Purchasing property in Switzerland
Contents
Purchase of real estate in Switzerland by a non-Swiss or
non-resident person. Click a heading to go straight to
that section:
A
Introduction
B
Legal restrictions
C
Purchase costs
D
Guarantees
E
Purchase procedure
F
Mortgages
G
Terms of payment
H
Annual expenses
I
Financial considerations
J
Legal aspects
K
Death duties and succession
L
Residency (B permits)
M
Contact Us
Introduction
A - Introduction
The Swiss government restricts the sale of second homes
to foreigners and have an annual quota of just 1,500
permits. Only properties in some cantons are authorised
for sale to foreigners and then only in tourist resorts. Your
notary will apply for a permit for you to buy a specific
property but only as part of the purchasing procedure.
There are also restrictions on the size of the plot of land
and the habitable area of the chalet. Usually the maximum
will be around 200m2 net habitable (the chalet shown
here is about the maximum size a foreigner can buy) but
it is possible for foreigners to buy larger chalets if they
have a Swiss B permit which entitles them to reside in
Switzerland.
Some Communes such as Saas Fee and Zermatt have
had strict planning laws and restrict the amount of new
construction. The few new properties which are built
in these resorts are usually only available for Swiss
buyers or Swiss residents (foreigners having a B permit).
Occasionally one will be available for a foreigner but
these sell fast.
In a referendum in March 2012 the Swiss people voted
to prohibit all new construction of second homes from
1st of January 2013 in communes which already have
over 20% of second homes.
New developments which have already received a building
permit will continue to be built over the next two or three
years but once this new stock is exhausted no more new
properties will be built in any ski resort in Switzerland.
This affects both Swiss buyers and foreigners.
The new properties we have are the last opportunity to
buy a new property in the Swiss Alps as a holiday home.
These properties are authorised for sale to foreigners
and the notary will apply for your foreigner purchase
permit as part of the purchase procedure. These will
be an excellent investment and will increase in value as
no more building permits will be given in future for the
construction of new properties.
Where can you buy? When can you sell?
Each canton has slightly different rules and these rules
may even vary from commune to commune within the
same canton. The most liberal canton is Vaud which
includes resorts such as Villars where foreigners can buy
virtually any property but they may not resell for 5 years.
Less well known Cantons such as Obwalden (the resort
of Engelberg) also have plenty of foreigner purchase
permits and few restrictions. There are two types of
restriction; legal restrictions (imposed by the Canton or
local commune) and planning restrictions limiting new
construction (imposed by the commune).
Canton Berne (Grindelwald)
In Grindelwald foreigners are permitted to buy apartments
and chalets but only if they have a market value of over
around 750,000 Sfrs.
Canton Berne (Wengen and Lauterbrunnen)
Foreigners are not permitted to buy detached chalets
but they are permitted to buy apartments and there
is no minimum purchase price. However, in each new
apartment building 50% of the apartments must be sold
to Swiss or B permit holders (foreigners with the right of
residence in Switzerland). Foreigners may resell at any
time.
Canton Vaud (Villars)
In Vaud there are few restrictions: foreigners may buy
most properties but may not resell for 5 years. Foreigner
permits are freely available for both re-sale and new
properties.
Canton Valais (Nendaz, Les Collons, Veysonnaz,
La Tzoumaz)
The Canton of Valais allocates the foreign permits and the
notary applies for a buyer to purchase a specific property.
The developer is not permitted to start construction of
your chalet until you have a permit. Foreigners must
wait 5 years to resell to another foreigner unless there
are special circumstances such as ill health, financial
problems, or buying a larger property.
Canton Valais (Saas Fee)
In Saas Fee planning laws restrict new construction to a
total of just 1500 m2 per year (one apartment building
and 2 or 3 chalets) but as a result of the referendum
decision no new building permits will be authorised after
January 2013. We have some new properties which have
been authorised under old building permits and some resale chalets which are already owned by foreigners and
these may be freely sold to another foreigner.
Canton Valais (Zermatt)
In Zermatt there are greater restrictions and foreigners
are not permitted to buy at all. Swiss nationals and
residents (B permit holders) are only permitted to buy
an apartment for their own use if they are resident (and
paying their taxes) in Zermatt. If you have a B permit
you may buy in Zermatt but must rent your property out.
