Guide to buying property in Switzerland Switzerland Switzerland All of the various reasons for the The procedure to acquire, hold and Contents The Purchase purchase of real estate have very sell real estate and its taxation are different consequences, not only primarily regulated by cantonal and of Real Estate from a tax and legal point of view, but communal laws. The purchase of real estate also regarding succession, financial The following information, prepared for in Switzerland structuring and asset allocation. In 2 in Switzerland us by Transforma Consulting is a general addition, the costs for the acquisition, introduction to this complicated legal Restrictions for the acquisition the holding and the sale are different system. In practice, each individual of real estate in Switzerland 4 depending on each specific case. Clients consider buying real estate in Switzerland for transaction must be analysed according Tax implications of taking up residency numerous reasons: lifestyle, quality of life, holiday The political, legal and economic stability to local laws and regulations and expert and inheritance tax 5 of Switzerland as well as the stable Swiss advice must be sought. purposes, a permanent home, education, relocation for Purchase of holiday home Franc (CHF), are the main reasons for a business reasons, investment and security. strong and long term investment in Swiss by non-residents 6 property. This is supported by the very Purchase of commercial property 7 This document has been compiled as a guide for high quality of life that Switzerland has potential purchasers of property in Switzerland. It does to offer with low crime rates, outstanding Financing and structuring construction, superior education and of purchase of real estate not seek to provide or replace legal advice which you 8 excellent medical facilities. Procedure for the purchase should obtain, nor is it intended to have any of real estate in Switzerland 9 contractual effect. Buying property in Switzerland 10 Contact 12 2 Guide to buying property in Switzerland Guide to buying property in Switzerland 3 Switzerland Switzerland 3. Tax implications of taking up residency and Inheritance tax 3.1 Difference between EU and non-EU citizenship for the residence permit As mentioned in part 2 of this guide, there are no restrictions for the purchase of residential real estate in Switzerland by EU citizens (permits B or C). Non-EU citizens need to wait for a permanent residence status (permit C) to purchase residential real estate other than their principal residence. 3.2 Purchase and sale of real estate as a resident person With the exception of Zürich and Schwyz, all cantons levy a transfer tax on the purchase price or the tax value of the property. In most cantons the purchaser is liable for the transfer tax, whereas The lowest maximum income tax rates (Pauschalbesteuerung, forfait fiscal, in some cantons 50% tax is paid by are at approximately 20%, the highest tassazione globale) has been confirmed both parties or by one party according at around 42%. In addition to the by initiatives on a federal level in 2014. to the purchase contract. The transfer worldwide income, a deemed rental value The new minimal taxable income is CHF tax rate is calculated differently in each of the Swiss real estate will be taxed 400’000 for the federal taxes. canton and varies in general between as income in Switzerland. On the other approximately 0.5% and 3%. hand, maintenance costs and mortgage 3.5 Succession for Swiss interests are fully deductible from the residents In addition, most cantons levy a land taxable income. As long as the Swiss residence is register fee of a few tenths of a per cent, considered a principal residence by reaching 1% in exceptional cases. In Worldwide movable assets and real Swiss international tax and private law some cantons, the notary charges for his estate in Switzerland are subject to rules, succession will be subject to Swiss services according to the time spent, and cantonal and communal wealth taxes. rules and taxes. Under Swiss inheritance in others, fees are based on a percentage Wealth tax is levied on net assets, law, forced heirship rules are applicable of a few tenths of a per cent of the consequently mortgages and other in relation to relatives. Swiss international purchase price. loans are deducted from the tax private law allows foreigners to ‘opt-out’ value of assets. Net assets are taxed Traditionally, all real estate agency fees if the last will and testaments falls under 2. Restrictions for the acquisition at progressive rates which reach a are paid by the seller unless agreed in another governing law. maximum between approximately of real estate in Switzerland advance or if a buyer signs a search 0.1%-1% depending on the cantonal Gift and inheritance taxes are currently mandate to provide a bespoke and communal tax rates. only levied on a cantonal and communal