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Author: Thierry Groppi

FAQs – Moving to and Living in Switzerland

Switzerland is a very attractive location to live and work for many non-Swiss nationals. It offers amazing scenery as well as a number of world-famous cities such as; Berne, Geneva, Lausanne, and Zurich. It also offers an attractive tax regime for individuals as well as for companies, in the right circumstances.

We interview Thierry Groppi in our Dixcart office in Switzerland, on what it is like moving to Switzerland and living there. Thierry is the Business Development Manager in our Dixcart Office in Switzerland.

How long can individuals stay in Switzerland as a tourist?

I am often asked this question.

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

What is the situation regarding working in Switzerland?

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 for Swiss work and/or residence permits, it is important to note that different regulations apply to EU and EFTA nationals compared to other nationals, so it is worth checking.

The most popular route is definitely individuals forming a company in Switzerland. This is because EU/EFTA and non-EU/EFTA nationals can form a company, be employed by it, reside in Switzerland, and benefit from the attractive tax regime.

What is the minimum investment required for Swiss residency, when forming a company by a Non-EU/EFTA citizen?

The company must present a business plan detailing how the amount to be invested in it will generate a turnover of CHF 1 million or more per annum, in the ‘near future’, and the business plan has to show that the company will achieve this turnover in a specified number of months, not necessarily in the first year (particularly if the company is a start-up).

Can individuals gain Swiss residency through investment in real estate?

No, Switzerland does not offer a real estate investment programme.

Non-Swiss nationals can only gain Swiss residency through the ‘Swiss Business Investment Programme’, detailed above or through the Swiss Lump Sum System of Taxation.

Swiss based real estate can be purchased after gaining a residence permit. Quotas may be applicable to non-Swiss nationals in relation to owning a second residence in Switzerland.

What is Swiss Lump Sum Taxation?

The Swiss Lump Sum System of Taxation is extremely popular. This annual tax is based on the applicant’s ‘expenses’ (not income), which is generally calculated as being 7 times the applicant’s annual rent.

A tax rate is then applied to the individual’s expenses and depends on the canton. The tax rate is generally between 21% and 46%, as agreed with the relevant cantonal tax authority.

Minimum deemed expenses, are detailed by many cantons, some of which are listed below:

  • Aargau – CHF 400,000
  • Bern – CHF 400,000
  • Geneva – CHF 600,000
  • Fribourg – CHF 250,000
  • Lucerne – CHF 600,000
  • Ticino – CHF 400,000
  • Schwyz – CHF 600,000
  • St Gallen – CHF 600,000
  • Uri – CHF 400,000

What are some of the advantages of living in Switzerland?

There are so many advantages of living in Switzerland.

It has, and continues to be, one of the most sought-after countries to live in, in the world. It is a safe and neutral country, it has high standards of living and education, there are a variety of multicultural cities, and it is an all-round beautiful country with pristine lakes and the backdrop of the Alps.

It is also excellent for businesses. Business is investment friendly in Switzerland, and there is a great banking system.

How can an individual become a Swiss Citizen?

An EU or non-EU/EFTA national must have lived at least 10 years in Switzerland 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.

A child of a Swiss national (under the age of 18) will automatically be granted Swiss nationality. 

What reputation does a Swiss passport have?

A Swiss passport is very well respected across the world. It is well ranked in the world passport rankings in terms of visa free travel, with Swiss citizens able to travel, visa free, to 172 countries.

Which cities are well-known and popular to live in?

Geneva, Zurich, Bern, Lausanne, Basel, Lucerne, and Lugano are some of the most well-known cities in Switzerland, and are definitely the most popular in terms of where people live after relocating to Switzerland.

What languages are widely spoken in Switzerland?

English is spoken everywhere, as well as the three national languages of: French, German and Italian.

Is Switzerland in Schengen?

Yes, Switzerland is a Schengen signatory, enabling free movement for Swiss nationals within the EU. A Swiss residence card also allows for free movements in Schengen countries.

Does Switzerland have tax treaties?

Yes, Switzerland has a large number of tax treaties, just over 100 in total.

Additional Information

For additional questions about how to relocate to Switzerland, or what it is like to live and work in Switzerland, please get in touch: advice.switzerland@dixcart.com.

Publication

17 August 2022

Reference

IN667

Country/Countries

Living in Switzerland.