Canton Valais (Verbier)
There are very few permits available for foreigners.
We occasionally have re-sale chalets which are already
owned by foreigners and these may be freely sold to
another foreigner.
Canton Obwalden (Engelberg)
There are plenty of foreigner purchase permits and
few restrictions. Foreigners are permitted to re-sell
immediately to a Swiss buyer and after 5 years to another
foreigner. The Titlis Resort is the last possibility to buy
a new property in Engelberg following the decision of
the referendum to prohibit construction of new second
homes so buy while you can.
Legal Restrictions
B - Legal Restrictions
1.Non-Swiss may only buy one property per family in
Switzerland. Family is defined as husband and wife and
/or under-age children. Over the age of 20, the son or
daughter of an owner may purchase one property in
his/her own name.
2.In some Cantons foreigners may be prohibited from
re-selling their property within a certain period after
they have purchased it (5 years in Valais and Vaud)
and in other Cantons they may be permitted to re-sell
the property immediately (Berne and Obwalden).
3.Under Swiss Law, an owner or his family may occupy
their apartment for up to six months per year. If you
wish to spend more time in Switzerland you would
need to apply for a residence permit.
4.The owner is free to rent their property (or not) as
they wish. The owner, or his friends, or family, are
supposed to use the property for at least three weeks
of the year so the property may not be rented on an
annual basis (maximum 11 months and one week).
Purchase Costs
C - Purchase Costs
The purchase of an apartment becomes valid once the
owner is registered in the Land Registry. The purchase
fees also vary from Canton to Canton between 2.5 %
and 5 % of the purchase price.
Canton Bern (Lauterbrunnen, Wengen and Grindelwald)
- total purchase costs amount to a total of around 3% of
the purchase price, (Government purchase tax (1.8%),
Notary fees (0.8%), land registration fees, registration
of mortgage.)
In the Canton of Graubünden there are sufficient foreigner
purchase permits and no waiting list. Property transfer
taxes (Handänderungssteuer) are around 2% and notary
fees are around 0.5% so total sales costs are in the
region of 2.5% of the sales price.
Canton Valais (Saas Fee, Les Collons, St Luc, etc) the
taxes and notary fees together amount to a total of
around 2.5% of the purchase price in total.
In Villars (Canton Vaud) the total fees are 5% of the
purchase price, being a one off property transfer tax of
3.3 % (similar to UK stamp duty) plus the Notary and
land registration fees which total 1.7 %.
In addition, the registration of a mortgage is charged on
a sliding scale which varies in different cantons.
In Canton Valais it is a straight 1.6% levied on the amount
of the loan, in canton Vaud it is as follows:
• Up
• Up
• Up
• Up
• Up
to
to
to
to
to
100,000
200,000
300,000
400,000
500,000
0.6%
0.5%
0.47%
0.45%
0.44%
All these purchase costs are payable by the purchaser.
When you come to sell, no Notary fees are payable.
Construction Guarantee & Purchase Procedure
D – Construction Guarantee
The federal construction guarantee is as follows:
• 5 years for construction defects
• 10 years for hidden defects
For resale properties, there are no guarantees.
E – Purchase Procedure
An official Swiss notary of the district will act on behalf of
both the purchaser and the vendor. Once the client has
chosen an apartment or a chalet he / she will complete a
civil status questionnaire and other documents stating the
details of the purchaser and the property. Once the notary
has received these completed and signed documents,
plus the deposit and a copy of the purchaser’s passport,
If the purchaser is a foreigner, the Notary will first apply
to the Cantonal authorities for a permit authorising the
purchaser to buy that particular property. In Valais and
Vaud most of the permits are allocated in January so
there may be a wait to receive one but in other cantons
they may be given much more quickly (often in 6 to 8
weeks).
Within 30 days of being allocated a permit the buyer
must sign the notary’s deed of sale and usually they will
sign a Power of Attorney, entrusting the notary’s office
with the duty of ensuring that all the legal formalities are
respected, particularly the registration of the deed in the
Land Register and releasing the acquired property from
any previous mortgage. The power of attorney must be
notarised if it has not been signed in the presence of
the notary dealing with your purchase. You will need
to take the power of attorney to a Notary Public (not
a solicitor) in your country of residence to have your
signature witnessed and (in the UK) the Notary Public
will send the document off to the foreign office to have
it “legalised” and then you will send it back to the notary.
All stage payments after signing the deed of sale are
made to the notary. The notary will also liaise with the
bank for the registration of the required mortgage.
As part of the purchase procedure the notary will request
permission from the local canton and from the central
government in Bern for the sale to be approved. In the
Canton of Valais the notary may only sign the official
deed of sale when a foreigner purchase permit has been
pre-allocated to the purchaser to buy that particular
property.
Usually a sale to a foreigner will only be refused if the
purchaser already owns another property in Switzerland.
A contract can be made conditional upon the authorisation
being granted and the process of obtaining the purchase
permit is undertaken by the notary. In some cantons
such as Bern (Wengen) it may take only a few weeks.
In Switzerland both the purchaser and vendor are required
to attend at the notary’s office to sign the deed of sale
in his presence but usually both parties will sign a power
of attorney which will authorise one of the secretaries
working in the notary’s office to sign the sales deed on
their behalf.
The notary will therefore send you a copy of the deed
of sale in French or German with a professional English
translation of this and a power of attorney (also in
English) which authorises his secretary to sign this for
you.
The Commission Fonciere (Land Register) when
authorising a foreigner to purchase will also impose
certain conditions. These conditions are not onerous there is usually the obligation for the owner or his family
or friends to use the property for 3 weeks of the year.
There is also a prohibition against renting the property
for more than 11 months per year. The property can only
be purchased in the name of an individual or individuals.
It is not possible for a foreigner to be able to acquire a
property in the name of a company.
F – Mortgages
Swiss banks will lend up to 70% of the purchase price
and we can introduce you to a bank which has all their
documentation in English. The loan is usually granted in
the form of a current account overdraft secured on the
property repayable over 25 years.
As interest is payable every quarter on the capital balance
outstanding over that period, the repayments will be
higher in the earlier years but will reduce as the capital
is repaid. Swiss interest rates are the cheapest in Europe
currently around 1.5% variable rate or fixed at 2% for
the first ten years. It is possible to defer changing pounds
sterling or euros in to Sfrs for 3 years as the bank will
invest your 30% equity in a £ or € investment account.
The banks do not charge a set up fee or require any life
insurance. The costs for registering the mortgage varies
from one canton to another but will be a maximum of
1.6% of the amount borrowed.
G – Terms Of Payment
If purchasing off plan you will be required by the developer
to make stage payments as the construction proceeds.
Each developer has a different payment structure but
typically it would be a deposit of around 30,000 sfrs
to reserve a property, 10% when the notary’s deed of
sale is signed and then payments when the foundations
and roof are started. Final payment when the keys are
handed over. If you are taking bank finance then you
pay the first 30% and then the bank pays the remaining
stage payments.
H – Annual Expenses
H – Annual Running costs
The annual running costs for a property are not expensive
in Switzerland. The service charges for an apartment
building are divided up proportionately between the
owners, according to the size of their apartment. These
expenses include, the caretaker, maintenance of the
building and grounds, communal water, electricity and
heating. In addition are structural insurance and various
taxes, gardening and maintenance of roads (inc. snow
clearing), administration fees and an allocation to the
building’s renovation fund. These are payable quarterly,
half yearly, or yearly and typically they are around 0.5%
to 0.75% of the value of the property per year so 5,000
sfrs for a 3 bedroom apartment. Chalets are cheap to
maintain particularly if new as very little maintenance is
required.
Annual Property taxes
Foreigners owning a property in Switzerland pay taxes
to three bodies - the Federal Government, the Canton,
and the Commune. The total of all these annual taxes
varies from Canton to Canton. Owners have a choice
of completing a tax declaration disclosing their worldwide assets or being assessed simply on the basis of
the property in Switzerland and the income it produces.
Most owners elect to be assessed.
