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Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
The acquisition of real estate (including the acquisition of shares in property owning compa-nies) in Switzerland by persons abroad is subject to statutory restrictions. The Federal Law of 16 December 1983 on the Acquisition of Real Estate by Persons Abroad (better known as the Lex Koller) restricts the acquisition of real estate for residential purposes. Under the Lex Koller direct investment in residential and other non-commercial real estate and the acquisition of shares of a real estate company with such purpose by a foreign investor are restricted and permitted only with a corresponding administrative authorisation. Approval will be denied unless there is a reason for approval specified by law. The acquisition of residential real estate for purely investment purposes is generally not allowed.
Not considered as persons abroad according to the Lex Koller are particularly foreigners domi-ciled in Switzerland who are nationals of EU/EFTA member states or of the UK with a respec-tive residence permit (B or C permit) and nationals of other countries who are holders of a valid settlement permit (C permit) in Switzerland. All other foreigners are generally subject to the Lex Koller.
Legal entities are considered persons abroad if they are either domiciled abroad or dominated by persons abroad in the sense of the Lex Koller. Domination by persons abroad is presumed in particular when more than one-third of a company’s capital or more than one-third of the vot-ing rights are in the hands of persons abroad, or if they have granted substantial loans to the company.
Real estate for permanent business establishment, such as manufacturing facilities, ware-houses, offices, shopping centres, retail premises, hotels, restaurants, etc, can be acquired without authorisation. In this case, it is immaterial whether the real estate is used for the buy-er’s business or was rented or leased by a third party in order to pursue a commercial activity. Such real estate properties may also be purchased solely as an investment.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
In general, there are no statutory provisions that restrict lending to foreign companies but lenders and banks impose their own requirements on borrowers. Despite certain general banking provisions, in particular anti-money laundering regulations are applicable.
As already explained under Question 1, foreign legal entities must obtain the necessary permit for real estate acquisition, if the acquisition falls within the scope of Lex Koller.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Value added tax: In the case of commercial properties, the purchaser can opt to be subject to VAT in order to make the input tax deduction.
Property transfer tax: In some cantons, the acquisition of real estate is subject to property transfer tax based on the purchase price plus all other services provided by the buyer. Proper-ty transfer tax is generally borne by the buyer. There are exemptions in certain circumstances.
Taxation of real estate capital gains: Depending on the canton, taxation of real estate capital gains may be based on either of the following two models:
- Uniform system (e.g., Canton of Zurich): Real estate capital gains are subject to a spe-cial tax known as the real estate capital gains tax, which is payable by both individuals and legal entities.
- Two-tier System (e.g., Canton of St. Gallen, Confederation): The special tax known as the “real estate capital gains tax” only applies to capital gains realized by individuals up-on disposal of their private assets. In contrast, capital gains realized on the disposal of real property that constitutes business assets are generally subject to ordinary income tax or profit tax.
The difference between the purchase value of a property (less property transfer tax, land register fees and notarial fees) and the sales proceeds is taxable (less property transfer tax, land register fees, notarial fees and brokerage commissions).
To calculate the capital gains tax on real estate, the difference between the purchase value of a property (less property transfer tax, land register fees and notarial fees) and the sales proceeds is taxable (less property transfer tax, land register fees, notarial fees and brokerage commis-sions). The determination is therefore based on the net capital gain (i.e. the selling price less investment costs) and is further influenced by the period of ownership.
Land registry fees: The land registry fees, which are payable upon registration, amount to a few thousandth parts of the selling price. Depending on the canton, the fees may be measured according to time expenditure and/or a percentage rate based on the purchase price.
Notarial fees: The notarial fees, which vary from one canton to the next, amount to a few thou-sandth parts of the selling price.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Yes, there are taxes connected with real estate ownership (property taxes, wealth tax, tax on imputed rental value, charges and fees, etc.). Such taxes are generally collected from the owner of the real estate recorded in the land register. A possibility to transfer such taxes to a third party is not provided by the law.
In some cases, however, it is possible to transfer the liability for the above-mentioned taxes and charges under a contractual agreement between the owner and the tenants, provided it’s compliant with the binding law that protects the tenants.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
There are various tax benefits for owners of real estate in Switzerland but no (tax) incentives for foreigners . Such incentives would be contrary to the spirit of the Lex Koller (see Question 1), which is intended to limit the purchase of real estate by foreigners.
How is the ownership of Real Estate evidenced in your jurisdiction?
The owner of real estate is recorded in the land register of the place where the property is located. Since the land register is considered as a public record (principle of public transparen-cy), anyone can access part of the information about specific real estate (including the owner's name and identification data). This serves the principle of legal certainty.
Anyone who can prove a legitimate interest (subject to approval by the land registry manager) will be allowed to inspect the land register in greater detail and/or obtain excerpts containing further information.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
No, anyone can look up the identity of the legal owner, according to the principle of public trans-parency. It is not possible to anonymize such data.