11 June 2021

Land acquisition by foreigners

Immigration in a nutshell - Volume 1

Our blog series provides practical knowledge from the field of business immigration.

Acquiring real estate in Switzerland can be difficult for non-Swiss citizens due to the Federal Act of 16 December 1982 on the Acquisition of Real Estate by non-Swiss citizens (Classified Compilation, 211.412.41),  dubbed "Lex Koller" after its initiator. Its purpose is to prevent the foreignization of Swiss territory by preventing foreigners from acquiring residential property purely as a financial investment, thereby driving up the prices of housing, which is already in short supply.

Which purchasers are subject to the Authorisation Act? 

Both natural persons and legal entities may be subject to the Lex Koller. Exempt from the authorisation requirement are Swiss citizens; EU/EFTA citizens with a B/C residence permit who have made their life in Switzerland; non-EU/EFTA citizens with a C residence permit who have made their life in Switzerland; as well as legal entities based in Switzerland that are controlled by persons based in Switzerland. All other buyers are subject to the Lex Koller.

An important exception that should be specifically highlighted is the purchase of a principal domicile. A non-EU/EFTA citizen based in Switzerland (usually with a B residence permit) may purchase a flat (single-family house or condominium) at the place of their actual domicile without any permit. The buyer must occupy the residence themself; subletting, even partially, is prohibited. The area of the property may be so large that apart of it could be qualified as a mere capital investment. The land register office usually refers the buyer to the authorisation authority if the area of the property exceeds 3,000 m2. 

Which legal transactions require authorisation?

The acquisition of residential real estate is subject to authorization. This includes the acquisition of single-family and multi-family houses, condominiums and plots of land for such buildings. Undeveloped land becomes subject to authorisation if the construction of an exempted building is not commenced within one year. Conversely, this means that all buildings with permanent commercial use can be freely acquired by foreigners.

Not only is the transfer of real estate in the land register subject to authorisation, but also any legal transaction that gives a foreigner actual power of disposal over real estate which is subject to authorisation. Decisive is an economic point of view. 

Only recently, the Lex Koller once again caused discussion in both chambers of the Swiss Parliament. The extension of the Lex Koller to cover the acquisition of permanent business premises was discussed. This was intended to counter the danger of domestic land being sold to foreign investors as a result of the Corona pandemic. It was only at the stage of the procedure for the revision of differences that the National Council supported the Council of States  and finally refrained from extending the Lex Koller. 

Who is responsible for issuing the permit?

The cantonal authority in whose area of jurisdiction the property, or the largest part of the property in terms of value, is located is responsible for determining whether a permit is required as well as its issue. In the canton of Zurich, this is the district council.

If you have any questions regarding the Lex Koller, our immigration team will be happy to help.

Categories: Immigration

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