The annual taxes are based on the “tax value” of a
property, which is about 60% of the market value. The
annual property taxes are, in effect, a tax on the notional
rental income, which could be derived from the property
and often you will pay almost the same annual tax if you
decide to rent your apartment or if you prefer to keep it
exclusively for your own use. You may also be liable to
pay tax in your country of domicile.
If you do not rent your property then your tax is
calculated on a notional rental income which is based
on the taxable value of the property (about 60% of the
market value). The total annual property taxes will be
around 4,500 Sfrs per year for a property valued at 1m
sfrs (0.0045% of market value).
Or if you do rent then you will be taxed on the actual
rental income. You may deduct some expenses and
interest on your mortgage. As a rule of thumb you will
pay income tax at around 20% on the gross income or
approximately 5,000 Sfrs on a property valued at 1m sfrs
so also around (0.0045% of market value).
I – Financial Considerations
1. Taxes on real estate profit (capital gains tax)
In the case of resale, the property is subject to an
appreciation tax.
The purchase price is not indexed to the cost of living in
Switzerland so the taxable profit is the difference between
the sale price and the total purchase price (including
fees and special renovations or improvements to the
property). Deductions can be made for any commission
due to the real estate agents and other costs.
The rate of the capital gains tax decreases with each
year of ownership, starting at 30% (if you sell within a
year) and decreasing to 9% after 10 years and 1% after
25 years.
2. Return on capital
The principal source of profit for foreign investors has
been the Swiss Franc, which has been, and continues to
be one of the strongest of the world’s currencies.
Swiss real estate has appreciated on a very steady basis.
Prices fell in the early 90’s, but not nearly as dramatically
as they did in the UK. The market has been rising again
since the mid/late 90’s. As a generalisation, prices of
detached chalet do tend to go up more than apartments
and if you can buy a chalet where a tour operator is
prepared to offer a guaranteed rent for the season then
this can make a very good hassle-free investment.
3. Administration services
Local agents can handle the administration and
management of your property including checking, cleaning
and maintaining the property, stocking refrigerators with
necessary basics before arrival, restaurant and ticket
bookings, payment of bills, insurance for household
contents, baby-sitting and even car delivery to the
airport.
4. Rental
Rental can easily be arranged through a local agent,
or a larger agency such as Interhome (which has 500
agencies throughout Europe) or through a tour operator
in the UK, Germany, or Holland. Renting the property out
when you are not using it, can provide sufficient income
to cover the annual running costs.
Generally, tour operators will only give a guaranteed
rental income if you are buying in a resort which is
relatively high and snow sure and has a long season.
They prefer to rent chalets which are part of a larger
development (rather than a one off property) and also
favour developments which have additional facilities.
Should you decide to let your property, then any rental
income would be liable for taxation in Switzerland and
you may be liable to pay tax on such income in the
country in which you are resident. Most countries have
a dual taxation agreement with Switzerland so you get
a credit for any tax paid in Switzerland. You do not get
taxed twice.
J – Legal Aspect
Apartments are organised as ‘Propriete Par Etage’ (PPE)
- in effect each apartment is ‘freehold’ and the owner of
that apartment has a share of the whole building and its
integral and communal parts and an exclusive right to
use their own apartment.
All the apartment owners are bound together in a kind of
residents association (known as a “co-propriety”), which
sets out the rules of the house (e.g. the laundry room to
be used only between certain hours). The owners have
complete control over the building, but at the annual
meeting they will appoint an Administrator who will deal
with the day to day running of the property. The annual
meeting will also set the budget for the forthcoming
year, vote on suggestions made by the administrator and
apartment owners, and review any problems.
A complete set of rules for co-ownership may be
provided on request. Similar arrangements are made for
a community of several chalets which will share costs
and will be run on similar lines.
K – Death Duties And Succession
All properties in Switzerland are freehold and the
purchaser has the right to transfer the property to his
or her heirs by way of succession. Unless the purchaser
becomes a Swiss resident then English law will apply,
so the property will devolve in accordance with your
English Will. We would advise that you have a separate
Will drawn up which deals specifically with the Swiss
property. A copy of your Will should be lodged with the
Swiss notary.
