The Swiss lump-sum taxation regime

What is the Swiss lump-sum taxation regime?
The Swiss lump-sum taxation regime (also called forfait fiscal or Pauschalbesteuerung) is an instrument for foreign nationals to pay Swiss taxes based on the annual worldwide cost of living rather than on worldwide income and net wealth. It is available in most cantons in Switzerland, except for e.g., Zurich.

The income tax basis is based on the highest amount of (i) the amount derived from the annual worldwide cost of living as agreed by the competent Swiss tax authorities, (ii) seven times the annual rental value or rent paid, (iii) the sum of the annual control calculation (resulting from all Swiss source income and the foreign source income where tax treaty benefits are claimed) and (iv) the minimum taxable income basis (which is CHF 421’700 at federal level and between CHF 200’000 and CHF 900’000 at cantonal level). 

Prerequisites for the Swiss lump-sum taxation regime
To apply for the Swiss lump-sum taxation regime, the following requirements must be met: (i) the taxpayer is not a Swiss citizen, (ii) the taxpayer must take up tax residence in Switzerland for the first time or 10 years after having last emigrated from the country, (iii) the taxpayer does not carry out any gainful activity in Switzerland (being employed or self-employed); and, if married, both spouses must meet the above conditions. In principle, a gainful activity outside Switzerland may be permitted.

What are the benefits of the Swiss lump-sum taxation regime?
The Swiss lump-sum taxation regime is an attractive and cost-effective tax regime for foreigners wishing to establish their tax residence in Switzerland. The Swiss lump-sum taxation requires an advance tax ruling confirmation by the competent Swiss tax authorities, which requires full disclosure of all relevant facts. Although there are specific rules and minimum tax requirements (which may vary from canton to canton), as the tax ruling of the competent Swiss tax authorities generally covers the relevant amounts, one of the advantages of this tax regime is the legal certainty, i.e., the annual tax burden is predictable and there are no surprises. In addition, if the taxpayer’s foreign income is significantly higher than the individual annual cost of living, the Swiss lump-sum taxation regime can produce attractive results.

The Luxembourg SPF

What is a Luxembourg SPF?
The Luxembourg private wealth management company (SPF - société de gestion de patrimoine familial) is a tax-exempt investment vehicle which allows resident and non-resident individuals and families to manage their private financial assets.

The SPF is an unregulated entity, which does not require authorization or supervision by any regulatory authority and is not subject to any risk diversification rules.

Being a passive investment vehicle, its activities must be strictly limited to the acquisition, holding, administration and realization of financial assets (including shares, debt instruments derivatives, cash etc.). An SPF may not be actively involved in the management of its participations and is not allowed to carry out any commercial activities including financing activities.

What are the benefits of the Luxembourg SPF tax regime?
An SPF is exempt from corporate income tax, municipal business tax and net wealth tax.

An SPF is subject to a yearly subscription tax of 0.25% levied on its (i) fully paid-up share capital (ii) increased by the share premium and (iii) the part of the debts exceeding eight times the fully paid-up share capital plus the share premium as existing as of 1 January of each year. The minimum subscription tax amounts to EUR 100 and the maximum amount is capped to EUR 125,000 per year.

Generally, distributions made by an SPF are not subject to withholding tax. Furthermore, non-residents will not be subject to tax on capital gains realized on the sale of shares in an SPF and liquidation proceeds received from an SPF.

Due to its tax-exempt status, an SPF has no access to double tax treaties and European Directives. Accordingly, no tax residency certificates are issued by the Luxembourg tax authorities for an SPF.

Combining a Luxembourg SPF with the Swiss lump-sum taxation

A combination of the Luxembourg SPF regime with the Swiss lump-sum taxation might lead to an efficient structuring option. If properly structured, the SPF would serve as a tax-neutral investment vehicle, and dividend income derived from it should, in principle, not be subject to income tax in Switzerland, given its qualification as foreign source income.


The Swiss lump-sum taxation regime is a unique and advantageous tax regime for wealthy foreigners who wish to enjoy the benefits of living in Switzerland without being subject to the ordinary income and net wealth tax. In combination with the Luxembourg SPF, it can be used as an efficient structuring solution for Brazilian individuals who plan to relocate.


If you have any questions about setting-up a SPF in Luxembourg and combining it with the Swiss lump-sum taxation regime, please do not hesitate to reach out. Please find your contact details below.