In the most practical terms, investing in Switzerland can mean simply owning a holiday home, starting a business or buying stocks. Here's what you should know.
While countries like the United States, Britain and Spain have seen crashes in house prices in past years, the Swiss market has experienced above average growth.
The Lex Koller legislation limits how foreigners can buy property in Switzerland and owning property does not give a person the right to a Swiss residence permit. Permits and authorisation for buying property are handled at the cantonal level.
Financing is typically available, usually between 60-80%. Interest rates are often low at 4% or below and have even strayed into negative territory recently. Expect to pay closing costs and various taxes and fees for completing the transaction and getting the property registered with authorities.
Buying a holiday home
Foreigners can buy holiday homes but need special permission to do so. Several factors apply. The dwelling must be in a place designated by the cantonal authorities as a holiday resort, where quotas come into play. The cantons and municipalities may add their own restrictions, such as allowing foreigners to buy only residences that are already foreign-owned.
Holiday homes may not be rented out on an annual basis but only periodically. Serviced flats must be made available to the relevant hotel owner for hotel operations, especially during the high season. A people’s initiative in 2011 limited the construction of second homes.
As a general rule, the net floor space (which includes rooms such as the kitchen, hall, toilet, indoor swimming pool, sauna and hobbies room, but not balconies, the stairwell, cellar and attic) and the surface area of the real estate must not exceed 200 m2 and 1,000 m2 respectively. Larger areas, up to 250 m2 and to 1,500 m2 respectively, are authorised automatically if you can prove a need. Only in exceptional cases are the limits higher.
Lastly, it is generally prohibited to have more than one holiday home at a time in the family. If the purchaser of a holiday home or serviced flat, their spouse, registered partner or child under 18 already own such a dwelling or a secondary dwelling in Switzerland, authorisation may only be granted provided that the dwelling is sold before the new purchase is entered in the community’s Land Registry.
Buying a main residence
Foreigners from third states (not EU or EFTA) resident in Switzerland who do not hold a C permit may buy a single-family house or owner-occupied flat in their actual place of residence without having to obtain authorisation. (The same goes for buying land to build on, but construction must begin within one year). In both cases, the buyer must live in the dwelling and cannot rent it out, even in part.
In June 2016 the United Kingdom voted to leave the European Union. It will remain an EU member while negotiations are carried out. After that, it is not clear how Brexit will affect British citizens wanting to live in Switzerland.
Generally there are no limitations on how big the living area may be, but the buyer can only purchase one residential unit. The property cannot be so large to be regarded as being purely for investment purposes. There is some concern when the property size covers more than 3,000 sq. metres, at which time the land registry will intervene to rule on whether such cases should be allowed.
If you move, it is not compulsory to sell the property. The owner may continue to use it as a secondary or holiday residence, or even rent it to third parties.
The owner may also purchase another home in a new place of residency without having to sell the first one. However, a buyer who has no intention of living in the second home permanently is in violation of the law. Changing where you live for the sole purpose of being able to purchase several dwellings without requiring authorisation is strictly forbidden. In such cases, the authorities can make the buyer apply for authorisation for other properties retroactively or even order the sales to be revoked.
Buying a second, non-holiday home
People from the European Union or EFTA states who commute across the border to work in Switzerland with a G permit can buy a secondary home in the area of their place of work without authorisation.
The buyer must occupy the residence for as long as he or she works in the area as a cross-border commuter. The buyer cannot rent it out, even in part, and the land registry will not, as a rule, enter a transaction immediately if the real estate surface area exceeds 1,000 sq. metres but will refer the purchaser to the appropriate authorisation body.
Building on undeveloped land
In principle, authorisation is required to buy undeveloped land in residential, industrial or commercial zones. There are times when no such authorisation is needed (main residence, secondary residence, permanent business establishment). That said, certain rules apply, such as work must begin within approximately one year.
Information for foreigners on buying property in Switzerland is available at the Federal Office of Justice.
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