Buying a property in Switzerland can offer wonderful
advantages - whether as your personal home, retirement
home, vacation property for personal use and rental
income, or as an investment, now and for the future.
Swiss Federal laws govern who can buy property in
Switzerland, and under what conditions - and different
provisions then apply in each canton. Special
more liberal rules enable foreigners to purchase
property in designated touristic areas, such as Gstaad,
which is also among the most scenic and well-loved
holiday destinations.
We have set out below the main considerations that
apply and, with our experience in working with these
laws to assist property purchasers, would be pleased
to provide further information, and discuss any questions
with you. We can also help potential buyers find
appropriate legal professionals - lawyers and notaries
- to make the purchase of Swiss property simple and
risk-free.
Swiss property law
Swiss property law limits the sale of property to
non-residents, whether individuals or companies.
The Federal law on the acquisition of property
by foreigners, 'Lex Friedrich' (enacted in 1983,
amended in 1997), limits the acquisition on Swiss
real estate by foreigners, and operates together
with cantonal laws and communal regulations. A "foreigner" is
defined as any person who does not have the right
to take up residence in Switzerland - that is,
a person who does not possess a C-permit. Any foreigner
wishing to purchase real estate subject to restriction
must obtain authorisation from the cantonal authority,
whether or not they are purchasing from another
foreign owner.
When can a Swiss property be purchased without authorisation?
• Nationals and C-permit holders - Swiss
property may be purchased freely by Swiss residents
living in Switzerland and abroad, dual nationals
living abroad, and foreign nationals with a valid
C-permit who are resident in Switzerland.
• Foreigners' and B-permit holders' principal
residence - Swiss property laws allow foreigners
to purchase a single residence property, without
authorisation, as their principal residence, provided
that the purchaser lives at the property and uses
it personally and exclusively for themselves, their
family and close relatives. For so long as the property
is classed as a principal residence, rental is not
permitted. While there are no restrictions on habitable
area, the surface area of the land purchased should
not exceed 3000m2 (for larger areas the authorities
must verify that the purchase is not subject to authorisation).
• Foreigners' second homes in touristic areas
- Swiss laws also permit foreigners to buy vacation
properties more readily in holiday areas, such as
Gstaad, designated as 'touristic areas' under cantonal
law.
• Business properties - A property can be
purchased without authorisation if it is intended
as a permanent business establishment for trading,
manufacturing or certain commercial industrial activities
or for use by craftsmen of self-employed professionals.
This applies whether the property is used by the
purchaser’s company or rented to a third party
as a business establishment. Note - property intended
for the construction or commercial leasing of dwellings
that are not part of a hotel or condominium is not
a permanent business establishment under Swiss law.
When is a property subject to restrictions on purchase?
A property purchase by a foreigner will require authorisation
by the cantonal authorities when each of the following
three conditions are met:
(i) The property itself is neither the purchaser’s
principle residence for their personal long-term
occupation, nor intended as a permanent business
establishment; and
(ii) The purchase is classified as a purchase of
real estate under Federal law, with filing of the
purchase on the Land Register together with legal
records that grant the right to use of the real estate
subject to authorisation; and
(iii) The purchaser, whether an individual or company,
is classed as "non-resident" under Federal
Law:
(a) Non-resident individuals - include persons
domiciled abroad or domiciled in Switzerland without
a C-permit. Staff members of diplomatic missions
and consulates, and international civil servants
in possession of a legitimation card (carte de lÉgitimation)
are exempt from the Swiss property law, and can purchase
property freely provided they can prove that they
have lived in Switzerland for 10 years without interruption
(or five years for nationals of countries that have
entered bilateral agreements with Switzerland, namely:
Germany, Andorra, Austria, Belgium, Denmark, Spain,
USA, Finland, France, Great Britain, Greece, Ireland,
Iceland, Italy, Liechtenstein, Luxembourg, Monaco,
Norway, Holland, Portugal, San-Marino, Sweden and
The Vatican.