According to the federal law regarding search service. Prohibited Residential real estate purchase outside the designated level. In most cantons there is no taxation the acquisition of real estate by persons Lump sum holiday zones, by non-Swiss citizen without residence Tax implications of taking 3.4 between spouses as well as direct abroad (also referred to as ‘Lex Koller’), 3.3 up residency For non-Swiss citizens without any descendants. While some cantonal the purchase of residential real estate Quota system Holiday home purchase by person without residence permit gainful activity in Switzerland, a large tax laws do not levy any gift and/or is restricted in Switzerland for foreign In general, one of the consequences of a number of cantons provide for a taxation inheritance tax, others impose gift and citizens. Based on the bilateral permit B is that the person is considered No restrictions Residential real estate purchase by EU/EFTA citizen according to the rental value (typically inheritance taxes up to approximately agreements between the EU and to be a tax resident in Switzerland with residence permit (permits B and C) multiplying the annual rental value by 40% for non-related persons. Switzerland, Swiss law facilitates the according to Swiss laws. 7) of the Swiss property as well as the purchase of residential real estate for EU One property as Residential real estate purchase by non-EU citizen According to Swiss tax law, worldwide living costs and does not consider a citizens. In a nutshell, real estate can be principal residence with residence (permit B) income and worldwide wealth are taxable client’s worldwide income. Furthermore, purchased under the following conditions: in Switzerland and have to be declared. tax authorities require a minimum tax No restrictions Residential real estate purchase by non-EU-citizen As taxes are levied on a federal, cantonal burden of at least CHF 120,000 to with permanent residence permit (permit C) and communal level, the tax rates vary in grant lump sum taxation in the case each commune and are progressive. of real estate with a relatively low tax No restrictions Commercial real estate value. This so called lump sum taxation 4 Guide to buying property in Switzerland Guide to buying property in Switzerland 5 Switzerland Switzerland 4. Purchase of SH holiday home by Major Touristic Areas BS in Switzerland non-residents TG French Part ZH wwChateaux-d’Oex 4.1 Conditions AG BL wwCrans Montana According to Lex Koller, the purchase of JU AR wwLes Diablerets a holiday home is subject to the following SO ZURICH AI wwMontreux/Vevey conditions: wwNeuchâtel ww wwAuthorisation of the purchase by SG Verbier ww the relevant authorities Villars ZG wwVeysonnaz wwOnly within a tourist commune (Village) LU Weggis SZ BERN German Part ww Within the annual permit quota for each NE GL wwAdelboden canton/commune (Village) NW ww Klosters Andermatten ww BE wwArosa Personal use only. The owner may OW Flims/Laax Engelberg Davos wwDavos only rent the property periodically, Arosa Scuol ww not permanently Meiringen UR Lenzerheide Engelberg VD wwFlims/Laax ww GR Maximum of 200 sq m of official living FR Grindelwald Zuoz wwGrindelwald area (up to 250 sq m can sometimes Andermatten ww Samedan Gstaad be approved) Chateau wwKlosters Gstaad Adelboden St Moritz Pontresina D'Oex ww wwMaximum of 1,000 sq m of land Lenk Lake Geneva Lenk wwLenzerheide (up to 1,500 sq m can sometimes Montreux Leukerbad ww be approved) Swiss Les Diablerets Leukerbad Riveria wwMeiringen Villars TI In the whole of Switzerland, only 1,500 Crans Montana wwPontresina holiday home purchase authorisations wwSamedan Veysonnaz/Nendaz Locarno/Ascona are granted to non-residents each year. GE VS wwScuol The Swiss government allocates the wwSt. Moritz GENEVA Verbier regional quotas according to the number Lake LUGANO wwWeggis Zermatt Maggiore of tourism facilities and new wwWengen developments as well as the proportion Lake ww Morcote Lugano Zermatt of land. The cantons Valais, Grisons, wwZuoz Berne, Ticino and Vaud receive an Italian Part* allocation between 140 and 330 Switzerland the owner becomes wwAscona authorisations each, the other cantons personally liable for income and wealth wwLocarno receive less than 100. taxes in connection with the property. wwLugano Usually, holiday homes are taxed based If the purchaser/vendor acquired the wwMorcote property as a ‘person abroad’ under the on the deemed rental value and tax value at the rates applicable to worldwide *Non-resident purchase available quota system, no new authorisation will throughout this region. Please contact income and wealth. For the sake of on the holding period, varying from estate in Switzerland is subject to the permanent residents. This will potentially be necessary and the purchase does not for any specific location. fall under the current quota. simplicity, the tax authorities may agree approximately 10%-50%.