Switzerland: the Lex Koller still restricts purchases by foreigners

The federal law on the acquisition of real estate by persons abroad makes the purchase of a property by a person domiciled outside Switzerland subject to authorisation.

A European Union national who holds a residence permit and actually lives in Switzerland is, however, exempt for their main residence.

The rule is therefore clear in principle: settling there opens up the market; investing from a distance does not. This is the opposite of the logic of the residency by investment schemes used elsewhere.

Second homes in tourist areas are also subject to cantonal quotas and additional restrictions, with regulated conditions of use and resale.

We do not publish cantonal quotas, maximum authorised floor areas or the conditions of use for second homes acquired under authorisation: they fall under cantonal rules that we have not been able to verify in up-to-date official sources.

Switzerland is a small territory, much of which is mountainous and unbuildable. Pressure on land is structural, and the law is long-standing.

It is also part of a dominant rental culture: the Swiss home ownership rate is one of the lowest in Western Europe, and renting is viable over the long term.

Rents are regulated by a mechanism linked to the reference mortgage rate, and tenant protection is strong. A sitting tenant enjoys a stability that few European markets offer.

An expatriate who settles in Switzerland therefore rents in the vast majority of cases, and there is nothing temporary about this situation.

The difficulty is not the price but access: the vacancy rate is very low in the most sought-after cantons, and the standardised application file puts a newcomer with no Swiss track record at a disadvantage.

This set-up has a corollary that would-be residents underestimate: the search for housing must come before the application for a residence permit, not after it. Without an address, the cantonal file does not progress; without a permit, the rental application is incomplete.

The usual practice is therefore to first obtain a lease commitment or temporary housing, then file the application with the cantonal authorities. Swiss estate agencies know this sequence and can help with it, but it needs to be planned in advance.

An owner-occupier is taxed on an imputed rental value, a notional income corresponding to the rent they would receive by letting the property.

This mechanism, regularly debated in Switzerland, significantly changes the calculation of whether buying pays off compared with renting, and it has no equivalent in most European systems.

Tax is also levied at three levels — Confederation, canton, municipality — and the burden depends more on the address than on the country.

Finally, tax liability arises quickly: federal law uses 30 days¹ of stay with gainful activity, or 90 days² without activity.

On the other hand, inheritances between spouses and, as a general rule, to descendants are exempt, at a rate of 0%³, the tax being cantonal.

1. For a European Union national, buying requires actual residence in Switzerland.
2. Second homes in tourist areas are subject to quotas and regulation.
3. Renting is viable over the long term and is the norm, including for established residents.
4. The taxable imputed rental value changes the calculation of whether buying pays off.
5. Tax liability arises from 30 days¹ with gainful activity.

Finally, lump-sum taxation based on expenditure, open to foreign nationals with no gainful activity in Switzerland, requires a federal minimum of about CHF 435,000⁴ a year, cantonal minimums that are often higher, and a prior agreement negotiated with the cantonal authority. Several cantons have abolished it by popular vote: its availability must be checked before any property decision.