Much of the public debate has focused on the abolition of the so-called “marriage penalty” and the broader political objective of introducing a tax system that is neutral with respect to civil status. However, for internationally mobile individuals, another question is of equal importance: what impact will the shift to individual taxation have on Switzerland’s lump-sum taxation regime?

The answer is potentially significant. The reform directly affects one of the key structural features of the current regime: under existing law, spouses living together must both satisfy the conditions for lump-sum taxation. The removal of this rule is expected to create new planning opportunities and greater flexibility for mobile individuals and their families.

Background: the move to individual taxation

Under the current Swiss tax system, married couples are generally taxed jointly, whereas unmarried couples are taxed separately. This distinction has long been criticised, as joint taxation may lead, due to progressive tax rates, to a higher overall tax burden for dual-income married couples than for unmarried couples in comparable economic situations.

The reform approved in March 2026 aims to eliminate this disparity by introducing a system in which every individual is taxed separately, irrespective of marital status.

The reform is not limited to direct federal tax. It is intended to apply across all levels of taxation - federal, cantonal and communal – which implies significant legislative adjustments at the cantonal level. The final practical impact of the reform will therefore depend to a large extent on cantonal implementation.  

Swiss lump-sum taxation: current framework

Swiss lump-sum taxation (forfait fiscal / Pauschalbesteuerung) is a special method of assessing income and wealth tax for certain foreign nationals who take up residence in Switzerland. The regime is available only to individuals who do not hold Swiss citizenship, become Swiss tax resident for the first time (or after an absence of at least ten years), and do not engage in gainful activity in Switzerland. It is therefore primarily aimed at internationally mobile individuals relocating for private purposes, rather than for employment or business activities in Switzerland.

Under this regime, taxation is based not on actual worldwide income and wealth, but on the taxpayer’s annual worldwide living expenses, subject to minimum thresholds at federal and cantonal levels and additional safeguards.

For direct federal tax, the minimum tax assessment base currently amounts (as of 2026) to CHF 435’000. In addition, several comparative calculations apply, including seven times the annual rental value (or actual rent), three times the pension or boarding costs (where applicable), and a control calculation based on certain Swiss-source income and foreign-source income for which treaty benefits are claimed. At cantonal level, both the minimum tax assessment thresholds and practical application vary significantly, making the canton of residence a key planning factor.  

A crucial feature of the current regime is found in Art. 14 para. 2 of the Federal Act on Direct Federal Tax: if spouses live together, both must satisfy the conditions for lump-sum taxation. In practice, this results in an “all-or-nothing” approach: if one spouse takes up gainful activity in Switzerland, or acquires Swiss citizenship, the couple generally cannot remain under the lump-sum regime and becomes subject to ordinary taxation.

Key impact of individual taxation

The introduction of individual taxation fundamentally alters this framework.

The approved reform expressly provides for the repeal of Art. 14 para. 2 of the Federal Act on Direct Federal Tax, thereby removing the requirement that both spouses must qualify simultaneously for lump-sum taxation.

Emergence of “mixed-status” couples

Under the new system, eligibility for lump-sum taxation will, in principle, be assessed individually. This opens the door to new structuring possibilities, where one spouse benefits from lump-sum taxation while the other is subject to ordinary taxation. This represents a significant departure from current law and introduces a level of flexibility that is particularly relevant for internationally mobile households.

Such structures may be attractive where one spouse remains economically inactive in Switzerland and meets the conditions for the lump-sum taxation regime, while the other spouse carries out professional or entrepreneurial activities. This could include, for example, employment or consulting activities, board memberships, or active investment management.

In this context, “mixed-status” couples will require particularly careful planning. Specific attention should be given to wealth and succession planning, especially in the event of the death of the spouse benefiting from lump-sum taxation. While transfers between spouses are generally exempt from inheritance and gift taxes, the transfer of assets to a surviving spouse subject to ordinary taxation may result in a significant increase in the effective tax burden. In particular, foreign-source income and assets that were not taken into account under the lump-sum taxation regime will become fully subject to ordinary income and wealth taxation at federal, cantonal and communal levels. This effect can be especially pronounced where the deceased spouse held substantial foreign investment portfolios, private equity participations or other income-generating structures. These scenarios underline the importance of anticipating asset allocation, ownership structuring and succession arrangements at an early stage.

Increased importance of asset and income allocation

With the individual taxation, the civil-law allocation of income and assets will become more critical. Questions such as which spouse owns a given portfolio, who receives dividends or interest, who is contractually entitled to income streams, and how liabilities are structured, may directly influence the tax outcome, especially in the context of the control calculation.

This will require more careful planning and documentation, especially for high-net-worth families with complex structures.

Potential increase in minimum tax assessment base

Where both spouses remain under the lump-sum taxation regime, the shift to individual taxation may lead to a higher aggregate tax burden.

This is because the applicable minimum tax assessment thresholds (e.g., CHF 435’000 at federal level) are likely to apply per individual, rather than once per couple. As a result, the overall tax assessment base may increase, reducing the relative attractiveness of the regime in some cases.

However, the exact extent of this effect will depend on how the implementing legislation is drafted at both federal and cantonal levels.  

Conclusion

The introduction of individual taxation marks a major shift in Swiss tax law. While much of the public discussion has focused on the elimination of the marriage penalty, its interaction with specific regimes, such as lump-sum taxation, may prove equally consequential.

Based on the legislative framework approved, lump-sum taxation is expected to transition from a joint “all-or-nothing” system to a more flexible, individualised regime.  This development may open new structuring opportunities for internationally mobile individuals, particularly in relation to family governance, asset ownership and professional activity.

At the same time, the reform introduces additional complexity, notably with respect to asset and income allocation and the potential duplication of minimum tax assessment thresholds.

Ultimately, the continued attractiveness of the lump-sum regime will depend on individual circumstances and on the way in which the reform is implemented at cantonal level. Careful planning will therefore be essential in order to fully assess and optimise the opportunities created by this significant legislative change.

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