In today's globalized world, migration is no longer just driven by economic and existential needs. People increasingly choose to be expatriates and lead international lifestyles. As such, relocation planning has never been as important. Also, families are increasingly spread across jurisdictions, rendering relocation and estate planning as well as investment and financial advice for family members and stakeholders (e.g. family offices and trustees) even more important. In this brochure, we set out the most important legal and tax considerations to bear in mind if you are planning a move to Switzerland. Following a brief general overview of the Swiss political system, the brochure summarises the most important tax laws, the rules on foreigners acquiring Swiss real estate and the most relevant aspects of Swiss family, divorce and succession law.

Switzerland at a Glance

Overview

Switzerland has a population of approximately 8.7 million, of which roughly one quarter are foreign nationals. The country has four official languages (German, French, Italian and Romansh) and English is also widely spoken.

Politically and economically, Switzerland is one of the most stable countries in the world. It is a federal republic made up of 26 cantons, each of which has considerable autonomy in the areas of taxation, healthcare, social welfare, law enforcement and education; this creates a number of differences in local governance.

Ranked amongst the wealthiest countries in the world, Switzerland is also renowned for its high quality of living. Its largest city, Zurich, was recently ranked second in the Mercer Quality of Living Survey1, followed closely by other Swiss cities, Geneva, Basel and the capital, Bern. Few other countries can boast as many cities in the top 20.

Switzerland has a stable economy thanks to its highly developed professional services sector (including banks and insurance companies) and thriving manufacturing and pharmaceutical industries. Competitive taxation levels both for individuals and corporations help to stimulate business and migration. Moreover, Switzerland has one of the highest concentrations of philanthropic foundations in the world.

Switzerland's outstanding healthcare system consists of a combination of public, private and semi-private healthcare institutions. These offer a large network of highly qualified doctors and hospitals, which are equipped with the most cutting-edge medical facilities. The Swiss healthcare system is not only attractive for international clients and relocators but has, for many years, proven itself as a reliable source of basic and further medical support for the Swiss population in general.

Political System

The political system of Switzerland is based on the Federal Constitution of 1848. The latter determines that Switzerland is governed under a federal system at three levels: the Confederation, the cantons and the municipalities. At each level, the political authority is divided into legislative, executive and judicial powers.

The Federal Assembly (legislative power)

On the federal level, the legislative power is exercised by the Federal Assembly, which consists of two chambers, the National Council and the Council of States. The National Council has 200 seats and represents the population of Switzerland as a whole. The 200 seats in the National Council are assigned to the cantons in proportion to their population. The Council of States represents the cantons and has 46 seats: two for each canton and one for each half-canton.

The two councils have equal powers. The representatives for each chamber are elected by popular vote for a four-year term directly by the Swiss population.

As the legislative power, both chambers debate all constitutional amendments before they are submitted to a popular vote. They also decide on the enactment, amendment or repeal of federal laws. as becoming subject to the automatic international exchange of information and the American CRS and FATCA regimes.

The Federal Council (executive power)

On the federal level, Switzerland is governed by the Federal Council, a seven-member collegial body in which the main political parties and the country's different regions and languages are represented. Every four years, the members are elected or re-elected by the Federal Assembly. Although one of the Federal Council members, on a rotating annual basis, takes the seat of the "Federal President", this position is more of a representative nature; Switzerland does not formally have a president with special powers.

The Judiciary

The judiciary comprises of federal and cantonal courts. Each canton has its own courts of first instance and a second instance of appeal. The highest judicial authority is the Federal Supreme Court located in Lausanne (with a branch in Lucerne), which is the final instance of appeal against decisions of: the cantonal courts of appeal; the Federal Criminal Court, located in Ticino; the Federal Administrative Court and the Federal Patent Court, both located in St. Gall.

Participation rights of citizens

Due to the structure of Switzerland as a direct democracy, Swiss citizens can in many ways participate in the political decision-making process, e.g. by means of a popular initiative or a referendum. The popular initiative allows citizens (under certain conditions) to propose an amendment to the Federal Constitution, while the referendum enables citizens to request that bills approved by the Federal Assembly are put to a nationwide vote. All constitutional amendments are subject to a mandatory referendum.

Swiss citizens can also exercise their political rights on a cantonal and communal level whereby some cantons and municipalities also allow non-Swiss residents to participate if they meet certain conditions (e.g. permanent residence permit).

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Footnote

1. Quality of Living City Ranking by Mercer (2019), available at: https://mobilityexchange.mercer.com/insights/quality-of-living-rankings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.