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When talking about purchasing real estate in Switzerland, it is necessary to distinguish between the two cases.
There are two taxes for residential property owners in Switzerland.
Property tax. This includes the property tax (Liegenschaftssteuer) and the land tax. Depending on the canton, you will have to pay 0.2–0.6% of the cadastral value of the property. The lowest rates are in small towns and villages in the north of the country, the highest ones are in resort locations.
Nice moment: the cadastral value of the property, influencing the tax to be paid, is calculated according to the criteria established by specific cantons. It always turns out to be lower than the purchase price of the acquired property. On average, 30-60% of the paid amount.
The tax applies to both residents and non-residents of Switzerland. However, there is no Liegenschaftssteuer in some cantons: Zurich, Schwyz, Glarus, Solothurn, Basel-Landschaft and Aargau.
Wealth tax. It is applicable only to the residents of Switzerland. It is levied from the total income of an individual, except for the real estate objects located outside Switzerland. However, the property, located abroad, affects the calculation of the final rate. Therefore, when filing your tax return, you will have to indicate all the income and assets that you own.
The wealth tax rate is progressive, it varies from 0.1% to 0.9%, but the formula for the calculation is different in each canton. One way or another, loans, mortgages and debts can be deducted from the final amount.
Tax reliefs. There are no “official” groups of individuals, who can benefit from tax reliefs. Nevertheless, there may be exceptions at the cantonal level. For example, a foreigner who moves to Switzerland for the first time and invests in the development of the canton in which he lives, can receive a discount. The level of employment can also affect this moment - for example, a foreigner does not work and does not conduct business in Switzerland, but receives all income from abroad.
Only residents of the country are eligible for obtaining tax reliefs.
Terms of payments. The residents should submit their declarations by the end of April of the year following the reporting year. The payroll period is autumn (the specific period may vary in each canton).
Non-residents should submit their declarations only if they have rental income.
The amount that the owner pays monthly for the maintenance of his housing will depend on the region. For example, the average monthly charges for gas, heating, electricity, water and garbage disposal for an apartment of 100 sq. m (for one person) in St. Gallen - € 280, in Neuchâtel - € 235, in Basel - € 215, in Bern - € 205, in Lausanne - € 190, in Geneva - € 180, in Aarau - € 170 , in Lugano - € 130, in Sion - € 115, in Schaffhausen - € 95. These are the charges for ordinary housing in a standard complex. If we are talking about luxury real estate, this amount may increase three to five times.
In general, the residents of the country spend 5-7% of their salaries to cover the costs associated with the maintenance of their properties.
Water, gas and electricity costs are not catastrophic. For example, a tenant of a spacious apartment of about 80-100 sq. m will have to pay € 420-500 for water, € 700-1,300 for electricity, and € 800-1,400 for gas per year. All the costs will depend on the specific city and the number of people in the apartment.
It is worth noting that the Swiss are accustomed to saving on maintenance. If they do invest money, they improve the energy efficiency of the house or buy energy-saving appliances. Many service providers have reduced rates at night or during unpopular hours. And all this is not only in order to save money, but also because people in the country are very concerned about the environment.
The cost of this service depends on the amount of waste. The fee of € 1.5–2.0 is charged for the disposal of a garbage bag for 60 liters, for 110 liters - € 4.0.
Switzerland has had a well-functioning waste disposal system for many decades, it is accepted and supported by all citizens of the country. The main idea is to collect and recycle materials that are suitable for repeated usage, and thereby reduce the amount of residual waste to a minimum. Therefore, you only have to pay for the disposal of residual waste. Everything else (glass, plastic bottles and wrappage, paper, metal cans, etc.) is placed in public containers free of charge, these containers are installed literally at every step in all municipalities in Switzerland. Large and well-managed apartment buildings have such containers in the basement.
You need to buy special bags certified by the municipality (sold in supermarkets and gas stations) for the disposal of residual waste. If you separate your waste properly, you will be surprised how little residual waste you generate. For example, a family living in a large penthouse in Locarno collects no more than one bag (60 liters) per week.
Switzerland has a separate tax on radio and television (Empfangsgebühren). It applies to all people who live in the country for more than 90 days. The amount of this tax is € 310 per year, you can pay it in one or two installments. The Billag company is responsible for the collection of these taxes.
Please note that these fees cover only viewing the state channels (SRF - Schweizer Radio und Fernsehen). If you want to watch cable TV or satellite TV, you will need to pay extra.
The Internet is expensive - you will have to pay about € 50-60 per month. But you get Internet access and unlimited number of domestic phone calls (land line and mobile) for this money.
