By Joshua Franklin
ZURICH (Reuters) - Britons living in Switzerland face an uncertain future following the United Kingdom's decision to quit the European Union, which could see them subject to strict Swiss immigration rules.
About 41,000 British nationals now live in Switzerland, which is not a member of the EU, under an agreement allowing unlimited numbers of EU nationals to reside there.
For many, this access could be threatened by Brexit if Britain is labeled a "third country" - a status given to non-EU and non-European Free Trade Association countries, which face tougher controls by Swiss authorities. Problems could affect Britons already living in Switzerland as well as those wanting to move there, experts said.
"It is vital Switzerland and the UK find a solution for the more than 40,000 British nationals living in Switzerland after Brexit," British-Swiss Chamber of Commerce Deputy Chairman Haig Simonian said.
A new immigration agreement with Switzerland is yet another issue facing Britain's already overburdened government as it prepares to negotiate an exit from the EU.
But the topic is barely on the radar of some British government ministers, according to one senior Swiss executive who recently met with British officials.
"NEW TO SWITZERLAND"
Brits in Switzerland have a long history, going back to the 19th century when Sherlock Holmes' tussle with arch-foe Professor Moriarty at the Reichenbach Falls in Arthur Conan Doyle's The Final Problem inspired UK tourists to visit the Alpine country, helping popularize Swiss mountain holidays.
As of September 2016, Switzerland was home to 41,130 British nationals, many of whom are bankers at the likes of UBS, Credit Suisse and Julius Baer in Zurich, or work at drugmakers Roche and Novartis in Basel. The number of Swiss living in Britain is pegged at 33,745.
For now, Swiss companies say they are not taking any special measures towards their existing or potential British employees, given the issue is in the hands of politicians.
"It's not Julius Baer who defines the situation of our British employees after Brexit, but it's politics," said a spokeswoman for Julius Baer.
"We will not implement a specific solution at Julius Baer, but it will be aligned with a governmental solution or with a defined solution within the financial industry," she added.
The 2017 cap for work permits awarded to third-country nationals in Switzerland has been set at 7,500. Swiss, EU and EFTA member citizens also receive preferential hiring treatment from employers in Switzerland.
"In practice, this often means that the government will not grant a work permit for the non-EU national, even if he/she is the preferred candidate," Adrian Tuescher, a director at consultancy KPMG, wrote in a blog post. Existing Swiss permits for British nationals should remain valid post-Brexit, according to Switzerland's agreement on European immigration.
"However, afterwards if an extension or renewal is due, they will likely be subject to the restrictions...as if they were 'new to Switzerland'," Tuescher wrote.
This would jeopardize the future residency of the almost 18,000 Brits in Switzerland whose permits allowing them to live in the country are subject to renewal.
This would likely include some of the wealthy British expatriates who have taken up residence in Switzerland to benefit from generous local tax rules.
That is unless Britain can reach a bilateral agreement with Switzerland to grant privileged access to its nationals even after Brexit.
A spokeswoman for Switzerland's State Secretariat for Migration said it was too early to speculate about an accord. A spokeswoman for Britain's Brexit department said this was an important issue.
"Our guiding principle is a reciprocal agreement in relation to European nationals already residing in the UK and British nationals abroad," the spokeswoman said.
Britain already has a full plate of negotiations which includes the heftier conundrum of securing the long-term residency status of roughly 1.2 million Britons living in other EU countries.
The situation in Switzerland is complicated further by a Swiss referendum from early 2014 in favor of immigration quotas on EU workers.
With around quarter of Switzerland's population non-Swiss, the right-wing Swiss People's Party marshaled anti-immigrant sentiment to secure a narrow victory in the vote.
Parliament has opted to implement the referendum without quotas, unwilling to infringe too much on freedom of movement that is the price of enhanced Swiss access to the single market.
(Additional reporting by Kylie MacLellan in London; Editing by Angus MacSwan and Rachel Armstrong)