Thanks to a high quality of life and its safe and hospitable environment, many families decide to move to Switzerland with their children.
Moving to a new country is a major decision that is not easy to make and must be given its due time. There are many factors to be considered including work permits, family tax planning, the right school, and the importance of a vehicle. Here is a summary of the primary information needed.
EU / EFTA citizen immigration and permits
Individuals coming from member states of the EU / EFTA (citizens of the EU, Norway, Iceland, and Liechtenstein, and the UK until 31/12/2020) regardless of their qualifications, have easy access to the Swiss labor market based on the Agreement on the Free Movement of Persons. Based on a Swiss employment contract, a residency permit may be requested according to the Agreement on the Free Movement of Persons. EU / EFTA citizens entering Switzerland for work (without an employment contract with a Swiss company) for up to 90 days per year are covered by the Agreement on the Free Movement of Persons and must register their working presence in Switzerland on the Confederation portal.
Swiss salaries are above average with mandatory minimums set according to law, which are to be calculated individually based on parameters such as education, age, professionalism, experience, or responsibility. It takes approximately 3-6 weeks for the authorities to process permits.
Non EU / EFTA citizen immigration and permits
These individuals are granted a work permit only if it can be proven that it was not possible to find an equivalent candidate in the Swiss labor market. Exemptions may apply for internal company transfers of highly specialized employees ("expats") or for positions in managerial roles. Most non EU / EFTA citizens must have a visa to enter Switzerland for work and/or residency.
Residency permit types
L Permit - up to 4 consecutive months / 120 non-consecutive days within 12 months. No quota applies and no registration in Switzerland is required.
B Permit - Long-term permit valid up to 12 months for non EU / EFTA citizens and up to 5 years for EU / EFTA citizens. The B permit may be extended each time for five years, indefinitely.
C Permit - Permanent residency. This permit may be issued after 5 or 10 years of residency in Switzerland depending upon the applicant's nationality.
G Permit - The cross-border permit can be issued for EU / EFTA citizens with a Swiss employment contract and residency in the EU / EFTA countries. Non EU / EFTA citizens may also request a cross-border permit if they have lived in one of the border regions for at least 6 months with a residency permit.
Even though Switzerland is a small country, its inhabitants speak no less than three different languages: German, French, and Italian, and in some cases, Romansh (minority), while English is becoming the official language of professionals and international companies. Every document in Switzerland, from ingredients on product labels to official government documents must be prepared in three different languages (German, French, and Italian). There are also numerous dialects recognized in various Cantons and used primarily in spoken language. Schweizerdeutsch, for example, is spoken by inhabitants of Zurich and German Switzerland, demonstrating their attachment to traditions and the desire to maintain a local identity.
Looking for housing
The Swiss housing market is difficult in certain locations due to the limited supply. Prices for purchasing and renting property are relatively high, especially in urban areas.
Rental property: The rental market is widespread in Switzerland, and it is relatively easy to find a house or an apartment to rent through various sources such as the internet or local newspaper advertisements. The search time is relatively short, depending on the renter's available financial resources.
Purchasing property: Purchasing property may require a bit of time, so it should be one of the first activities planned for the family move. At the time of purchase, it is advisable to seek the advice of a qualified real estate professional to evaluate how to proceed and what the costs will be, including commissions, transfer taxes, notary fees, and land registry fees (about 6-7% of the sale price should be budgeted for these items).
The bilateral agreement on the free movement of persons stipulates that as of 1 June 2002, an EU / EFTA citizen with a residency permit and residing in Switzerland has the same rights as Swiss citizens in relation to the purchase of real property, whether a primary residence, second home, vacation home, land on which to build, or investment property.
EU citizens and cross-border workers who are not residents in Switzerland may only purchase commercial buildings for carrying out a business activity, while they may purchase a vacation residence (maximum 200 square meters).
Management of the utilities is organized with the local operators in the city or Canton where you plan to settle. The telephone system in Switzerland is managed by Swisscom. To have a telephone line installed or connected, once you have registered with Swisscom, you can choose a different service provider from among a variety of companies. There is a wide range of internet service providers that vary based on the geographic area. The public utilities system (electricity and water) is usually managed by local entities.
The cantons manage the Swiss education system directly; therefore, it may vary from canton to canton. Public schools are financed by the cantons through tax revenue; therefore, there are no additional fees for schooling. The Swiss public school system is divided into the following sections:
• Preschool: ages 4 to 6. This school is mandatory in most cantons.
• Primary school: ages 6 to 12. Primacy school includes classes one through six.
• Secondary school: ages 12 to 15. Mandatory education is completed at the end of secondary school.
• Post-secondary school: this can be a high school or apprenticeship, with a duration of 3 to 4 years depending on the student's career and plans. Foreign children who wish to enroll in public schools must pass a proficiency test organized by the canton's education board.
Parents may also enroll their children in private or international schools in the area, including American, British, French, German, and Japanese schools.
License, purchase, and import of cars into Switzerland
To obtain a Swiss driver's license, file a simple application with the local motor vehicle division, which will quickly exchange your foreign license for a Swiss one. As a rule, it is mandatory to convert the driver's license from your country of origin to a Swiss one during the first year in Switzerland, without the need to take the driving test.
An individual must have a residency permit to be able to purchase a car in Switzerland. Purchasing a car from a dealer is the most straightforward approach since the seller will take care of the registration. It is also possible to purchase a car directly from an individual through specific online platforms.
Social and pension insurance
Swiss social security and pension contributions are mandatory for residents of Switzerland (excluding minors). The Swiss social security system is based on three pillars:
• Pillar # 1 (government pension): mandatory for all workers and comprised of old age and disability insurance and a pension to cover the basic cost of living.
