Lump-sum taxation in Switzerland

Lump-sum taxation in Switzerland

End of 2014 Swiss voters rejected with a clear majority a proposal to abolish lump-sum taxation. This means that Switzerland will be retaining that expense-based form of taxation.


Lump-sum taxation is a simplified method for determining the basis of assessing the tax payable by foreign nationals who are resident in Switzerland but not engage in any gainful employment in the country. Over the last years this type of taxation has come under pressure in Switzerland. In autumn 2012 parliament approved measures to tighten lump-sum taxation, which will now be implemented as planned on the basis of the results of the vote.


More stringent requirements

As before, lump-sum taxation will be assessed on the basis of the taxpayers living expenses. However, the minimum expense is now assumed to be equal seven times the annual resident expense (currently five times) or three times the cost of meals and accommodation in a hotel. A minimum threshold on CHF 400'000 has been set as the assessment base at the federal level. The cantons must also determine a freely selectable minimum assessment base (the canton of Zug has set a minimum of CHF 420'000 whereas the minimum in the cantons of Luzern and Schwyz is CHF 600'000).

The more stringent requirements were incorporates in the Tax Harmonization Act (StHG) effective 1 January 2014, while the cantons have a further two years to modify their laws accordingly.



With the voters rejecting the proposal to abolish lump-sum taxation Switzerland will remain a serious contender in international competition with other countries such as Belgium, Monaco, Andorra, Gibraltar, the UK and Malta. Together with the other advantages the county offers (such as quality of life, infrastructure, political security etc.) Switzerland for sure will remain attractive to wealthy foreigners.

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