SWITZERLAND Law and Practice Contributed by: Natalie Dini and Peter Vogt, Tax Partner AG
Expenditure-Based (“Lump Sum”) Taxation Please refer to 1.1 Tax Regimes for discussion of the Swiss lump sum tax regime. 1.4 Taxation of Real Estate Owned by Non- Residents Swiss tax rules for a non-resident who owns Swiss real estate are as follows. • Limited tax liability on rental (or imputed) income: The canton and commune where the property is located as well as the Confederation tax the net rental income (or the deemed rental value if the home is not rented but kept for private use). Ordi - nary progressive income tax rates apply. Expenses that relate to the Swiss property (eg, maintenance costs or mortgage interest) can be deducted. • Annual wealth/property taxes: Most cantons charge non-residents the same net wealth tax they impose on residents, but only on the Swiss real estate asset. Some cantons levy an additional annual property tax on the tax value of the prop - erty. • Real estate capital gains tax: When the property is sold, the canton of situs taxes the capital gain, irrespective of the owner’s foreign residence. The tax is progressive and usually falls the longer the holding period. • Transfer duties on purchase: Most cantons levy a one-off property-transfer tax or fee of 1–3 % of the price (exemptions apply). • Inheritance/gift tax rule of situs: If the non-resident owner gifts or bequeaths the property, the canton where the property is located taxes the transfer. 1.5 Stability of Tax Laws Switzerland’s tax regime is not at all volatile. There are formal checks and balances in place requiring changes in tax law to go through parliament and in many cases a popular referendum. This direct form of democracy has shown some radical ideas appear - ing on the ballot; however, only a handful survive the two-tier (“people + cantons”) vote. The result is a sys - tem that changes slowly and predictably. In addition, competition between the 26 cantons ensures that tax rates rarely move suddenly.
Federal Inheritance Tax Initiative A popular initiative launched by the Young Socialists aims to introduce a federal 50% tax on the value of all gifts and estates that, together, exceed CHF50 mil - lion per donor/decedent. This CHF50 million allow - ance is a once-per-person lifetime one; above it the whole surplus would be taxed, with no exemption for spouses or descendants. Cantonal inheritance and gift taxes would continue to apply on top. The revenue from the proposed tax is earmarked for climate-action programmes. Parliament and the Fed - eral Council oppose the plan and have recommended rejection. Nevertheless, the Swiss direct-democracy rules force a nationwide referendum, scheduled for 30 November 2025. Pollsters and most commentators expect the measure to fail because it needs a “double majority” of both voters and cantons, but its mere presence on the bal - lot has already prompted some very wealthy families to accelerate lifetime transfers or review residency. 1.6 Transparency and Increased Global Reporting Over the last decade Switzerland has closed most of the loopholes that once made the country synony - mous with opacity. Exchange of Information Regarding automatic exchange of account informa - tion, since 2017, Swiss banks, insurers and asset man - agers have reported account data under the OECD Common Reporting Standard, and this has now been extended to crypto-assets: a Crypto-Asset Reporting Framework has been introduced, and first exchanges are scheduled for calendar-year 2026 data. FATCA An intergovernmental agreement to implement the US Foreign Account Tax Compliance Act (Model 2 FATCA IGA) has applied since 2014, forcing Swiss financial institutions to report US account holders. In June 2024 Switzerland and the United States signed an amendment that turns the flow into a two- way automatic exchange starting in 2027.
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