• Pillar # 2 (occupational pension): includes benefits similar to the first pillar and together should amount to at least 60% of the beneficiary's last income and allow pensioners to maintain the lifestyle to which they are accustomed. Contributions to the second pillar are only mandatory for salaried workers.
• Pillar # 3 (savings): this is an additional individual and voluntary savings plan to make up the remaining 40% of the missing income. This type of savings also offers tax advantages, within certain limits, which cannot be used by other types of savings.
Anyone settling in Switzerland must take out a local health insurance policy within three months, which will be valid from the date of entry into the Confederation. Health insurance is mandatory for all residents of Switzerland. It is organized privately and must cover all members of the family. Social health insurance offers everyone living in Switzerland adequate health assistance in the event of illness or injury. It generally covers the costs of outpatient treatment, doctors (general practitioners), hospitals, pharmaceuticals, and other types of treatment depending upon the packages chosen. There is a deductible for health costs that is the individual's responsibility. It ranges from a minimum of CHF 300 up to CHF 2500 according to the insurance premium that is paid.
You have free choice in selecting an insurance company based on the quality of the service, guaranteed coverage, and related costs.
Taxes on income and assets
The Swiss taxation system is structured on three levels:
• Federal tax (marginal rate: 11.5%) is uniform throughout Switzerland and is only based on income.
• Canton taxes vary from canton to canton and is levied on income and substance, i.e., wealth held (wealth tax).
• The municipal tax may vary from place to place and is levied on income and substance. It is typically calculated as a multiple or percentage of the canton tax. The maximum overall income tax rate varies between approximately 20% and 40%, while the marginal substance tax may vary from approximately 0.15% to 1% depending on the Canton.
Natural persons are considered tax residents in Switzerland based on national legislation if:
a. their tax domicile (i.e., the center of their vital interests) is located in Switzerland; or
b. They spend 30 consecutive days in Switzerland (short trips abroad are ignored) while carrying out a lucrative activity; or
c. They spend 90 consecutive days in Switzerland (short trips abroad are ignored) without carrying out a lucrative activity.
In practice, on the international level and as a result of double taxation treaties, these rules are relaxed to prevent double taxation.
Income and wealth tax
The Swiss income tax basis is rather broad. Taxable income includes all sources of income, whether from a lucrative activity (or pension), financial income (dividends, interest), or real estate income (rental value or rents received). Business expenses, health insurance expenses, securities management expenses, passive interest expenses, etc. may be deducted from this income. The most important exception to this general rule relates to capital gains on private movable assets (e.g., shares and bonds) that generally are exempt (capital gains not taxed). In general, capital gains on real estate located in Switzerland are normally taxed separately based on a special canton (and sometimes municipal) tax.
Essentially all of an individuals assets are subject to taxation. This includes, for example, bank account balances, securities of any kind and other investments, real estate (the value of foreign real estate is only considered to determine the rate), cars, boats, airplanes, precious metals, or works of art. In general, the fair market value of all assets at the end of the tax period is subject to wealth tax in Switzerland, except for real estate, which is taxed at an estimated value (cadastral value). Non resident taxpayers
Individuals who do not qualify as Swiss tax residents may be subject to Swiss taxation in the event of certain income of Swiss origin and / or assets in Swiss territory. For example, tax is due in the case of:
a. Lucrative activities (subordinate or independent) carried out in Swiss territory; or
b. Director's fees paid by companies with registered offices in Switzerland; or
c. Income (in particular pensions in the second pillar) paid by a Swiss social security institution
Inheritance and gift taxes
There are no federal inheritance or gift taxes, but practically all cantons (except for Cantons Svitto and Obwaldo) collect these taxes at their discretion. A natural person becomes subject to Swiss inheritance and gift tax when:
- they inherit assets from a person whose last residence was in Switzerland;
- they receive a gift of movable or fixed assets from someone who is a resident in Switzerland;
The tax responsibility does not depend on the nationality of the deceased or giver, nor on the place of residence of the heir. Transfers (e.g., gifts and inheritances) to spouses are free from inheritance and gift taxes in all cantons while transfers to direct descendants (e.g., children, grandchildren) are exempt in most cantons.
Switzerland introduced a value added tax (VAT) in January 1995, which is similar to the one applied in other European countries. The VAT rate for most purchases in Switzerland is currently 7.7%, while certain essential items are taxed at a reduced rate (currently 2.5%).
Federal withholding tax
The federal withholding tax is applied with a rate of 35% on financial income from Swiss sources (such as dividends and interest greater than CHF 200 per year) deriving from deposits at Swiss banks, income from Swiss investment funds, as well as bonds and other similar securities. This withholding is completely reimbursed or fully credited against the Swiss tax debt for taxpayers residing in Switzerland, provided that the investment and related income are declared in the tax return. Foreign beneficiaries of interest and dividends may be granted a partial reimbursement of the withholding in the event there is a double taxation treaty in force between Switzerland and their country of residence.
Expenditure taxation or global taxation
Taxation according to expenditure is a special tax procedure reserved for foreign citizens domiciled in Switzerland who do not carry out a lucrative activity. This type of taxation is available to physical persons with foreign citizenship who, for the first time or after an absence of at least ten years from the country, acquire a domicile or residence for tax purposes in Switzerland, without carrying out any lucrative activity.
The right to expenditure taxation expires when the taxpayer acquires Swiss nationality (marries a Swiss citizen) or begins a lucrative activity. The determining expenditure for tax purposes is calculated on the total annual expenses that the person (nuclear family) support to maintain their life style.
This taxation system, usually requested by wealthy taxpayers and holders of significant assets, has been the subject of criticism and discontent in recent years, which led to the abolition of this type of taxation. Nevertheless, it remains in force for federal tax and in cantons that provide for it in their legislation, including Canton Ticino.