PERMITS

RETIRING IN SWITZERLAND

The pandemic has revealed the pros and cons of each nation’s health system and ability to handle a major crisis. The recent events have stirred many life decisions in terms of settling in a new environment and starting a new life elsewhere.

Switzerland offers a high quality lifestyle combined with excellent healthcare infrastructures, a stable government system and highly competitive academic institutions. Divided into 26 cantons and three linguistic regions (Italian, German an French), most cities are nestled between lakes and mountains.

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First step

If you are considering moving to Switzerland, the first step is to select a future Canton of residence.

Indeed, the application takes place on a cantonal level. 

The language spoken in the Canton could be a criterion to determine where you would like to settle down, as well as other factors such as the cantonal tax system, the types and prices of properties available or personal ties or family connections in a specific area.

Zug offers the lowest tax rate, but the cantons of Geneva, Vaud, Zurich and Valais are usually preferred by expats, where English is commonly understood. Settling in an alpine ski resort in Valais, such as Verbier or Crans-Montana for example, offers an exceptional quality of lifestyle.

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Second step

Once you have determined where you would like to settle in Switzerland, you will need to apply for a residence permit (B permit).

The cantonal immigration authority will generally deliver the permit, although the communal immigration authority handles the application directly in some cantons, where the applicant must declare their arrival within 14 days.

If you are a citizen of one of the 27 EU/EFTA member states, you benefit from the Agreement on the free movement of people (AMFP) allowing you to settle in Switzerland without gainful employment.

Once in Switzerland, you have 90 days to apply for your residence permit.

A retiree or person without gainful employment must be able to prove they have sufficient financial means to cover their expenses and living costs in Switzerland (proof of personal assets or pension fund) and hold a valid health and accident insurance.

The applicant can buy property as a primary residence once the B permit has been granted.

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Non-EU citizens

Unless they meet the requirements for lump sum taxation, whereby the retiree can negotiate a yearly taxation set in advance with the cantonal tax authorities, non-EU citizens must meet three conditions to apply for a B permit:

First of all, the retiree must be at least 55 years old.

It is then required that the applicant have strong personnal ties with Switzerland, such as proof of regular trips over the past years and existing social or family ties.

Lastly, proof of sufficient funds to settle in Switzerland  long-term must be demonstrated through bank statements or pension fund details. The application is examined at a cantonal level first, then at a federal level. The approval is dependent on the authorities’ discretionary power.

In practice, the applicant must be able to provide proof that his financial situation would allow themself and their dependents to spend the rest of their life in Switzerland without ever requiring financial assistance from the canton.

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Lump-sum taxation

Non-EU citizens can apply for a B permit through a lump sum tax agreement, i.e. an agreement with the tax authorities whereby their annual taxes are determined in advance.  

Lump-sum taxation, also referred to as expenditure-based taxation, is a simplified taxation system through which the taxpayer’s taxes are based on their spending and not on their revenues. The tax is calculated on the basis of the taxpayers’ total annual cost of living in Switzerland and abroad, for themselves and their dependents.

The law sets the minimum value on the basis of which the tax must be calculated. This value is based on a comparative system. Three elements are taken into account, of which the highest value forms the basis to calculate the expenditure-based taxation. Firstly, the tax calculated on the amount set by the law representing the minimum amount for expenditure. On a federal level, this amount is of CHF 400’000.- for European citizens. For non-European citizens, the minimal amount can vary as it is set by each canton. Secondly, the tax calculated on the annual rental value or gross rent multiplied by seven or three times the annual cost for housing and food. Lastly, the expenditure-based tax cannot be lower than the tax on certain gross elements of income and wealth in Switzerland.

Long-term Swiss residence

After 5 years holding the B permit, the foreigner and his family members can apply for a C permit, providing permanent residency in Switzerland. Permanent residency opens the path to Swiss citizenship after 10 years of residence if the integration requirements are met.

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