Moving to Switzerland – A Move You Will Never Regret
When moving to Switzerland, you need to know that each Swiss Canton is very different in terms of culture, language and taxation. There are many subtle distinctions to consider before you can decide where to settle down. Entrepreneurs and celebrities in Switzerland who are always on the move appreciate the proximity of airports and highways. A family with children needs an area where private boarding schools in Switzerland and/or universities are close by. Some want to live in the proximity of a Swiss city while others prefer to settle at a resort in the mountains. Whatever your preference, acquiring a residence permit is the crucial element when moving to Switzerland. It helps to know the right people at the cantonal and federal migration offices for processing permit applications. After the acceptation of your application, it takes usually three months to process. Who needs a Visa? To enter Switzerland, you need a valid travel document recognised or accepted by the Swiss authorities. Principally, citizens from EU or EFTA countries can stay up to three months when visiting as tourists without a permit. Foreign nationals not from the EU may need a visa to enter Switzerland. Should you require one, you have to apply for it in your home country. The reason for this is that visas are never issued in Switzerland. What is a Swiss resident? A Swiss resident is somebody whose residence is legally in Switzerland. This means that your life activities are here and therefore you become a Swiss taxpayer. When you are granted a Swiss residence permit, you are required to live here. After moving to Switzerland, make sure you stay at least 180 days a year or more. If you cannot stay for more than 180 days, then you must make sure that you do not spend more time in any other specific country. The reason for this rule is that residency permits are not given to people who spend only a month or two in Switzerland.
What benefits do you receive when moving to Switzerland? Like in all countries, the Swiss authorities want you to meet a few basic conditions in order to qualify for immigration for you or your family. There are of course lucrative benefits when you play with the idea about moving to Switzerland because you… • Can live in Switzerland with your spouse and your children under 18 Who can acquire a permit? Since the bilateral agreement on June 1st 2002 between Switzerland and the EU and EFTA countries, it has become easier moving to Switzerland. It gives the citizens of the EFTA and European Union much more possibilities. Many restrictions are now lifted. The criteria applied to decide who can become a resident were further extended as to what you can do. Unfortunately it has become more difficult for citizens from countries outside the EU. The Swiss government issues of course different permits for anyone who works during his/her stay or who remains for longer than three months. If you are an EU citizen, you can search for work for up to three months. When you are not an EU national, you are required to obtain a pre-authorisation before you enter Switzerland. Basically it is a document that states that you will receive your immigration documents after your arrival. After moving to Switzerland, you have 8 days to register at the local town hall. This registration is obligatory for foreigners as well as Swiss citizens. Now you probably want to know why Swiss citizens also have to register. You see, we Swiss have to contact the new community and/or canton we relocate to. This is for two reasons. First, every community and canton has a different tax foot and therefore is heavily competing against each other. And second, the Swiss army also wants to know where we live, in case we are doing military service. The different requirements depend on what you intend to do in Switzerland. Discover what is required to receive a permit if you are retired, are an investor or are a celebrity with the thougt of moving to Switzerland. Retired People If you or your spouse is an EU citizen or you have an EU passport, you may have a chance to acquire a residence permit. The requirements to qualify are modest and you certainly do not need to be a celebrity or mega wealthy. Therefore, to retire in Switzerland, you have to… • Be over 55 years old Please note: If you are younger than 55, you will not qualify for retirement in Switzerland. However, there is an alternative to obtain a permit by investing in a local company. Investors Like everywhere in the world, when you invest in a company, you help to create jobs in Switzerland. The requirements for such an investment are that… • Your investment has to finance a company for growth You also qualify for a residence permit by making an investment when you are younger than 55 years. However, you still have to be retired and have an annual income of more than 100,000 CHF. Entrepreneurs and Small Businesses Another way to obtain to immigrate is by forming a Swiss company. For that you have to meet several basic conditions in order for you and your family to qualify. You can get a permit when a real and legal Swiss company with business activity hires you. You could become its manager or even the owner of the company. However, you cannot be self-employed or set up a simple consulting type of business. The Swiss authorities require you to actually form a company that creates jobs. That means that you need to hire at least one full-time Swiss employee. Hiring your wife, your son, your cook or your gardener does not count. How much you need to invest to form a company is not a critical decision. The idea is that you create jobs and of course the company has to cover all its expenses. This means that your salary also must compare to that of a Swiss managing director. In numbers, the gross margin cannot be less than 200,000 CHF before salaries and taxes. Company Relocation and Medium to Large Companies Many international companies choose Switzerland as their head office. Like in all countries, there are certain conditions required by the federal and cantonal authorities to transfer a company. This usually requires businesses to relocate expatriates to Switzerland. It is not a problem as long as the proportion of Swiss employees to expat employees is in line. However, the expat workers must have skills that are difficult to find on the Swiss market. They must also be paid Swiss salaries. Since Switzerland provides an efficient system, it creates few problems forming a company. It is usually best to obtain a residence permit before incorporating a Swiss company. It makes moving to Switzerland so much easier. After checking that the incorporators, administrators and the articles in incorporation chosen, the company name is free and the capital deposited, the company usually incorporates in about two weeks. Forming a limited liability company requires CHF 20,000 of registered capital. A business corporation needs CHF 100,000 of registered capital and half of that released at the time of the incorporation. Artists and Sport Stars The "Pauschalbesteuerung" or translated as "lump sum taxation" is quite unique and special in our country. The fiscal arrangement based on Switzerland’s federal law is available in all cantons. However, our tax system forces each community and canton to compete against each other. The possibility of paying a yearly fixed amount of tax attracts not just many celebrities, the wealthy and business people. It attracts also many sport stars and retired individuals. This is one of the main reasons why some people are moving to Switzerland. Even Swiss citizens, especially those who earn above average compare the tax foot of the communities and cantons. It makes sense in most cases as there are big differences in tax rates. Before you think about moving to Switzerland, you should know that you need a taxable income of at least 80,000 CHF a year. This is a rather modest amount to grant you the necessary documents if you are flexible enough. This is because many cantons have different income minimums for foreign nationals. The amount of taxes is based on your rental payments and not on your real income. In fact, nobody even asks you to declare neither your income nor your assets. You are paying only on the rental value of your home. In other words, the normal tax rate calculates as equal to 5 times your annual rent. For example – let us assume you rent an apartment in the city of Lausanne for CHF 3,500 a month. Your annual rental is 3,500x12 = CHF 42,000 and your taxable income would be just 5 times your annual rent. Therefore, 42,000x5 = CHF 210,000, which means that your annual tax bill would be approximately CHF 63,000 a year. If you own a CHF 4,000,000 villa in Zurich, we find out the rental value of your villa. In this case we take a mortgage of (say 4%) to calculate our annual rent of CHF 4,000,000x4% = CHF 160,000. Your taxable income will then be 4x160,000 = CHF 640,000. Taking a 30% tax rate, you annual tax bill would be approximately CHF 640,000x30%, is CHF 192,000 a year. Please note that this is only an example. The overall tax rate depends on where you live and there are big differences between the Swiss cities and cantons. It also changes when you own several Swiss properties and if you decide to use the Swiss double tax treaties. I realize that it may not be a paradise for everybody and it requires some thoughts before one can decide about moving to Switzerland. 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