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17 January 2024 Buying Property in Switzerland as a Foreigner - How Does that Work?

Without Swiss citizenship, there may be obstacles to buying real estate in Switzerland. The reason for this is the so-called Lex Koller (Federal Law on the Acquisition of Real Estate by Persons Abroad, or "BewG" for short). The law makes the acquisition of land by foreigners subject to authorisation in certain cases.

This article intends to provide a brief overview of who requires a cantonal authorisation for which property acquisition.

Acquisition without Authorisation

Not every purchase of real estate by a foreign national is subject to authorisation: If the person buys a property at her legal and actual place of residence in Switzerland in order to live in it (main residence), she does not require authorisation. If the foreign person acquires property in order to build her main residence on it, the same applies, provided that construction begins within one year of acquisition. If the person moves within Switzerland, this does not trigger an obligation to sell. She can acquire a new main residence and use the previous one as a second home or holiday home or even rent it out. However, this is only possible if the person has no intention to circumvent the law.

In addition, the acquisition of land is not subject to authorisation, regardless of citizenship of the buyer, if he uses it for an economic activity (e.g. hotels, restaurants, offices, etc.). By way of exception, an associated dwelling may also be exempt from authorisation if it is essential for the operation of the business. That means that the business needs a person to be permanently present on the premises. However, this does not apply if the foreigner acquires real estate solely as a capital investment or for trading purposes.

Residency in Switzerland

If none of the conditions outlaid above apply, you have to examine if the purchase is subject to authorisation. For this purpose, I differentiate between buyers residing in Switzerland and those residing abroad.

If the buyer actually resides in Switzerland and is in possession of a valid permanent residence permit (C), he has the same rights as a Swiss person in the acquisition process. The acquisition is not subject to any conditions under immigration law. The same applies to persons with actual and legal residence in Switzerland who hold an EU/EFTA permit (B, C or L). EU/EFTA citizens with a cross-border commuter permit (G) work in Switzerland but have their main place of residence in another contracting state. In the absence of a domestic residence, they therefore require an authorisation. Persons from the United Kingdom who already had a right of residence in Switzerland based on the Agreement on the Free Movement of Persons (AFMP) before 1 January 2021 will continue to have the same rights as EU/EFTA citizens. However, all new British nationals arriving from 1 January 2021 can no longer invoke acquired rights under the AFMP. They are third-country nationals.

Third-country nationals without a permanent residence permit qualify as foreigners and need an authorisation when acquiring real estate, even if they are residents in Switzerland.

Residency Abroad

Persons residing abroad but wishing to acquire property in Switzerland, qualify as foreigner. If the land purchase is not for gainful employment or main residential purposes, it is subject to authorisation for these persons.

Therefore, third-country nationals and EU/EFTA citizens require an authorisation.

If a company with its actual or statutory registered office abroad or a foreign-controlled company (e.g. if a foreign person owns more than one third of the share capital) wants to acquire the property, an authorisation is also required.

The cantonal authorities at the location of the property check the authorisation requirement. If the reasons for authorisation listed in Art. 8 BewG and any additional cantonal reasons for authorisation are fulfilled, the authorities will allow the acquisition.

Holiday Accommodations or Secondary Residences

The dream of a Swiss chalet in the mountains or a secondary residence in Switzerland is restricted for foreigners as follows: Holiday flats and flats in aparthotels are subject to quotas. Switzerland issues a maximum of 1500 authorisations per year and distributes them among the cantons. The cantons only issue those authorisations at locations, which are highly frequented by tourists. Certain cantons, such as Zurich, even prohibit the sale of holiday flats or aparthotels to foreigners altogether. In addition, only those foreigners who have an exceptionally close relationship with the location that is worthy of protection may purchase a second home.

For foreign nationals and EU/EFTA citizens with or without residence in Switzerland, the purchase of holiday accommodation or a second home is subject to authorisation. In addition, a person may not own more than one such property. They cannot rent out the secondary residence, the holiday accommodation only periodically and not all year round.

EU/EFTA cross-border commuters, on the other hand, have the special rule that they can buy a second home in the region where they work without an authorisation, but shall not rent it out during their employment.

If the authorisation requirement is unclear, the authority must determine it. We therefore recommend that you clarify whether you need an authorisation before making the purchase. Anyone who does not have an authorisation is liable to prosecution and must bear the consequences under civil law, such as the invalidity or nullity of the purchase transaction.

The VISCHER immigration team will be happy to provide you with advice and support on all aspects of property acquisition in Switzerland.

Authors: Urs Haegi and Giulia Hiddink