(b) Non-resident businesses - include companies
with their registered office located outside Switzerland,
regardless whether they are Swiss-owned or otherwise
connected to Switzerland, and those companies whose
head office is in Switzerland but are controlled
by non-residents (i.e., where foreigners control
more than 1/3 of share capital, more than 1/3 of
voting rights at the general meeting, or form the
majority of Board members or beneficiaries of a private
foundation).
To what sort of properties do these regulations
apply?
You need to obtain authorisation from the cantonal
authorities before you can validly complete a purchase
of property in Switzerland, and we can help you with
this process. A purchase made without authorisation
is void, and contractual obligations are unenforceable.
Authorisations remain valid for a period of three
years. An authorisation may be revoked if it was
obtained fraudulently or based on incorrect information
or supporting documents, or if the circumstances
on which it was granted change and severe violations
may be punished by a fine or prison sentence.
To what sort of properties do these regulations
apply?
• A Swiss property may consist of any of
the following dwellings:
• free-standing house (villa) or chalet
• apartment, with cellar and/or attic attached
• condominium (known as propriété par
etage (PPE) or ownership by floor, where you own
an apartment, garage, cellar and a share of the common
areas, and pay yearly maintenance charges
• time-share apartment or apparthotel (part
hotel and part residential housing, managed and let
by the hotel)
• business or commercial property
What are the various Swiss residence permits?
All foreigners living in Switzerland are given a
permit, depending on their nationality and residency
status. Each cantonal authority has wide discretion
in deciding whether to grant a permit in any case,
and we can assist you to obtain professional advice
should you consider applying for a Swiss permit:
• Short term residence and work permit for
periods up to one year
• B-permit - renewable residence and work
permit for stays over one year (special provisions
apply to students)
• C-permit - permanent residence and work
permit issued to foreigners after an extended period
(e.g., usually 10 years, although only 5 years for
some nationals, such as US citizens)
• D- permit for diplomatic staff and international
civil servants
• Border commuter permit for persons living
in a defined border zone just outside Switzerland
• European Community nationals have the right
to reside and work in Switzerland, and must be treated
in a non-discriminatory manner. EC nationals may
stay in Switzerland for three months without a residence
permit, after which they must submit an application
to the appropriate cantonal authority.
• Note that the spouses of work and residence
permit holders, in possession of a residence permit
are entitled to a work permit.
How can a foreigner obtain a Swiss permit?
A foreigner can obtain a Swiss permit under a number
of categories, depending on nationality, residence
and required purpose - we can put you in touch
with agents who will assist you to apply for a
Swiss permit. The purchase of real estate in Switzerland
does not entitle the purchaser to a residence permit.
As a Swiss property-owner, can I leave the country
and change my place of residence?
A purchaser of Swiss property can later adopt a new
place of residence without being required to sell
their Swiss property, and may continue to use it
as they wish - as a second home, holiday home or
for rental. However, persons who purchase property
in Switzerland must intend to live in the property
for a significant period of time - it is not permitted
under Swiss law to purchase numerous 'residences'
simply to avoid the need for authorisation.
Are mortgages available to foreign nationals to
purchase Swiss property?
A foreigner buying property in Switzerland may be
eligible for a mortgage of between 60% and 80% of
the purchase price or bank-appraised value (which
ever is lower).
Can property to be used as business premises?
Yes, infact if you purchase a property that owned
by a company rather than an indiviual, no permits
apply.
Can a property be purchased as a holiday or second
home?
• Holiday homes - A foreigner may be authorised
to purchase a holiday home or an apartment in a condominium
that is located in a "tourist resort",
as defined by each canton. A purchaser can rent out
their holiday home, although leases must be shorter
than a year.
• Second homes - A foreigner may also purchase
a second home in an area where you can demonstrate
strong ties that need to be maintained, such as to
protect important economic, scientific or cultural
interests. However, a "strong tie" cannot
be justified by temporary interests such as holiday
visits, spa or medical treatment, study or family
relationships with Swiss residents. Second homes
cannot be rented out, and must be sold within two
years if no longer used as such.
