What is the Lump-
It is a special system of taxation based on the expenses of the taxpayer (an alternative to the ordinary taxation). Both federal and cantonal tax legislation provides for the possibility, under certain conditions, of levying a flat rate tax instead of ordinary income and wealth tax.
This method, which couples a residence permit with the tax deal, involves a negotiation
with the canton in which residence is planned. The amount of tax is determined on
a flat basis (lump-
The “target group“ of flat rate taxation are foreign nationals who take up tax domicile
or tax residence in Switzerland for the first time or following an absence of at
least ten years. Lump-
Depending on expenditure, tax is calculated on the basis of the annual cost-
Check with other income and asset holdings
The tax based on expenditure must not be lower than the taxes calculated according to the regular tariff on domestic income and assets as well as certain income from foreign sources for which the taxpayer makes use of a double taxation convention concluded by Switzerland. Income from domestic sources consists in particular of the following: income from immovable property situated in Switzerland, income from movables situated in Switzerland, proceeds from copyrights, patents and licensing fees exercised in Switzerland, and benefits, annuities and pensions from Swiss sources.
Deductions and tax rates
The only permissible deductions from gross income are the costs for the maintenance and management of immovable properties in Switzerland as well as costs for the standard general management of securities and deposits whose yields are taxed. No other expenses, particularly interest on debts, annuities and permanent expenses may be deducted. Social deductions are also excluded. Depending on the individuals personal status (single, married, one parent family), the same tax rates apply as for ordinary income tax.
Taxation based on expenditure is only granted upon the request of the taxpayer and only then when legal requirements are fulfilled. If ordinary taxation is more advantageous for a taxpayer, he has the option, in any tax period, of foregoing the flat rate taxation system and of requesting ordinary taxation.
Swiss anticipatory tax
As incomes from Swiss sources must be declared in the assessment and are thereby visible in the basis for taxation, withholding tax on those taxed elements of income may be reclaimed.
The "Modified" Lump-
It has been stated in a number of Swiss tax treaties (e.g. USA, Canada, Germany,
Belgium, Italy, Norway, Austria) that treaty benefits can only be claimed by a Swiss
resident alien, if all income (dividends, interest and royalties, not, however, capital
gains) derived from these contracting states is subject to regular taxation under
Swiss law and if the taxes together with the other income from Swiss sources are
levied at the same rate as that for the total income. In these cases, the lump-
Who can benefit from lump-
What can we do for you ?
We have a well-
We can negotiate on your behalf with Swiss tax authorities to help you get the best possible deal.