiss National Bank (SNB) to abandon an exchange rate control that prevented the Swiss franc strengthening beyond 1.2 francs to the euro. The removal of the ceiling saw the franc soar to parity with the euro, making Swiss exports around 20% more expensive to European importers.
While Swiss watchmakers have been complaining about the recent strength of the franc, it has not stopped them accumulating cash.
Richemont, which owns Swiss maker Cartier, reported in September that it is holding 4.28 billion euros in cash. Swatch Group’s latest accounts show it is sitting on a 1.16 billion Swiss franc cash pile, according to Bloomberg.
Patek Philippe, which is celebrated its 175th anniversary last year, will move into its new 50,000 square metre facility in 2018.