For further information

Please contact Thierry Groppi.

Back

How to Become Swiss Resident by Working in Switzerland

Swiss Residence

Switzerland is a popular destination for non-Swiss nationals wishing to become Swiss resident.

Working in Switzerland is often overlooked as an option, in terms of being able to move to this country. 

Swiss residence

1. Why do Individuals Choose to Live in Switzerland?

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

These include:

  • 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.
  • Many of the world’s largest international organizations have their headquarters in Switzerland.
  • Switzerland is not part of the EU but one of 27 countries making up the ‘Schengen’ area. An area which enjoys a number of travel rights.

Additional important information regarding this jurisdiction:

  • Switzerland, together with, Iceland, Liechtenstein and Norway, 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 has been 13.99%

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.

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

How to become Swiss Resident?

2. Residence – Working in Switzerland

The acquisition of a Swiss work permit allows a foreigner to become legally Swiss resident.

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

  1. Being hired by an existing Swiss Company.
  2. Forming a Swiss Company and becoming a director or an employee of the Company.
  3. Investing in a Swiss Company and becoming a director or an employee of the Company.

A. Being Hired by an Existing Swiss Company

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

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

Non-EU/EFTA nationals, however, are only allowed to enter the Swiss labour market if they are appropriately qualified, for example if they are managers, specialists and/or with higher education qualifications. They also need to meet a higher level of due diligence criteria, compared to EU/EFTA nationals.

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

B & C. Forming or Investing in a Swiss Company and Becoming a Director or an Employee of the Company

Procedures for both EU/EFTA and for non-EU/EFTA nationals are easier, if the new resident forms a Swiss company and is employed by it.

Any foreign national can form a company and therefore potentially create jobs for Swiss nationals. The owner of the company is eligible for a residence permit in Switzerland, as long as he/she is employed by the company in a senior capacity. The owner of the company is eligible for Swiss residence as long as he/she is employed by the company.

In principal, non-EU/EFTA nationals can form a company which must generate an annual minimum turnover of CHF 1 million, and create new jobs exploiting new technologies and/or the development of the region and contribute to the economic development of the country. The types of economic development objectives for the company, which are regarded positively in Switzerland, include; opening up new markets, securing export sales, establishing economically significant links abroad, and the creation of new tax revenue. Precise requirements vary by canton.

Alternatively, EU and non-EU/EFTA applicants can choose to invest in a company which is struggling to expand, as it lacks the necessary funding. This new funding should then enable the company to create jobs and assist the Swiss economy to expand. The investment must add economic value to a particular Swiss region.

A higher level of due diligence criteria must be met by non-EU/EFTA nationals, in comparison to EU/EFTA nationals, and the business proposition, put forward, will also need to offer greater potential.

3. Taxation

Individuals

Each canton sets its own tax rates and generally imposes the following taxes: income, net wealth, real estate, inheritance and gift tax. The income 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 classified as an asset, which is exempt from capital gains tax.

Swiss Companies

Swiss companies can enjoy a zero-tax rate for capital gains and dividend income, depending on the circumstances.

Operative companies are taxed as follows:

  • The effective cantonal and federal corporate income tax rate (CIT) is between 12% and 14% in most cantons. The Geneva corporate tax rate is 13.99%.
  • Swiss Holding Companies benefit from a participation exemption and do not pay tax on profits or capital gains arising from qualifying participations. This means that a pure Holding Company is exempt from Swiss tax.

Withholding Tax (WHT)

  • There is no WHT on dividend distributions to shareholders based in Switzerland and/or in the EU (due to the EU Parent/Subsidiary Directive).
  • If shareholders are domiciled outside Switzerland and outside of the EU, and a double tax treaty applies, the final taxation on distributions is generally between 5% and 15%.

Double Tax Treaties

Switzerland has an extensive double tax treaty network, with access to tax treaties with over 100 countries.

Additional Information

If you require additional information regarding moving to Switzerland to work and how to become Swiss resident, or have any other questions about this jurisdiction, please contact the Dixcart office in Switzerland: advice.switzerland@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

Switzerland Residence Through Work Permit

Publication

18 August 2020

Reference

IN666

Country/Countries

Living in Switzerland.

For further information

Please contact Thierry Groppi.

Back

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