Author: Christine Breitler

Why Switzerland?

There are many reasons why Switzerland is a desirable country to live in.

• A high standard of living with excellent working conditions and business opportunities.
• Beautiful scenery and an active outdoor lifestyle.
• A central location within Europe, with flight connections to over 200 international locations.

Non-Swiss nationals are allowed to stay in Switzerland as tourists, without registration, for up to three months. After three months, anyone planning to stay in Switzerland must obtain a work and/or residence permit, and formally register with the Swiss authorities.

How to Become a legal Swiss Resident

There are two alternative routes to become a Swiss resident:

• By working in Switzerland
• Through the Swiss ‘Lump Sum System of Taxation’

Working in Switzerland

The acquisition of a Swiss work permit allows a non-Swiss national to become a Swiss resident.

There are three ways to be entitled to work in Switzerland:

• Being hired by an existing Swiss company.
• Forming a Swiss company and become a director or an employee of the company.
• Investing in a Swiss company and become a director or an employee of the company.

When applying to work in Switzerland and/or for residence permits, different regulations apply to EU/EFTA nationals, compared to nationals of other countries.

It is a straightforward process for EU/EFTA citizens as they enjoy priority access to the labour market in Switzerland.

Non-EU/EFTA nationals can work in Switzerland as long as the are appropriately qualified, for example managers or specialists and/or with higher education qualifications.

An alternative route is for non-Swiss nationals to form a Swiss company and obtain a residence permit in Switzerland. Relevant individuals must be employed by the company that they establish in Switzerland.

Non-EU/EFTA businesses need to create jobs and business opportunities in Switzerland, as specified by each particular canton.

Lump Sum Taxation

A non-Swiss national, who does not work in Switzerland, can apply for Swiss residency under the system of ‘Lump Sum Taxation’.

• The taxpayer’s lifestyle expenses are used as a tax base instead of his/her global income and wealth. There is no report of global earnings and assets.

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

Work activities outside Switzerland are permitted. Activities relating to the administration of private assets in Switzerland can also be undertaken.

Third country nationals (non-EU/EFTA), may be required to pay a higher lump-sum tax on the basis of “predominant cantonal interest”. This will depend on a number of factors and varies case by case.

How can an Individual Become a Swiss Citizen?

• An EU or non-EU/EFTA national must have lived in Switzerland for at least 10 years, to be able to apply for a Swiss passport.
• However, if an EU or non-EU/EFTA national is the spouse of a Swiss national, they need only to have lived in Switzerland for 5 years.

Additional Information

If you require additional information regarding moving to and living in Switzerland, or have any other questions about this jurisdiction, please contact Christine Breitler or Thierry Groppi at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.

Many foreigners consider moving to Switzerland for its high life quality, outdoor Swiss lifestyle, excellent working conditions and business opportunities.

A central location within Europe with a high standard of living, as well as connections to over 200 international locations via regular international flights, also make Switzerland an attractive location.

Many of the world’s largest multi-nationals and international organisations have their head-quarters in Switzerland. 

Switzerland is not part of the EU but one of 26 countries making up the ‘Schengen’ area. Together with Iceland, Liechtenstein and Norway, Switzerland forms the European Free Trade Association (EFTA). 

Switzerland is divided into 26 cantons, each currently with its own basis of taxation. As from January 2020 the corporate tax rate (combined federal and cantonal) for all companies in Geneva will be 13.99% 

Residence

Foreigners are allowed to stay in Switzerland as tourists, without registration, for up to three months.

After three months, anyone planning to stay in Switzerland must obtain a work and/or residence permit, and formally register with the Swiss authorities. 

When applying for Swiss work and/or residence permits, different regulations apply to EU and EFTA nationals compared to other nationals. 

EU/EFTA Nationals

EU/EFTA – Working

EU/EFTA nationals enjoy priority access to the labour market. 

Should an EU/EFTA citizen want to live and work in Switzerland, he/she can freely enter the country but will need a work permit. 

The individual will need to find a job and the employer register the employment, before the individual actually starts work. 

The procedure is made easier, if the new resident forms a Swiss company and is employed by it. 

EU/EFTA Not working

The process is relatively straightforward for EU/EFTA nationals wanting to live, but not work, in Switzerland. 

The following conditions must be met:

• They must have sufficient financial resources to live in Switzerland and ensure that they will not become dependent on Swiss welfare

AND

• Take out Swiss health and accident insurance OR
• Students need to be admitted by the relevant educational institution, prior to entering Switzerland. 

NON-EU/EFTA Nationals

Non-EU/EFTA – Working

Third country nationals are allowed to enter the Swiss labour market if they are appropriately qualified, for example managers, specialists and those with higher educational qualifications. 

The employer needs to apply to the Swiss authorities for a work visa, while the employee applies for an entry visa in his/her home country. The work visa will allow the individual to live and work in Switzerland. 

The procedure is made easier, if the new resident forms a Swiss company and is employed by it.

Non-EU/EFTA – Not working

Non-EU/EFTA nationals, without gainful employment are divided into two categories: 

1. Older than 55; 

• Must apply for a Swiss residence permit through a Swiss consulate/embassy from their current country of residence.
• Provide proof of adequate financial resources to support their life in Switzerland.
• Take out Swiss health and accident insurance.
• Demonstrate a close connection to Switzerland (for example: frequent trips, family members living in the country, past residency or ownership of real estate in Switzerland).
• Abstain from gainful employment activity in Switzerland and abroad. 

1. Under 55;

• A residence permit will be approved 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. 

Moving to Switzerland – taxation

• Standard taxation

Each canton sets its own tax rates and generally imposes the following taxes: income, net wealth, real estate, inheritance and gift tax. The specific tax rate varies by canton and is between 21% and 46%.

In Switzerland, the transfer of assets, on death, to a spouse, children and/or grandchildren is exempt from gift and inheritance tax,  in most cantons.

Capital gains are generally tax free, except in the case of real estate. The sale of company shares is one of the assets, that is exempt from capital gains tax.

• Lump sum taxation

Lump sum taxation is a special tax status available to resident non-Swiss nationals without gainful employment in Switzerland.

The taxpayer’s lifestyle expenses are used as a tax base instead of his/her global income and wealth. This means that it is not necessary to report effective global earnings and assets.

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

It is possible for an individual to have gainful employment  outside Switzerland and to take advantage of Swiss lump-sum taxation. Activities relating to the administration of private assets in Switzerland can also be undertaken. 

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.

Find out more about living in Switzerland.