There are special tariff packages for international calls.
If the apartment is located in a condominium, you will have to pay for the services of the managing company, which keeps the common areas clean and tidy, every month. The payments may vary between € 1,000-2,500 per year, depending on the status of the housing.
This expense is relevant only if you own an apartment. If you are renting accommodation, the condominium fees are paid by the landlord.
If you own a private house, you will have to pay the gardener € 500-700 per month. You will be required to pay for the removal of snow around your property, even when you don't live there. If your house is located in a ski area with a lot of snow, you may expect to pay a minimum of € 200 in winter months.
For a personal parking space, you will have to pay € 150-170 per month (if there is no garage). Keep in mind that there are very few free public parking lots in Swiss cities. So private parking is a must for those who wish to use a car. Upper class apartments usually have parking spaces for all the residents.
Insurance is an optional expense item, unless you use a mortgage to buy real estate. The cost of the policy depends on the location of you housing, the specific municipality and the list of insured risks.
The cost and features of the insurance depend on the two moments
1. You are renting out your property or you are the owner of an apartment. In this case, it is better to secure the furniture and personal belongings against such risks as fire, burglary (yes, this might happen even in Switzerland), water damage.
Most landlords require their tenants to have a personal liability insurance, which covers potential damage to the building or neighbors (for example, you have forgotten to turn off the tap in the bathroom, as a result - the water flooded the neighbors).
These two types of insurance are offered as combined home insurance (Haushaltsversicherung) in Switzerland and cost around € 600 per year for a good 120 sq.m apartment.
Insurance of buildings (Gebäudeversicherung) is compulsory in most of the cantons (except for Geneva, Ticino, Appenzell Innerrhoden and Wallis). The exact rates vary greatly in different cantons and depend on the type of your property, but they are relatively low anyway. The cost of insurance for a villa that costs € 5.5 million and is located on the Lake of Zurich will be € 1,500 per year.
It is important to keep in mind: the above mentioned home insurance rates are valid only for properties that are occupied permanently. The rates for a holiday home may be two times higher; the local insurance companies regard a house or an apartment that is not permanently inhabited as more risky.
| Expenses | 3-bedroom apartment in Bern, 3 people | 1-bedroom apartment in Geneva, 1 person |
|---|---|---|
|
Heating |
€1,250 |
€820 |
|
Maintenance |
€720 |
€1,300 |
|
Electricity |
€1,250 |
€720 |
|
Water supply and wastewater disposal |
€850 |
€360 |
|
Garbage disposal |
€110 |
€65 |
|
Internet and TV |
€900 |
€900 |
|
Home insurance |
€600 |
€500 |
|
Parking space |
€1,800 |
- |
|
Real estate tax |
€3,900 |
€4,500 |
| Total |
€11,380 |
€9,165 |
Payments. Local utility companies work on a prepayment basis: the new owner or tenant immediately pays the estimated amount for the year after moving or makes monthly payments specified in the contract (usually € 150-200). The invoice with real figures comes at the end of the year. The property owner will get a refund of the overpaid amounts, or he will need to make some additional payments.
Rental yields. According to the analysis of the Global Property Guide portal in December, the rental yields in the country are low. For example, you will have to pay in about € 1.45 million for a middle-class apartment of 120 sq. m, located in a dormitory district in Zurich, in Geneva - € 1.38 million. You can rent out such apartments for € 3,946 and € 3,827, respectively. Consequently, the annual rental yield will be around 3.27-3.33%.
Rental rates. A foreigner with a residence permit in Switzerland is allowed conclude long term and short-term rental agreements.
Non-residents of the country may only purchase and rent out a property that is registered as a second residence (Zweitwohnsitz), or apartments / chalets that fall into the category of "commercial tourist real estate". In the latter case, the management of such properties is usually carried out by a Swiss travel company.
We will talk about the long-term rental rates further. As for the short-term rental rates, on AirBnb the cost of a day starts from € 100 for a studio apartment in Zurich, in Geneva - from € 90.
If we talk about two-room business class apartments within walking distance to the lake or the city center, the prices start from € 250 per night in both cities.
Prescribed income tax. Local authorities assume that a foreign citizen acquires a property in order to rent it out. Therefore, even if you decide not to rent out the purchased house or apartment, you will have to pay tax on potential rental income.
But! The minimum legal period of the tourist rent is 183 days. Moreover, the same tenant is not allowed to stay in such housing for more than 90 days. So you may use the property yourself for almost 6 months. In any case, this is the maximum time that a foreigner can spend in Switzerland without a residence permit.
