Switzerland: Residence and Taxation of Foreign Individuals in Switzerland

Last Updated: 24 November 2004

Article by Dominique Christin, Bianchi Carnicé & Christin de Coulon,

Originally published in Bachmann Group Communiqué: Issue 3 August 2004

The Agreement for the Free Movement of Persons ("ALCP") with the (then) 15 EC Member States associated with the low level of estate duties and the so called "lump sum taxation" make Switzerland a place of residence very attractive taxwise for EC nationals.


The grant of residence and work permits to nationals of EC Member States has become much easier since the ALCP entered into force (June 1st, 2002 for phase I and June 1st, 2004 for phase II). The ALCP gradually introduces in Switzerland the free movement of persons for nationals from those EC Member States. An additional protocol is expected to operate the extension of ALCP to the 10 new EC Member States as from May 2005. The free movements also apply to nationals of Iceland, Norway and Liechtenstein.


  • Maximum numbers ("Quotas") of work permits have been maintained; in addition, supporting measures have been introduced to prevent social welfare dumping
  • On the other hand, the free movement is already fully available for taking up Swiss residency without gainful activity. The sole conditions are to have sufficient funds to cover living expenses and proper sickness insurance.


In Switzerland, inheritance and gift taxes are levied at the place of residence of the deceased (for inheritance duties purpose) or the donor (for gift taxes purpose). Unless provided otherwise in an applicable double taxation treaty, inheritance and gift taxes are due in respect of any moveable assets worldwide and immovable property in Switzerland. For immovable property, the taxes will be levied according to the rules of the canton where the property is located.

The tax rates increase with the amounts involved and depend on the degree of relationship between the deceased/donor and the recipient. The tax levied in the case of transfer to direct relatives and spouses is normally not higher than 5% or 6% of the part of the estate received. On the other hand, the tax due in case of transfer between unrelated parties may go up to 50% of the amount received.Currently, no inheritance or gift tax is levied at all on the federal level.

On the cantonal level, the situation varies very much from one canton to another. The undefeated inheritance and gift tax regimes are in the German speaking part of Switzerland. In particular, the canton of Schwitz levies no such taxes at all. The canton of Lucerne is also well known because gifts are not taxed there.

Over the last five years, several other cantons have decided to reduce the burden of inheritance and gift taxes. This trend has extended to the French speaking part of Switzerland. Following the example of the canton of Valais, several French speaking cantons have decided to reduce or abolish the taxes on the transfer of assets to the children and spouses. In the canton of Vaud, a reduction of taxes on transfer between direct relatives and spouses has been decided on May 16, 2004.

The canton of Geneva has completely abolished the estate duties between direct relatives (parents, grand-parents, children, grandchildren) and between spouses, as from June 1st 2004. Gift taxes have also been abolished in Geneva between direct relatives and spouses with respect to any gift made on or after June 1st 2004. These new Geneva tax advantages do not extend to residents benefiting from the so called "lump sum taxation". In such case, only a relief of 50% of the estate duties shall apply, provided that the deceased was non-Swiss, never worked in Switzerland and has been a resident in the canton of Geneva since January 1st 1979.


What is the lump sum taxation? In principle, individuals with residence in Switzerland are taxed based on their worldwide income. In addition, a net wealth tax is levied at cantonal and communal levels. As an alternative to this ordinary regime, non- Swiss nationals may elect for lump sum taxation if they are not engaged in gainful activities in Switzerland (or abroad for the service of a Swiss company) and become resident in Switzerland for the first time or after a minimum ten years absence.

If these two conditions are met, Swiss nationals are also eligible for the lump sum taxation but only during the (calendar) year of their arrival in Switzerland. This limited entitlement is very interesting for Swiss nationals: they may during this limited period of time dispose of commercial or industrial assets without Swiss capital gain tax liability. Capital gains realised on private assets are normally not taxable in Switzerland.

The difference between the ordinary and lump sum regimes consists in the taxable base of assessment: whereas an ordinary taxpayer will be assessed on his worldwide income and assets (except for immovable property abroad and unless provided otherwise in an applicable double tax treaty), a lump sum taxpayer will be assessed on a lump sum base. The lump sum is based on the cost of living. The base of assessment is agreed upon with the tax authorities and reviewed regularly. It may not be lower than 5X the rental value of the main accommodation used by the taxpayer and his family. Several cantons have introduced fixed minimum requirements.

The key points of the lump sum system are: first, there is no obligation to report to the Swiss tax authorities the foreign assets and income. Second, the taxpayer under the lump sum system remains eligible under the double taxation treaties concluded with Switzerland. The treaties with a number of countries provide for certain limitations of benefits if the Swiss resident is assessed under the lump sum system. These limitations may however be accommodated, in accordance with the conditions imposed by the treaties. These countries are, inter alia, France, Germany, Austria, Belgium, Italy, Norway, Canada and the United States.

The content of this article is intended for general information purposes only; we are at your disposal to give a specific advice and any complementary information.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions