Switzerland's flat-rate taxation is an attractive tax model for wealthy foreign individuals. The approved flat-rate taxation, also called «lump-sum», «golden visa» or «tax ruling», is at the same time a residence permit. But beware: Requirements, handling, assessment bases etc. can vary from canton to canton. Moreover, not every canton offers this tax model.
Snow-covered mountain ranges, picturesque lakeside regions, natural recreation areas that look like works of art, sparkling and ultra-modern cityscapes... There is no question that Switzerland is a beautiful country and has something to offer for every taste – and attracts tourists from all over the world, regardless of the season.
As is well known, however, the advantages of Switzerland go beyond the picture-postcard idyll. For example, the country is very popular as a destination for foreign taxpayers. Its central location within Central Europe, high quality of life, modern infrastructure, security, etc. have an extremely strong magnetic effect on wealthy foreigners.
Flat-rate taxation
«Stability, privacy and quality of service are further reasons why Switzerland is highly sought after by wealthy individuals», explains Dimitar Jauch, CEO, Leo Trust Switzerland AG. «In addition, the country offers an advantageous taxation model with flat-rate taxation», he adds.
With flat-rate taxation («taxation according to expenditure»), the taxes of a wealthy individual are calculated based on the living expenses incurred at home and abroad – and not on worldwide income and assets.
The assessment basis for the respective taxation is agreed in advance, i.e. before the actual move to Switzerland, as a «lump-sum» with the tax authorities – and recorded in a binding tax ruling. The bureaucratic-administrative effort is kept within limits, and the taxpayer also benefits from a certain degree of planning security.
Complex tax determination
The principle and advantages of flat-rate taxation are obvious and easy to understand. But it is not as simple as it sounds in practice. Dimitar Jauch says: «Not everyone meets the requirements. And what exactly is the respective basis of calculation? How and at what time is the flat-rate assessed? The tax calculation is not entirely straightforward. To make matters worse, the situation is different for individuals than for spouses or registered partners. Last but not least, the handling varies from canton to canton; some cantons have even abolished flat-rate taxation.»
In this context, the CEO mentions that the abolition would only affect the so-called «cantonal and communal taxes»; for the «direct federal tax», flat-rate taxation would remain possible. Flat-rate taxation would also be reviewed regularly – and if a double taxation agreement existed, the situation, or rather the basis of assessment, would be different again. The fact that in certain cases flat-rate taxation claims can also be reversed does not make matters any easier.
Tailor-made services
It is therefore advisable to call in specialists. «Every case is different and must be considered individually», says Dimitar Jauch and continues: «But it is clear that the repeated provision of the right documents, the handling, the regular exchange with the authorities, the keeping of deadlines is associated with a lot of effort – and is complex. Professional support is definitely worthwhile.» And the professional knows from experience: «The tax ruling alone is not enough. Once the agreement has been reached, the real work begins.»
But where does it really start? «Moving the centre of one's life is a logistical, organisational and sometimes emotional challenge», says Dimitar Jauch and builds a bridge to the services offered: «Leo Trust Switzerland is perfectly positioned here as well. Our services are geared to this and can be tailored to every client need. In addition, we have the necessary expertise.» Those who rely on Leo Trust Switzerland also benefit from a great deal of commitment. «We support our clients in finding the right property, buying a car or a boat, choosing a school for the children, etc.»
Do you have any inquiries? Dr. Roderik J. P. Strobl will be pleased to provide you with the information you need.
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This article is aimed at providing a general overview and summary of the issue. It is non-binding, and does not and should not be taken to constitute legal advice.
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