Taxation in Switzerland: practical information

A practical case: I buy a house in Ticino (Switzerland). I am British.
What are the applicable rules and precautions to pay attention to?

You must first distinguish between primary home, holiday residence or commercial property. In fact, the purchase of real estate in Switzerland by foreign residents is partially limited, but this limitation regards real estate for residential use. The purchase of real estate for commercial use (business, offices, locales for artesanal or industrial activities) is not subject to restrictions.

Also not subject to restriction is purchase by a foreign citizen with residence in Switzerland. By residence, we mean domicile, according to Swiss Civil Code, that is, the place in which a person stays with the intention of staying for a time and where exists the center of his interests. Thus, a foreign citizen who moved to Switzerland and obtained the necessary permission (permit "B") from the administrative authority can purchase any property. It should be noted that Italian citizens have, because of the bilateral agreements between the European Union and the Swiss Confederation, the right of moving to Switzerland. The purchase of real estate may take place only during the move, so the need to live and rent for a certain period should be kept in mind.

Moving to Switzerland

Moving to Switzerland means being subject to its taxes, with the exception of taxes on items taxable in Italy: the provisions of the double taxation agreement. It is possible to arrange with the Swiss authorities a lump-sum tax based on actual expenditure rather than income. In this case, however, the benefits of the agreement on double taxation are voided.

A foreign-residing foreign citizen may, with permission, purchase a second or vacation home in a tourist area if the total livable area is not more than, as per the rule, 200 m² (in the case of a non-condominium dwelling, the property may not exceed 1000 m²). The sale of these items is quota-contingent, therefore the application may not be accepted, depending on the level of the annual quota, unless authorization is granted at a later date. Authorization is not granted to anyone who already owns real estate in Switzerland. This happens even if it is the property of a spouse or a minor child.

However, the purchase of various objects by parents and their non-minor children remains possible. In the case it is to be rented out as an apartment or vacation house, the taxable aspect is limited to the taxes related to the property itself, with due regard to the value of the real property and to the its income value (with progressive rate based on income / assets wherever it is located). In the case of personal use, a value of theoretical income is calculated. Remember that authorization to purchase is usually granted with the presence of certain documents, such as prohibition of sale for 5 years from the date of purchase, prohibition of lease to 3rd parties (rental is permitted for short periods: a maximum of 10 months out of 12) and the obligation to occupy the property for at least two weeks per year. Prohibition of sale does not forbid transfer of ownership as an inheritance or a gift between spouses or between parents and children.

A final note: the purchase of a living-space or partial-living-space property by a housing company owned by foreign residents is not allowed.

 

(Source: Buy a home in Ticino-Svizzera,
Brenno Brunoni, bmalegal.ch)

 

Useful information:

Lugano: history and development
Ticino: description of the region
The Swiss context: geography and languages

Buying property from abroad in Switzerland
Taxation in Switzerland: Practical information

 

Access our Artprojekt real estate catalog and find our interesting proposals.