Inheritance tax is payable in Switzerland but is much
lower than in the UK and most European countries.
Inheritance tax is a cantonal tax and varies from one
canton to another. In most cantons there is no tax
between spouses and in Canton Valais (Verbier) there is
zero inheritance tax if the property is willed to direct line
descendants.
In Canton Vaud (Villars) the tax is progressive - starting
at 1.8% for property valued at up to 500,000 Sfrs, rising
to 4.3 % on property valued at over 500,000 Sfrs. If the
fiscal value of the property is over 1m Sfrs, the tax is
levied at a rate of 5.068%. If the property is registered
in the name of more than one person, then tax would be
payable only on the share of the property owned by the
deceased.
However, as is always the case (in whatever country you
may own property) where there is a dual taxation treaty,
you would be liable to pay tax in the country in which
you reside and be given credit for any tax paid to the
foreign (Swiss) government.
It is highly recommended that you consult a notary
regarding the Swiss law and to take in to account your
rights in your country of origin
L – Residency
The high standard of living, low crime figures, good health
care, strong economy, low taxes and a position at the
crossroads of Europe, have always attracted residents
from other countries to retire or work in Switzerland. If
an EU passport holder buys a holiday home in Switzerland
they will be permitted to spend up to 6 months a year in
Switzerland without requiring any special permission. To
spend more than 6 months in Switzerland or to become
resident there for tax purposes they must apply for a B
permit.
On 1st of June 2002, the bilateral agreement between
Switzerland and EU countries came into force and this
has made it much easier for EU passport holders to work
and/ or reside in Switzerland. There are two types of
permit - a B permit which gives you the right to reside
in Switzerland (but not to work) or a permit which gives
both the right to work and residency.
To work in Switzerland you will need a contract of
employment from a Swiss company or you could establish
your own company or be self-employed. Usually you will
need to show that you are creating employment for Swiss
nationals or you have an annual income of over 50,000
Sfrs.
It is easier to obtain a B permit (residence) on the
basis that you are not gainfully employed and if you are
over the age of 55 but it is still possible to obtain a B
permit if you are younger! You must satisfy the following
requirements:
People who are not gainfully employed must have sufficient
financial means for them not to become dependent on
social security and a burden on the host country. They
must have a private Swiss health insurance cover which
covers all risks, including accidents (it costs around 120
sfrs per month). You must also pay tax in Switzerland.
EC residence permits are valid for five years and will
automatically be renewed by the competent authorities
if the above-mentioned requirements are still satisfied.
In exceptional cases, the authorities may limit individual
permits to two years if the holders’ financial means do
not appear to be secured.
If you obtain a B permit this would entitle you to buy
a property which would otherwise not be available to
purchase by a foreigner and you may sign the deeds as
soon as you receive the permit.
NON EU Passport holders will have their applications
reviewed case by case but generally the requirements,
if retiring, are to have reached retirement age (60
years old), not to work in Switzerland, to prove one has
sufficient financial means to live in Switzerland without
working and to have personal ties in Switzerland such as
family or a house.
A useful book if you are considering retiring or working
in Switzerland is ‘Living and working in Switzerland’ by
David Hampshire (available from Amazon).
Contact us for advice or to arrange a visit
Contact
Company Profile
Simon Malster – Investors in Property
Tel: +44 (0)20 8905 5511
simon@investorsinproperty.com
Investors in Property specialise in the sale of ski chalets
and apartments in Switzerland, Austria, France & Italy.
We have over 20 years experience and an unrivalled
knowledge of well established and up and coming ski
resorts. We will provide expert advice and professional
guidance through every step of your purchase. If you
have any questions or need general advice please do not
hesitate to contact us.
7 February 2013
Disclaimer
Whilst we make every attempt to ensure the accuracy and reliability of the information contained in all brochures and the company website, the company, its employees and
agents will not be responsible for any loss, however arising, from the use of, or reliance on this information. The sales deed prepared by the local Notary will contain all the
terms of the sale and no warranty or representation made by an other person which is not specifically included in that deed of sale is legally enforceable.
© Investors in Property 2013