Lump-Sum Taxation - Revitrag Treuhand AG

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Lump-Sum Taxation
An overview
Foreigners moving to Switzerland for the first time without remunerative employment here are
offered the opportunity to agree
with the tax authorities on a permanent lump-sum tax, which as a
rule will represent only a fraction
of the taxes that would otherwise
be payable on their worldwide income. The lump-sum tax is applicable with both federal and cantonal taxes. Some Cantons differ in
the period of the right to be taxed
on a lump-sum basis.
The taxation is based on a person's annual living expenses which
are charged at the normal tax rates.
The living expenses must be equal
to five times the rent a taxpayer
pays for the apartment or the house
he lives in, respectively five times
the rental value of his property if
he lives in his own house or
apartment; for taxpayers who do
not have their own household, the
minimum is twice the price they
pay for accommodation and full
board. In practice, a lump-sum is
initially agreed upon by the taxpayer and the tax authorities which
will hardly be challenged and is
left unchanged for several years. In
most Cantons there are no wealth
taxes for persons taxed under these
rules.
However, at least the income
from Swiss sources (and foreign
sources for which double taxation
treaties are claimed) is taxed in
full.
Foreigners under the lump-sum
regime may reclaim withholding
taxes. The double taxation treaties
of Belgium, Germany, Italy, Canada, Norway, Austria and the USA
allow this form of taxation only
when income deriving from these
countries are taxed separately.
France accepts the lump-sum taxation only when the taxable income
is higher than five times of the
rent.
Swiss citizens may ask for
taxation under the lump-sum taxation regime during the first year of
their return from abroad after being for at least ten years outside of
Switzerland.
Exempt from lump-sum taxation are persons who take up personal professional activities in
Switzerland, e.g. artists, scientists,
inventors and athletes. Criterion is
the place of work.
The lump-sum taxation may
entail substantial tax savings compared to the regular taxation regime. Wealthy EU citizens who
continue gainful employment outside Switzerland may benefit from
extremely attractive taxation models if they choose to move to Switzerland.
Revitrag Treuhand AG
Metallstrasse 9a
CH-6304 Zug
Tel.
+41 41 726 09 00
Fax
+41 41 726 09 01
Email:
[email protected]