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Key Takeaways
- Foreign investors may only acquire residential property in Switzerland with a special permit – the legal basis is the Federal Act on the Acquisition of Real Estate by Persons Abroad (Lex Koller).
- Commercial real estate is exempt from Lex Koller and can generally be acquired freely by foreign investors.
- A foreign-domiciled company is automatically classed as a “person abroad” – regardless of who controls it; even Swiss-domiciled companies can count as foreign-controlled.
- Lex Koller is under a concrete reform process: on 15 April 2026, the Federal Council opened a consultation that would, among other things, restrict pure investment acquisitions of commercial real estate by persons abroad.
- Distributions from a Swiss corporation are subject to 35% federal withholding tax, reclaimable in whole or in part depending on the applicable double taxation treaty – a decisive factor when choosing a holding structure.
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What is Lex Koller and who does it affect?
Lex Koller restricts the acquisition of non-commercial real estate by persons abroad – this covers residential property, undeveloped land not earmarked for commercial use, properties used by public authorities, and permanently vacant buildings. In practice, foreign private individuals are therefore largely excluded from acquiring residential property. One notable exception: vacation homes in authorised tourist municipalities, subject to cantonal quotas.
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Who legally counts as a “person abroad”?
The definition is broader than many expect: a legal entity with its registered seat outside Switzerland is automatically deemed foreign, regardless of who actually controls it. Even a Swiss-domiciled company can be treated as foreign-controlled – this is assessed on an economic basis, tracing the ownership and financing chain. EU/EFTA nationals are treated as Swiss if they are both legally and actually resident in Switzerland; nationals of other countries need a Swiss C settlement permit for this treatment.
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Which properties can foreign investors acquire without a permit?
Commercial real estate – property permanently used for commercial activity – falls outside Lex Koller’s restrictions and can generally be acquired freely by foreign investors under standard transactional rules. For mixed-use property, no permit is required only where the residential portion is clearly subordinate (for example, a caretaker’s apartment within an office building) or where zoning rules limit the residential share to a maximum of 50%.
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What is changing with the current Lex Koller reform?
On 15 April 2026, the Federal Council opened a consultation on tightening Lex Koller; it closed on 15 July 2026. The draft does not concern only principal residences and vacation homes. Persons abroad would remain able to acquire commercial property without a permit for their own business, but pure investment acquisitions for letting or leasing would generally no longer be permitted. Stricter rules are also proposed for holdings in listed residential-property companies, real-estate funds and real-estate SICAVs. As at 31 August 2026, this remains a legislative proposal rather than applicable law. Investors should therefore structure transactions under current law while expressly accounting for reform risk.
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Which holding structure suits an acquisition of Swiss real estate?
Swiss real estate is typically held either directly through a foreign entity, or through a Swiss limited-liability vehicle – usually an Aktiengesellschaft (AG/SA) or a Gesellschaft mit beschränkter Haftung (GmbH/Sàrl). Direct holding through a foreign entity can be tax-efficient, since distributions outside Switzerland do not trigger Swiss withholding tax. A Swiss vehicle, however, often simplifies the transaction process: Swiss banks, notaries and counterparties generally prefer dealing with a locally incorporated entity, and registration, financing and ongoing management tend to run more smoothly. For US investors, it is also worth noting that a Swiss GmbH can often be treated as a transparent (pass-through) entity for US federal tax purposes if elected accordingly.
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What tax aspects are decisive when choosing a structure?
Switzerland imposes no exchange controls – capital can generally move in and out freely. Two points, however, deserve particular attention: first, Swiss financial institutions apply rigorous source-of-funds due diligence under Swiss anti-money laundering law, which should be planned for from the outset in complex international structures. Second, distributions and liquidation proceeds from a Swiss corporation are subject to 35% withholding tax, reclaimable in whole or in part depending on the applicable double taxation treaty. This burden should be modelled before the holding vehicle is chosen.
Source-of-funds review and ownership transparency connect real-estate investment with the new AMLA duties for advisers and the Swiss Transparency Register.
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What does the acquisition process look like, and what costs should be expected?
The purchase agreement must be notarised in the canton where the property is located and has no binding legal effect before that point – meaning pre-contractual reservation agreements are only enforceable to a limited extent. In commercial transactions, signing and closing frequently occur on the same day, with the purchase price routed through the notary’s escrow account or a Swiss bank payment undertaking. Conveyancing costs – notary fees, land register fees and, in some cantons, transfer taxes – typically reach around 3.5% of the purchase price, with the split between buyer and seller varying by canton. Statutory warranties are routinely excluded in sale contracts; instead, the parties agree on a targeted set of representations covering liens, pending litigation, environmental matters, and lease accuracy.
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How does financing through the mortgage note work?
Swiss real estate financing centres on the mortgage note (Schuldbrief), registered in the Land Register either as a paper note or, increasingly, as a register mortgage note. The mortgage note embodies both the secured claim and the lien, is transferable, and can be reused as collateral on refinancing – avoiding the significant cantonal fees triggered by issuing a new note. Foreign lenders may generally lend into Switzerland without a Swiss licence, provided they have no Swiss infrastructure or personnel. On the tax side: interest paid by a Swiss borrower on a loan secured by Swiss real estate is subject to withholding tax of roughly 13%–33%, depending on the structure.
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Frequently Asked Questions
Can I buy a vacation home in Switzerland as a foreign private individual? Yes, but only in authorised tourist municipalities and subject to cantonal quotas. Outside this framework, acquiring residential property as a foreign private individual generally requires a permit and is heavily restricted in practice.
Does a Swiss-incorporated company automatically count as “domestic”? Not necessarily. What matters is an economic assessment: if the company is actually controlled from abroad through the ownership and financing chain, it can be treated as a person abroad despite its Swiss seat.
Is it better to acquire through a foreign holding company or a Swiss vehicle? It depends on the individual case. A foreign holding company can avoid the 35% withholding tax on distributions, while a Swiss vehicle often simplifies dealings with banks and notaries. Modelling both options before choosing a structure is advisable.
How significant could the announced Lex Koller reform turn out to be? That remains open. Both the parliamentary motion and the Federal Council’s package of measures are still going through the political process, and no concrete entry into force has been set. Investors with second homes or heavily foreign-financed structures should follow developments closely.
What should be clarified before signing a reservation agreement? The Lex Koller classification of the target property, the appropriate holding structure, a rough tax calculation, and readiness to go through the financing bank’s due diligence process early on.
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