Immigration to Switzerland for Financially Independent Persons
Legislation of Switzerland provides a possibility to obtain a residence “permit B” that allows the applicant and his close family members to reside in Switzerland without gainful occupation. Not only employment but also self-employment is prohibited.
Permit B is valid for one year and is to be renewed annually. After 5 years of residence holder of Permit B can apply for Permit C (permanent residency in Switzerland). In order to be eligible to apply for permit C applicant must have a good command of the language of hi his canton.
The Permit B is granted by cantonal authorities based on fiscal deal (also known as lump-sum taxation) the applicant is expected to have with a chosen canton. According lump-sum taxation a taxable income is established by computing the foreigner`s annual cost of living expenses in Switzerland. The taxable income must correspond to seven times on the actual annual rental payments (or the rental value of the apartment or house).
In addition to taxation of hypothetical income the lump-sum tax also includes hypothetical wealth tax. Taking into account that applicable taxes are calculated based on hypothetical income, hypothetical wealth, and actual expenses in Switzerland the applicants are not expected to declare their actual world-wide income and actual cost of assets to Swiss authorities.
The lump-sum tax rates vary between the Cantons but the minimum will start from CHF 200,000 (the applicant is expected to sign an agreement for 5 or 10 years with cantonal authorities). In case income of the applicant amounts to several million annually it is obvious that lump-sum taxation is a privileged system that allows having preferential tax treatment. Wealthy individual who is a resident of Switzerland can pay taxes in Switzerland and can be free from payment of personal income tax in his country of citizenship where he spends less than 6 months per year.
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