IN433 - Switzerland: an Option to Consider for Individuals Seeking to Relocate from the UK

The UK is currently going through a period of considerable change, a significant element of which has been caused by the recent Brexit vote. Whilst this creates opportunities for some, the ensuing uncertainty is causing concern for a number of current UK resident individuals.

A number of revisions (due to be introduced in April 2017) have been also proposed regarding the status of UK nom-doms. These proposed changes will reduce a number of the advantages currently available to UK nom-doms. The latest rumours indicate that these changes may not be implemented following the Brexit vote, but the position remains to be clarified.

Criteria relating to UK resident and non-resident status can be found in the Dixcart article: The UK Resident/ Non-Resident Test.

Switzerland as an Alternative Jurisdiction to Consider

If the decision is taken to cease to be UK tax resident, many individuals will hope to continue to spend time in the UK for personal or business reasons. Being situated in the centre of Europe with five bordering countries, Switzerland is a popular and easily accessible jurisdiction to consider as an alternative place of residence.  There are twenty-six cantons in Switzerland and currently each has the autonomy to impose its own cantonal tax.

Reasons to Consider Relocating to Switzerland

Switzerland offers a number of benefits and opportunities that make it an attractive jurisdiction to consider when relocating:

  • It has a strong economy based on the finance, banking, technology and commodities sectors.
  • It has a stable political structure, parliamentary democracy, a reliable legal system and well-governed domestic institutions.
  • Although not an EU member, Switzerland has strong relations with European countries through bilateral agreements. It is a member of the European Free Trade Association (EFTA), the Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD).
  • Switzerland is regarded as one of the top ‘quality of life’ countries in the world. It offers beautiful scenery, with both a moderate and alpine climate.
  • Major cities, such as Bern, Geneva and Zurich, are historical, vibrant and picturesque.
  • English is spoken in all major cities in addition to the four national languages: French, German, Italian and Romansch.

The Lump Sum System of Taxation for Individuals Moving to Switzerland

Switzerland offers an attractive tax regime for individuals that choose to live there. The key features of the Swiss Lump Sum System of Taxation are: 

  • Income and wealth taxes are levied based on the taxpayers’ living expenses in Switzerland, rather than on their worldwide income and assets.
  • For federal tax purposes, a taxpayer's living expenses are assessed as at least seven times the annual rental cost or the deemed annual rental income of the taxpayer's dwelling in Switzerland. In Geneva, the minimum acceptable taxable income is CHF 300,000 per annum. The specific tax rate applied depends on the particular circumstances of each individual.

Please note that the minimum acceptable taxable income and minimum tax payable may vary across different Swiss cantons.

The Lump Sum System of Taxation applies to individuals taking up residence in Switzerland for the first time or returning to Switzerland after an absence of at least ten years. They must not engage in any gainful employment in Switzerland.

Please note that the Lump Sum System of Taxation is not available in three of the twenty-six Swiss cantons.

Tax Attractive Swiss Cantons to Consider as an Alternative Place of Residence

  • Valais
  • Zug

These two Cantons can be particularly attractive because of their minimum threshold of taxable income (Valais CHF 250,000 and Zug CHF 120,000) and as they do not levy inheritance tax. In Geneva for example, the inheritance tax for an individual taking advantage of the lump sum system is between 2% and 12%.

Additional Information

If you require additional information regarding the jurisdiction of Switzerland, please speak to Christine Breitler in our Swiss office: advice.switzerland@dixcart.com or to your usual Dixcart contact.

Categories: Jurisdiction, Switzerland, Year, 2016, Category, Dixcart Domiciles