SWISS LUMP SUM TAXATION - RESIDENCY IN SWITZERLAND
SWISS LUMP SUM TAXATION - EXPENDITURE-BASED TAXATION MECHANISM
Expenditure-based taxation is a special way of assessing income and wealth. The regular tax rates are applied in calculating the tax amount, however. This form of taxation is available to foreign nationals who make Switzerland their tax domicile for the first time or after at least ten years spent outside the country, and who are not gainfully employed in Switzerland. The right to expenditure-based taxation expires when a person acquires Swiss citizenship or takes up gainful employment in Switzerland.
The tax is calculated on the basis of the total annual cost of living expended by the taxpayers in Switzerland and abroad for themselves and their dependents. The law also provides for minimum values for the assessment basis and a minimum calculation according to which the tax may not be lower than the tax on specified gross elements of income and wealth in Switzerland calculated with the regular tax rate. This income includes in particular all income from Swiss sources, as well as income for which the taxpayer claims relief from foreign taxation in accordance with a double taxation agreement concluded by Switzerland.