Switzerland: Country and Foreign Investment
Entry and Residence
Entry into Switzerland, residence in Switzerland, Swiss naturalization and the right to work or purchase property in the country are all inextricably interlinked and so are all dealt with together.
In September, 2005, a 56% majority of Swiss voters approved proposals to open the country's borders to workers from the ten new EU member states. The vote in favour of the extension of the bilateral agreement on freedom of movement to the ten new members was welcomed by both the Swiss authorities and the European Commission, as there had been some uncertainty as to the public mood on the matter.
The free movement of persons between Switzerland and the ten new EU member states came into force on April 1, 2006. In a referendum on February 8, 2009, the Swiss electorate approved the continuation of the Free Movement of Persons Agreement after 2009 and Protocol II, which came into force on June 1, 2009 and further confirming the Swiss commitment to the Bilateral II agreements.
From May 1, 2011, citizens from the EU A8 countries (Poland, Latvia, Lithuania, Estonia, Slovakia, Slovenia, the Czech Republic and Hungary have been enjoying complete freedom of movement, and occupying a level playing field with the previous EU 17 countries. The right of free movement is complemented by the mutual recognition of professional qualifications, the right to buy property, and the coordination of social security systems.
Third-country nationals are subject to the Federal Act on the Residence and Settlement of Foreign Nationals (ANAG/LEtr) and its implementing ordinances. Admission for non-EU nationals is restricted and residence permits are granted at the sole discretion of the authorities. Authorisation to reside in Switzerland can be granted if the regulations regarding foreign nationals and the labour market are complied with but normally there is not any automatic right. Residence can be authorised if it is for specific purposes (education/training, family reunification, retirement in Switzerland) provided certain conditions are complied with. The FOM can give further information on this.
Third-country nationals with a permanent residence permit are entitled to have their children and spouse join them. Persons with an annual residence permit have no entitlement. The cantonal immigration authorities can, however, authorise family reunification if third-country nationals with an annual residence permit can provide evidence of suitable accommodation, adequate income and stability (i.e. evidence that the person's stay in Switzerland has not led to any complaints). People who enter Switzerland to join other members of their family may only take up employment if the employer has applied for and obtained authorisation from the cantonal office (immigration or labour market authorities). Information on family reunification is obtainable from the FOM and information on the authorisation procedure from the cantonal immigration authorities.
Entry for a short period of time: For nationals of most countries visa-free entry is permitted for a period of up to 90 days after which time the visitor must leave the country.
Obtaining Residence in Switzerland: The available types of permit are the '120-day' permit, the class A, B or C permits, the fiscal deal permit and the political refugee permit. The class A permit (for 'blue-collar' workers) and the political refugee permit are not described further here. Permits other than the '120-day' variety are subject to a quota system. However, agreements with the EU are gradually putting EU freedom-of-movement rules into place which will eventually allow EU citizens to by-pass the quota permit system altogether.
The '120-Day' Permit: This permit allows a managerial or specialist worker to work in a specified position for up to 120 days in a particular year; rotation among a number of individuals is not allowed.
The Class B permit: The class B permit is the most commonly issued permit and gives the right to live and work in Switzerland. It is the permit of choice for professional and managerial people, self employed individuals who wish to start their own company in Switzerland, and people who wish to reside in Switzerland and are wealthy enough to live off their own resources (but see the Fiscal Deal Permit below). The Class B permit has the following characteristics:
- It is usually granted for a period of up to one year at a time;
- If the permit is for work purposes then the applicant must have a job to go to in Switzerland;
- The granting of his permit must not have the effect of depriving a Swiss national of employment. Since many trades in Switzerland are protected by guilds which prohibit the recruitment of foreign workers an application for a class B permit is not always successful;
- The class B permit allows the applicant to bring his wife and children into the country but not his extended family;
- The application is not prejudiced by inability to speak the official languages of Switzerland;
- It takes about 3 months to obtain a Class B permit.
The Class C permit: The class C permit is a longer-term residency permit which gives the applicant almost the same rights as Swiss citizens and allows the applicant to buy real estate in Switzerland. To obtain a class C permit one must have had a class B permit for between 5 and 10 years depending on country of origin. The class C permit is the last step before applying for Swiss citizenship. It is subject to the same conditions as the class B permit.
The 'Fiscal Deal' Permit: This is a variant of the class B permit and is primarily for wealthy individuals who wish to live in Switzerland off income earned outside Switzerland (e.g. international tennis players and formula 1 drivers) but who have no need or desire to work in the country. To obtain a fiscal deal permit the applicant needs a certified net wealth of at least CHF2m and must be willing to spend at least 180 days a year in the country. The fiscal deal permit allows the applicant to pay considerably less tax than a Swiss national of his income bracket would normally pay since the assessment to tax is not based on the applicant's real income but rather on a much lower notional amount.
For further information see lump sum assessment method in our personal income tax section. The amount of tax payable by the holder of such a permit is a matter of personal negotiation with the canton in which the applicant resides. Switzerland is already a low tax country by OECD standards and the 'fiscal deal' results in extremely low levels of taxation. It takes about three months to obtain a fiscal deal permit.
Obtaining Swiss nationality: It goes without saying that Swiss nationals do not need permits to reside, work or purchase property in Switzerland. Obtaining Swiss nationality or citizenship is a long-drawn-out process involving procedures at federal, canton and communal levels. In order to obtain Swiss citizenship an applicant who is not the offspring of a Swiss national must satisfy the following criteria:
- There is an examination in Swiss history and culture;
- The applicant must have lived in the country for several years with a class B (or 'fiscal deal') permit;
- The applicant must then obtain a class C permit and continue to live in Switzerland for several more years.
Purchasing Real Estate in Switzerland: Since 1960 there have been restrictions on the purchase of real estate by non-Swiss nationals which although substantially relaxed in recent years are still draconian by OECD standards.
3 situations apply:
- Foreigners who have acquired a class C permit can buy vacation properties in designated areas.
- Foreigners who are not deemed resident in Switzerland under Swiss law can only purchase tax-exempt apartment blocks tied to below-market rentals for a period of 20 years. Such purchases require official permission. After 20 years they may raise the rents on the blocks purchased.
- The acquisition of premises for business purposes is unrestricted and although permission is required it is normally granted.
The purchase of real estate is conducted by a notary public who will not allow the transaction to proceed unless it is permitted by the law. The purchaser's details will be entered in the property owners' registry after the Government issues a notice of confirmation that the transaction is legal.
In June, 2005, 54.6% of Swiss voters agreed to join the Schengen and Dublin accords on passport-free European travel and the harmonisation of asylum procedures. Switzerland became a member of the Schengen area on December 12, 2008.