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Residence in Switzerland on Lump-Sum Taxations Agreement

Switzerland, officially the Swiss Confederation, is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe where it is bordered by Germany to the north, France to the west, Italy to the south, and Austria and Liechtenstein to the east. The Swiss population is approximately 7.8 million people. The largest cities are the two economic centers of Zurich and Geneva. Switzerland comprises three main linguistic and cultural regions: German, French, and Italian, to which the Romansh-speaking valleys are added. The Swiss therefore do not form a nation in the sense of a common ethnic or linguistic identity. The strong sense of belonging to the country is founded on the common historical background, shared values (federalism, direct democracy, neutrality) and Alpine symbolism.

The establishment of the Swiss Confederation is traditionally dated to 1 August 1291. The Swiss Confederation has a long history of neutrality – it has not been in a state of war internationally since 1815 – and did not join the United Nations until 2002. Switzerland is home to many international organizations, including the second largest UN office, the Red Cross, the World Trade Organization, International Labour Organization or sports federation as the International Olympic Committee and FIFA. On the European level it was a founder of the European Free Trade Association and is part of the Schengen Agreement. At the same time Switzerland is notably not a member of the European Union and not a member of the European Economic Area.

Switzerland is one of the richest countries in the world by per capita gross domestic product, with a nominal per capita GDP of USD 67,384. Switzerland also has one of the world’s largest account balances as a percentage of GDP, only placing behind a few oil producing countries. Zurich and Geneva have respectively been ranked as the cities with the second and third highest quality of life in the world. In 2010, World Economic Forum deemed Switzerland the world’s most competitive country.

Immigration to Switzerland – Permit B (Temporary Residence)

Logically enough, Switzerland is one of the most attractive countries in the world for immigration and doing business. Relatively low tax rates (in comparison with most EU-countries) make Switzerland one of the best choices for business and private residence. Investors and entrepreneurs as well as persons of independent means would normally have no problem obtaining a residence permit.

At the same time foreign investor from non-EU countries should keep in mind that EU-citizens enjoy preferential treatment in terms of obtaining residence permits in Switzerland. In particular, it is practically impossible for owners of small and medium-sized companies (if they are not holders of EU passports) to obtain residency in Switzerland with the right to work. Labour market of Switzerland is protected, and jobs are meant for Swiss citizens, then for EU-citizens, and only if are a really big expert in some area and can fulfill unique job duties, only then you can count on getting Permit B with a right to be gainfully occupied in Switzerland.

Lump-Sum Taxations Agreements – Permit B (Temporary Residence)

At the same time citizens of non-EU countries can immigrate to Switzerland through the system of Lump-Sum Taxation Agreements. These agreements are possible in each canton with the exception of Zurich. It is normally arranged in the following way. Foreign investor or wealthy individual who wants to relocate to this or that canton concludes a special agreement with canton (with obligation to pay annually fixed tax from CHF 300,000 to CHF 1,000,000 depending upon the canton chosen). Authorities of the canton approve Permit B for the applicant and his family members (it will be temporary residence permit without right to be gainfully occupied in Switzerland). After five or ten years of actual residence in the country Permit B can be transformed into Permit C (permanent residence).

Fees and Costs

Elma Global normally charges fixed fee of CHF 50,000 for the arrangement of Lump-Sum Taxation agreements and temporary residence permits for non-EU citizens.

Question and answers on relocation to Switzerland:

Question: Could you be so kind to provide us some information? Our client is going to obtain temporary residence on the basis of expenditure-based taxation system. The question is whether they will be obliged to pay taxes according to lump-sum taxation system or they will be subject to general taxation system rules when they get permanent residence permit?
Answer: When they get permanent residence permit, they can continue enjoy lump-sum taxation. Lump-sum is not possible only for Swiss citizens

Question: Kindly inform us about immigration (residency) options in Switzerland and the total cost on it. I am Pakistani citizen.
Answer: Lump-sum taxation (fiscal deals) for non-EU nationals became rather expensive these days. This is an option for extremely rich only. The minimum annual tax you must be prepared to pay annually in Switzerland is 300,000 CHF. The residency permit granted will be without authorization to be gainfully employed in Switzerland. After 5 years with temporary residence permit and provided you know language of the chosen canton, you can get permanent residency (permit C) and switch to normal taxation.
Question: Any other option?
Answer: Another option is to seek residency permit of another type – with the right of gainful employment based on investment into business. However, this is not very realistic for non-EU nationals with modest investment. This could be realistic if you invest about 1,000,000 CHF into new technology and create new jobs in Switzerland. Alternatively, you should be ready to invest at least 5,000,000 CHF into some business project approved by this or that canton.

Last updated 05.11.2021

If you have any questions regarding immigration to Switzerland or wish to use our legal assistance in incorporation of company in Switzerland or in obtaining temporary or permanent residency do not hesitate to contact us today

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