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Author: Thierry Groppi

FAQs – Moving to and Living in Switzerland

Moving to Switzerland

Switzerland is a very attractive location for many non-Swiss nationals who are moving to Switzerland and wish to work in Switzerland.

It is an attractive country with 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.

Please see below some frequently asked questions and their respective answers, regarding moving to and living in Switzerland:

How long can I stay in Switzerland as a tourist?

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.

What is the situation regarding working in Switzerland?

The acquisition of a Swiss work permit allows a non-Swiss national to become legally 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 for Swiss work and/or residence permits, different regulations apply to EU and EFTA nationals compared to other nationals.

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 1million or more per annum, in the ‘near’ future (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?

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.

Switzerland does not offer a real estate investment programme.

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?

A non-Swiss national can move to Switzerland and apply for residency under the Lump Sum System of Taxation.

This annual tax is based on:

  • The applicant’s ‘expenses’ (not income), which are generally calculated as being 7 times the applicant’s annual rent.

Cantons also have ‘minimum deemed expenses’, which are considered as being a percentage of the applicant’s tax base. These ‘taxes’ depend on the canton and are generally between the tax rates, 21% and 46% of the tax base, as agreed with the cantonal tax authorities. Minimum annual tax bands are detailed below for several key cantons:

  • Aargau – CHF 400,000
  • Bern – CHF 400,000
  • Geneva – CHF 600,000 (multiplied by the tax rate applied in the relevant canton)
  • 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?

Switzerland is:

  • A safe and neutral country.
  • High standards of living and education.
  • Multicultural cities.
  • A beautiful country with pristine lakes and the backdrop of the Alps.
  • Business is investment friendly.
  • An excellent 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.
  • A Swiss passport is very well ranked in the world passport rankings in terms of visa free travel to. Swiss citizens can 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.

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.
relocating to Switzerland

Additional Information about Moving to Switzerland

If you require additional information regarding moving to Switzerland and living in Switzerland, 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.

Publication

18 August 2020

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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