In such situation the income tax is calculated on the basis of provisional rental rates for which the object could be rented out. The positive moment is that you can deduct all expenses related to the maintenance and improvements of your home from your potential income: repairs, technical maintenance, insurance fees, investments in improving the energy efficiency of the house, protection of the environment etc. You may also deduct the interests on debts, even if they are not directly related to the provided real estate object.
The income tax is paid at two levels: the first one is federal, the second one is cantonal and municipal. In the first case the rate is progressive and starts from 0.77%, it does not exceed 11.50%. If the annual income is below € 13,460 for a single person or € 26,270 for a couple, you are not required to pay the federal income tax.
In the second case, the rates vary from 14% to32%, depending on the specific location.
Companies that lease real estate in Switzerland, after the reform on January 1-st, 2020, pay a total income tax of 12-21%, depending on the amount of their income and on the specific location.
Let's say you live in a premium-class apartment with an open roof terrace and panoramic views near Lucerne or Locarno. Such housing can be rented out for € 5.6–6.0 thousand per month. Thus, the amount of annual taxes for such property will be approximately € 14.0-18.7 thousand. Therefore, most foreigners prefer to rent out the purchased real estate in Switzerland and live in a rented apartment: this is more profitable.
Aspect 1. There are several interesting options for non-resident investors who wish to purchase a property in Switzerland for personal use. For example, pursuant to the law of Switzerland, all your mortgage payments (the interest and additional costs) for a private property are deducted as expenses when filing your tax declaration. If you combine your loan (maximum 40% of the price of your property) and the deposit of securities correctly, you will be able to not only reduce the income tax to zero, but even to get a higher profit than the mortgage interest rates.
Aspect 2. It may be very difficult to fill in and submit your tax return correctly without a good knowledge of German, French or Italian. You will need the help of a Swiss tax advisor, who charges € 1,000 for a simple property declaration.
Reduction of payments. If you live in Switzerland permanently, that is, if you are a resident of the country, the following types of expenses can be deducted when filling out your tax declaration:
Special tax regime for wealthy foreigners. This regime is applicable only to the residents of Switzerland. If you are a very wealthy person according to Swiss standards, there is a separate tax regime for you - lump-sum taxation. This means that the annual tax is calculated in relation to the potential expenses for the daily needs of your family, but not in relation to your assets and income. Officially, this tax regime is called “taxation according to expenses” (Besteuerung nach Aufwand).
There is no fixed formula for calculating this tax - the exact amount is determined by the canton in which the foreigner intends to live.
Managing companies. If you do not have the opportunity to deal with the issues of your property on your own, you may contact one of the many managing companies. The costs of their services vary from 10 to 25% of the profit depending on the presence / absence of tourists and the amount of income.
Such companies undertake the obligations to pay the utility bills, search for new tenants, control their payments, monitor the condition of your property, carry out minor home repairs, etc.
By the way, the tenants are responsible for final cleaning before moving - in Switzerland it is usual to clean the accommodation properly before you move. It is almost impossible to cope with this task on your own, that is why the tenants usually hire a cleaning company and pay about € 800-900 for the final cleaning.
Income. Swiss salaries are considered to be among the highest in the world. But you should remember that the cost of living in this country is not cheap: for example, the prices are 2-4 times higher than in neighboring Italy.
Higher prices are mainly for housing (purchase or rent) and for hotels and restaurants. When we talk about expensive consumer goods such as electronics, cameras, watches and luxury clothing, the prices in Switzerland are often lower than in neighboring Italy and Germany. This is due to the much lower value added tax (VAT). In Switzerland, it is 7.7%, compared with 19% in Germany and 22% in Italy.
There is no minimum wage at the national level. Although the minimum wage-rate is legally determined in the cantons of Geneva, Jura, Neuchatel and Ticino (€ 3.4 thousand per month).
In addition to this, the country has standard employment agreements (Generalarbeitsverträge) for certain spheres (tourism, catering, hospitality) in order to avoid labor exploitation.
In general, the lowest salaries are for cleaners, cashiers, bartenders - they receive about $ 3.1-3.5 thousand per month.
By the way, 60% of foreigners in Switzerland are engaged in “simple work”.
Specialists who have no practical experience in their profession receive 60-70% of the real salary at the start. The average salary in the country is set at the official level and in 2020 it was 6,639 GHF, or € 6,160, per month after taxes.
Financiers, doctors, engineers, IT specialists, lawyers have the most impressive salaries. Such highly qualified specialists with seven to ten years of experience usually receive € 18–20 thousand per month.
