Switzerland offers you the possibility of paying a fixed amount of taxes every year. This amount is based on your rental payments (or the rental value of your home), and has no relation to your real income or wealth. Actually, you are not even asked to declare your income nor your assets.

This fiscal arrangement is based on Switzerland's federal law and is thus available everywhere in the country. It is called Forfait fiscal in French, or Pauschalbesteuerung in German, which translates as "lump sum taxation". You sometimes also hear the expressions fiscal deal or fiscal arrangement.

This fiscal arrangement is a famous specialty of the Swiss tax system and has been used for decades by many foreigners, including many celebrities.

Who can get a fiscal deal?
You need to be a Swiss resident with a B or C permit, to be retired and not to have worked in Switzerland for the last 10 years. By retired is meant no day-to-day professional activity. You can oversee your investments but you can work neither in Switzerland nor abroad.

Many cantons have unofficial minimums for the taxable income (see below) before they grant you a residence permit. However, if you are flexible on the selection of the canton, this amount is rather reasonable. As a rule of thumb you should have a taxable income of no less than Sfr.80'000 a year to be eligible.

How is the annual tax computed?
The tax is based on your spending - not your income. In practice, your annual rent is taken as an approximation of your spending. Your taxable income is equal to 5 times this annual rent. You then pay the normal tax rate for the city and canton you live in.

	Example 1 : you rent
	Let's assume that you rent an appartment in Montreux for Sfr.3'000 a month. That makes an annual rent of 3000x12 = Sfr.36'000. Your taxable income will be just 5 times your annual rent, that is Sfr.36000x5 = Sfr.180'000. Your annual tax bill would be in this case of approximately Sfr.180'000x30%, that is Sfr.54'000 a year.

	Example 2 : you buy
	What if you own a Sfr.3'000'000 house ? We will first have to compute the rental value of your house. We can do this by taking the going mortgage rent (say, 5%) to get the annual rent. 3'000'000x5% = Sfr.150'000. Your taxable income will then be of 5x150'000=Sfr.750'000. Your annual tax bill, taking a 30% tax rate, would be approximately Sfr.750'000x30%, that is Sfr.225'000 a year.

Please note that your overall tax rate depends on your city and canton, and that there are great variations between cantons and sometimes cities.

There are several peculiarities when computing the overall tax bill, especially if you own many Swiss assets or if you want to use the Swiss double tax treaties to get back taxes paid abroad.

Micheloud & Co. specializes in helping foreigners to become Swiss residents. A majority of our client choose the fiscal deal for its reasonable cost and the privacy it offers. As part of our service we compute the exact tax which you will owe in different areas, negotiate the taxable income with the authorities and help you get the residence permits.

Otras páginas de interés:

Invertir y vivir en Suiza Retiring in Switzerland