What property purchasing activities are prohibited
in Switzerland?
Swiss law prohibits purchase of a property by a foreigner
in the name of a Swiss national. It is also prohibited
to purchase property with money gained through illegal
activities (money laundering). The ownership of property
must be in an individual or a swiss registered company.
What is the transaction process in purchasing a
property?
Once you have decided upon a property, you may make
an offer to the seller or his agent (in Switzerland,
this is usually 10% +/- than the asking price). At
this point, it is advisable to enter an agreement
("convention") with the seller and pay
a deposit of about 10% of the purchase price in cash
to confirm your offer - this gives you a legally
binding option to purchase the property, and usually
gives you the right to take up residence in the property.
You will then arrange financing, if applicable, and
ensure you have a valid residence permit. At this
point, the notary public will review the purchase
transaction, the vendor’s title to the property
and your entitlement to purchase the property, confirm
your understanding of the transaction, and then request
the Government to issue a certificate to confirm
your entitlement. The notary will then record your
ownership of the property on the Swiss real estate
register. Finally, the purchase price including applicable
taxes will be payable either directly to the vendor
or, more usually, via the notary public who will
release the funds only once the change in ownership
has been effectively registered. The entire process
can be completed in around two months.
What is the role of the notary?
A notary is a government-licensed official who performs
official tasks, such as certification, upon payment
of a fee. The notary fee for the purchaser includes
covering land tax (approximately 4% of the purchase
price) is payable at completion of the sale.
What conditions apply to resale of a Swiss property?
You may sell your property at any time to any purchaser
who is authorised to buy (i.e., any Swiss national,
or any foreign national who meets the requirements).
How do I ensure the maintenance of the property
from abroad?
We can help you to take care of the maintenance of
your property, including security, plumbing and electrical
work, gardening, painting, cleaning, decorating and
housekeeping. We can also manage short or long-term
holiday rentals of your property to carefully vetted
applicants. In most condominiums, time-share apartments
and some apartment buildings, a resident concierge
or manager will be present to maintain the property.
What conditions apply to Swiss property upon decease
of a foreign owner?
A Swiss property owned by a foreigner can be bequeathed
to the owner’s heirs, regardless of the heirs'
nationality or residence. Statutory heirs are exempt
from the authorisation requirement for ownership
of Swiss property, but remain responsible for any
charges payable related to the property ("statutory
heir" is defined by Swiss law as those who acquire
property through an estate, the ancestors or descendants
of the deceased and their spouse, brothers and sisters
of the deceased who are co-owners or joint-owners
of the property, and condominium owners. By contrast,
a "testamentary heir", who is not also
a statutory heir, and is not otherwise eligible to
own property in Switzerland, must sell the property
within two years of inheriting it.
What tax considerations apply to purchase of Swiss
real estate?
Upon purchase of a Swiss property, you will be required
to pay .. tax, plus the notary public tax of 4% of
the purchase price. During your occupation of the
property, you will be subject to the normal Swiss
property taxes... Upon final sale of the property,
a capital gains tax of 18% will be payable upon the
profit between purchase and sale price.
What are the history and current conditions of the
Swiss housing market?
The Swiss housing market is currently very interesting
for foreign purchasers and investors. A speculative
housing market slowed dramatically in the late 1980's,
and prices have been steadily rising espcially in
the resorts, making an investment in the property
market very attactive at this time. Market gains
can be anywhere for 5%-15% per annum in a resort
such as Gstaad and Verbier, depending on the property.
What are the benefits of purchasing property in
Switzerland? Is Swiss property a good investment?
Buying real
estate in
Switzerland is attractive due to the political
stability, high ethical standards
and particular promise of quality that is the hallmark
of 'Swissness' and last but no least, the attractive
interest rates create additional benefits.*The Swiss
government has recently also released legal obstacles
for the purchase of properties bought by foreigners
in Saanenland and Pays D’Enhaut you may now
buy up to 200 m2 living surface without restriction.
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