Part II · Jurisdictions · No. 10

Switzerland

Federal-and-cantonal fiscal structure. Cantonal wealth tax. The lump-sum (forfait) taxation regime for qualifying non-Swiss-national residents. The Geneva Freeport. The watchmaking, banking, and gold-trade ecosystem. Among the most established jurisdictions for non-U.S. wealth domicile.

Why this jurisdiction matters

Switzerland is a federation of 26 cantons, each with substantial fiscal autonomy. Federal direct tax is moderate (the top rate around 11.5%); cantonal and communal tax is the larger component, varying widely from low-tax cantons (Zug, Schwyz, Obwalden, Nidwalden) to higher-tax (Geneva, Vaud, Zurich). Combined federal-and-cantonal rates can range from approximately 22% to 45% depending on canton and income.

The relevant tax regime

• Income tax. Federal plus cantonal plus communal.
• Wealth tax. Cantonal and communal, on net worldwide wealth; rates typically 0.1% to 1%.
• Capital-gains tax. Individual capital gains on movable property generally not taxed at federal level. Real-estate capital gains taxed at cantonal level.
• VAT. 8.1% standard rate; 2.6% reduced rate on books; 3.8% accommodation. Among the lowest in Europe.
• Inheritance tax. Cantonal only (Schwyz levies none); spouses are exempt everywhere and direct descendants in most cantons; rates for others vary. There is no federal inheritance tax: a proposed 50% federal tax on estates and gifts above CHF 50 million (the JUSO initiative) was rejected by 78% of voters on 30 November 2025.
• Stamp duties. On securities transfers and certain insurance products.

The forfait (lump-sum) regime

Non-Swiss-national residents who do not engage in gainful activity in Switzerland may elect under federal law (Art. 14 LIFD/DBG) and cantonal counterparts to be taxed on a "lump sum" based on living expenses rather than on actual worldwide income and wealth. Since the 2016 reform, the base is the highest of actual worldwide living expenses, seven times the annual rent or rental value of the Swiss home (three times the board-and-lodging cost for hotel residents), and a federal minimum, which is indexed and was CHF 435,000 for 2026. Cantons set their own minima, and wealth tax is levied on a deemed wealth base. Availability is canton-specific: Zurich, Schaffhausen, Appenzell Ausserrhoden, Basel-Stadt and Basel-Landschaft have abolished it, and most other cantons retain it. Anyone who acquires Swiss citizenship loses eligibility.

The Geneva Freeport

The Geneva Freeport (Ports Francs et Entrepôts de Genève SA) is the historical model for modern luxury-storage freeports. Holdings of art, wine, and other valuables are stored in customs-bonded status. Transparency reforms since 2009 require inventory and disclosure; the regulatory environment has tightened materially. See freeport storage.

Registration or residency mechanics

Residency requires a residence permit: a B (residence) permit, later a C (settlement) permit. EU/EFTA nationals benefit from free movement of persons; non-EU/EFTA nationals who are not working usually obtain a B permit on grounds of “important public interest” (including fiscal interest) under the Federal Act on Foreign Nationals and Integration. Lump-sum applicants typically arrive on residency permits issued under the Federal Act on Foreign Nationals; cantonal authorities pre-approve the lump-sum base.

Reporting and disclosure

Switzerland has been a CRS participant since 2017 (first exchanges in 2018). FATCA has operated under a Model 2 IGA in force since 2 June 2014, under which Swiss financial institutions report directly to the IRS. A reciprocal Model 1 IGA signed on 27 June 2024 is due to apply from 1 January 2027, with reporting then running through the Federal Tax Administration. The Federal Act on the Transparency of Legal Entities (adopted 26 September 2025, in force 1 October 2026) creates a central, non-public federal register of beneficial owners.

The substance question

Forfait residents must be present in Switzerland under residency permit requirements; they may not engage in Swiss gainful activity. Treaty-shopping concerns have limited the use of forfait for treaty-residence purposes; modern tax treaties often deny treaty benefits to forfait residents on specific income streams.

Recent changes

The federal forfait minimum is indexed (CHF 435,000 for 2026). Voters rejected the federal inheritance-tax initiative on 30 November 2025. The central beneficial-owner register took effect on 1 October 2026, and the FATCA switch to Model 1 is scheduled for 2027. Lex Koller continues to restrict foreign ownership of Swiss residential real estate. Switzerland has applied the OECD Pillar Two minimum tax to large multinationals since 2024. Figures as of October 2026.

Common asset classes parked here

• Fine art — Geneva Freeport storage.
• Wine — Swiss wine-trade infrastructure.
• Watches — Swiss watchmaking center.
• Bullion — Swiss vault storage and refining (Argor-Heraeus, Valcambi).
• High-net-worth residency under forfait or standard regime.

Reviewed October 2026