Thinking of Moving to Switzerland, J.P. Morgan Private Bank can help

Living in Switzerland

Politically and economically, Switzerland enjoys one of the most stable regimes in the world. Known for its longstanding commitment to direct democracy, Swiss citizens are directly engaged in decision-making. From an economic perspective, it enjoys remarkably low unemployment, and its skilled labour force supports one of the highest GDP per capita rates. Powered by low corporate tax, the country is fuelled by a series of highly developed sectors such as tourism, financial services and a high-tech manufacturing industry.

Swiss healthcare infrastructure, including both public and private clinics, have an excellent reputation and are known around the world for their high-quality standards. Many people travel to Switzerland to access top medical professionals and state-of-the-art facilities. Switzerland is also one of the world’s most desirable holiday destinations. The country also boasts an impressive cultural offering and is known for its outstanding hospitality. Eminent symphony halls, theatres and opera houses are matched by museums, galleries and beautiful private collections. A bustling selection of restaurants and bars can be found across various regions, as can regular festivals like Art Basel, the Lucerne Festival, the Montreux Jazz Festival and the Locarno and Zurich film festivals.

The Swiss tax environment

A thriving federal republic, Switzerland is divided into 26 distinct states, known as “cantons.” These cantons are comprised of around 2,150 municipalities. Across the country, tax rules and regulations are issued at the federal, cantonal and municipal levels.

Cantons have considerable authority with respect to tax matters and there are great differences in how income, wealth, capital gains, real estate gains as well as gifts and bequests are taxed. These are important factors to consider when planning a move.

On the whole, Switzerland offers an attractive tax environment. No capital gains tax is levied on private financial returns. Spouses and direct descendants are usually exempt from gift and inheritance tax in most cantons, and taxed at modest rates in others. In some cantons (such as Obwalden and Schwyz) gift and inheritance taxes are nonexistent.

Switzerland also imposes a wealth tax at cantonal and municipal levels, and rates vary considerably – from 0.1% to 1%.

In addition to the ordinary Swiss tax regime, whereby Swiss residents are taxed on their income received as well as on their total net worth, there is another well-established regime known as the “lump sum” tax regime – available to newcomers to Switzerland. Instead of being taxed on their annual income/net wealth, they agree on a lump sum amount of tax to be paid each year.

The lump sum tax regime is available only to non-Swiss citizens residing in Switzerland, but not gainfully employed within the country. The ‘lump sum’ system is true to its name: taxpayers pay one annualised fee, calculated on the basis of their living expenses. Negotiations are conducted on a case-by-case basis with local authorities, with certain minimal thresholds.

The concept of lump-sum taxation has existed at the Swiss federal level for almost 90 years and, in certain cantons, even longer. Currently available in all but five of the 26 cantons (Zurich, Schaffhausen, Appenzell-Ausserhoden, Basel-Stadt and Basel-Landschaft no longer offer their residents access) the majority of lump sum taxpayers have settled in the Western part of the country (cantons of Vaud, Valais and Geneva). There are a significant number of lump sum taxpayers in the cantons of Ticino and Graubünden, and many newcomers also choose to take advantage of the regimes in the Germanic cantons.

We can help

Moving to a new country can be both an exciting and challenging experience. At J.P. Morgan, we partner with our clients to help facilitate their journeys. We stand ready to help you navigate your transition, ensuring that you are equipped with the necessary insights and information to make informed decisions.

Our teams have extensive experience in supporting those who relocate – or have relocated – to Switzerland. That transfer may involve considerations such as which canton to move to, or insights around purchasing property and local school systems. We are also committed to extending introductions to local tax and legal, as well as specialists in inheritance planning, accounting and tax return preparation.

Reach out to your local team in Geneva or Zurich for more information. We look forward to hearing from you.