For UK nationals, as long as the UK has not formally left the EU, nothing changes with regards to a relocation to Switzerland (that is, concerning permits, etc.) Once the UK formally leaves the EU, from a Swiss perspective, UK nationals would be considered to be “third-country nationals” (assuming the UK does not join EFTA or bilaterally agree a different status with Switzerland). Thus, with regards to relocation and residence permits, the situation will change in some way, in that UK nationals will no longer benefit from the same freedom of movement privileges as EU nationals.
What does Brexit mean for the Swiss privileged taxation regime? From a tax perspective, foreigners relocating for the first time to Switzerland are offered an attractive taxation regime called “lump-sum taxation.” To profit from this regime, lump-sum taxpayers may not conduct employment activities in Switzerland. In order to obtain a residence permit, the applicants must prove that they will not be at risk to require aid from the Swiss welfare system—something that can be assumed for lump-sum taxpayers with a requested minimum wealth basis.
Additionally, depending on the nationality, two different regimes for receiving a residence permit apply:
Once a permit is received, it is subject to renewal, and individuals need to make certain that they change their permit after the first five years, from an annual permit to unlimited residence permit in Switzerland. In order to extend or change it, the individuals must be in the position to prove their close ties to Switzerland—that is, how long someone’s been in Switzerland, because the longer they’ve lived in Switzerland, the stronger the connection. In addition it is often advantageous if the individuals can prove that they speak the local language (German / French / Italian) and if they have children, their children are sent to public or private schools in Switzerland rather than abroad. Finally, in many Swiss cantons, no inheritance tax or gift tax is levied on estate handed over to spouses and children.
What does Brexit mean for UK nationals holding residential property in Switzerland? In principle the acquisition of residential property in Switzerland by persons abroad is subject to a prior authorization requirement (the “Lex Koller” regime).
UK nationals with a holiday home in Switzerland may acquire real estate only within the annual cantonal quota for nationals, but may sell a holiday home at any time. Legal heirs of an owner do not require authorization to acquire the property. This will remain unchanged and those UK nationals who already have a holiday home in Switzerland are allowed to keep it.
In the future (after Brexit), UK nationals with a residence in Switzerland are likely to enjoy protection with regards to existing property used for residence purposes (the exempted acquisition for legal heirs will be maintained, and there will be no need to sell the property after a change of residence to a place abroad). However, in the future, new acquisitions of property for residence purpose by UK nationals may fall under the Lex Koller regime with restrictions in terms of size and use of the property.
Read a July 2016 blog posting by the KPMG member firm in Switzerland: Brexit: Is Switzerland an attractive alternative for resident non-doms?
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