Switzerland — Lump-Sum Taxation

Quick reference

Item	Value
Official name	Pauschalbesteuerung (DE) / Imposition d'après la dépense (FR)
Available to	Foreign nationals who are NOT gainfully employed in Switzerland
Tax base	Annual living expenses (not actual income)
Minimum tax base	7× annual rent or rental value of Swiss residence
Cantons	Available in most cantons (a few abolished it: ZH, SH, AR, AI, BL, BS)
Legislation	DBG Art. 14; StHG Art. 6

How the tax base is calculated

Instead of declaring actual worldwide income, the taxpayer pays tax based on their annual living expenses:

Tax base = MAX of:
  (a) 7 × annual rent (or rental value if owner-occupied)
  (b) Actual living expenses (worldwide) if higher
  (c) Cantonal minimum amounts (vary by canton — e.g. CHF 400,000 in some)

Some cantons have set explicit minimum tax bases (e.g. Valais: CHF 250,000; Vaud: CHF 250,000; Geneva: CHF 400,000; Ticino: CHF 500,000).

Federal minimum: CHF 451,200 (2025, indexed annually).

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Tax rates applied

The agreed tax base is taxed at ordinary Swiss income tax rates (federal + cantonal + communal). No special reduced rate — the benefit is the smaller base.

Effective all-in rates (federal + cantonal + communal) on typical lump-sum bases:

• Typically 15%–35% depending on canton and base amount

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Treaty benefits

Switzerland's extensive DTA network is NOT fully available to lump-sum taxpayers. Treaty reduced withholding rates require that the taxpayer is subject to Swiss tax on the specific income in question. For most DTAs, treaty benefits are only available on income up to the tax base amount.

Practical impact: lump-sum taxpayers may not reclaim withholding tax on foreign dividends/interest above certain amounts. Specific to each treaty — requires treaty-by- treaty analysis.

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Switzerland CGT: no tax on private securities

Switzerland does not tax capital gains on private moveable assets (shares, bonds, funds) for private investors — lump-sum or not. This is a key attraction.

Capital gains on real property are taxed (by cantons) — even under lump-sum. See ch-cantonal-tax.

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Sources

• Bundesgesetz über die direkte Bundessteuer (DBG), Art. 14
• Steuerharmonisierungsgesetz (StHG), Art. 6
• ESTV (Federal Tax Administration): estv.admin.ch

Working paper only. Lump-sum negotiations are done directly with the cantonal tax authority (Steueramt) and involve detailed negotiation. The specific canton chosen affects the outcome significantly. Engage a qualified Swiss tax adviser (Treuhänder/fiduciaire) before establishing Swiss residence.