The highest rates are in Zurich, the lowest rates are in the eastern regions of the country, where the incomes are about 30% lower.
The official minimum cost of living in Switzerland is € 2,050.
Rent. The rates vary greatly depending on the city. The most expensive option is Zurich. You will need about € 1.8 thousand per month to rent a small middle-class one-bedroom apartment near the city center, if we talk about remote areas - € 1.2-1.4 thousand. Spacious three-room apartments will cost around € 3.4 thousand and € 2.4 thousand, respectively. The utility charges for an apartment of 85 sq. m will be about € 230-250, including the Internet.
Food. Even if you cook at home, the food will cost at least twice as much as in Italy or Germany. A family of two will have to spend about € 600. A carton of milk costs € 1.5, bread - € 2.5, rice - € 2.6 per kilogram, a dozen eggs - € 5.2, chicken fillet - € 26 per kilogram, fruit - € 2.5–3.5 per kilogram, vegetables - € 2.5–4.0.
It is worth noting that the quality of products in Switzerland is much higher than in Germany, especially meat, dairy products and cheeses. Large Swiss supermarkets such as Coop and Migros offer a wide range of organic products (“bio”). There are always special offers in large grocery stores, which can help you to save 30-40% of the original cost of the products.
The cost of lunch in an "budget friendly" restaurant will be about € 25 per person, a three-course meal in a middle-class establishment costs € 100 for two. You will pay € 15-18 for a large portion of pasta, and € 10 for a salad. Combo meal in McDonald's costs € 14, a cup of cappuccino - € 4.5–6.0. And if you feel like having a nice dinner with wine in a Michelin-starred restaurant, get ready to spend € 500-700 (for two persons).
Transport. One-way ticket (Local Transport) costs about € 4, a monthly pass - € 80. A liter of gasoline is € 1.45, the taxi fare is € 3.5 per kilometer.
Most Swiss residents have a special Halbtax Abo discount card, which allows them to save on public transport. It is issued by SBB (Swiss Federal Railways), the card costs € 170 per year and provides a 50% discount on all types of public transport in the country: trains, buses, trams, ships and even cable railroads to the mountains.
A ticket for the Locarno-Ascona ride will cost only € 1.55 with this card, and a ticket for the Zurich-Locarno express (about 200 km of the way) may cost only € 16 during low demand hours.
Medical insurance. This kind of insurance is mandatory for all permanent residents of Switzerland. In the case of employment, the insurance fees are paid by the employee, they do not dependent on the amount of income. You will have to deduct € 400-500 monthly, depending on the desired coverage and the canton of residence. Reduced rates apply for children.
It is interesting that this insurance includes medical care not only within the country, but also when traveling around Europe and to many other countries of the world, including Russia.
Trends of the market. Despite the pandemic, the cost of buying and renting a home has increased in Switzerland in 2020. At the same time, the demand for the purchase and rent of spacious apartments and private houses has sharply increased.
When selling real estate, the owner should pay the capital gains tax. The buyer bears the duty to pay the property transfer tax and the land registration fee, as well as half of the notary fees. Additional costs for the seller include the services of a real estate agency, which charges 3-4% of the property value for the transaction.
Property transfer tax (Handänderungssteuer). There is no such levy in the cantons of Zurich, Uri, Schwyz, Glarus, Zug and Schaffhausen. In all other cantons, the rate ranges from 1.0% in Nidwalden and St. Gallen to 3.0% in Geneva.
The key point: The property transfer tax is divided between by the buyer and the seller In the cantons of Basel Land and Obwalden.
Land registration fee (Grundbuchgebühr). The rate varies from 0.15% in the canton of Zurich to 1.10% in Ticino. There is no such contribution in the canton of Schwyz.
If the purchase is financed with a mortgage, the bank will require the land registration fee to be entered in the land register as a collateral. This will incur an additional fee of about 0.20 to 0.35% (depending on the canton) of the amount of the collateral.
Capital gains tax (Grundstücksgewinnsteuer). This tax is not charged at the federal level – it is appointed at either the canton or the municipality level. This levy is paid on the difference between the selling price and the total purchase price, including fees and commissions, repairs and other costs to improve the property. You may also deduct the agency's commission, the fee for the services of a realtor, lawyer, etc. from the taxable base.
The rate depends on the specific location and the holding period of the property: the applicable charge decreases each year. For example, if you have bought a house and plan to sell it in a year, you will have to pay 30%. If you have owned this property for more than 24 years, the rate will be 7%.
The editors would like to thank Alla Knappé, executive director of Benesteem Executive Consulting, for assistance in preparing the material.
