Moving to Switzerland

Switzerland is in the centre of Europe, bordered by; Germany, France, Austria and Italy. It has very close links to the majority of European countries and is a member of the European Free Trade Association (EFTA), but it is not a member of the EU.

Switzerland is divided into 26 cantons, each currently with its own basis of taxation.

Tax Advantages when Living in Switzerland

If an individual has a Swiss work permit, they can become Swiss resident. They must have a job or form a company and be employed by it. It is straightforward for EU citizens over the age of 55, who are not working, to move to Switzerland, as long as they are financially independent.

The ‘Lump Sum System of Taxation’ is applicable for individuals moving to Switzerland for the first time or returning after a minimum ten year absence. No employment can be undertaken in Switzerland, but the individual can be employed in another country and can administer private assets in Switzerland.

The ‘Lump Sum System of Taxation’ bases income and wealth taxes on a taxpayer’s living expenses in Switzerland, NOT on his/her worldwide income or assets. 

Once the tax base (living expenses in Switzerland), has been determined and agreed with the tax authorities, it will be subject to the standard tax rate in that particular canton. 

Third country nationals (non-EU/EFTA), are required to pay a higher lump-sum tax on the basis of “predominant cantonal interest”. This generally equates to paying tax on deemed (or actual) annual income, of between CHF 400,000 and CHF 1,000,000, and depends on a number of factors, including the specific canton in which the individual lives.