International families in Switzerland: lump-sum taxation and multi-jurisdiction coordination

Switzerland allows foreign nationals who settle there for the first time — or after an absence of at least ten years — and who do not carry on any gainful activity in Switzerland to be taxed on their expenditure, a regime commonly known as lump-sum taxation. It is set out in art. 14 of the Federal Act on Direct Federal Taxation (DBG/LIFD), in the version in force since 1 January 2016, and in art. 6 of the Tax Harmonisation Act (StHG/LHID) for cantonal taxes, which each canton is free to offer or not.

What is expenditure-based taxation?

Instead of ordinary income tax, tax is calculated on the annual expenditure of the taxpayer and their dependants, incurred in Switzerland and abroad to maintain their standard of living. The ordinary tax scale is then applied to this base (art. 14 para. 4 DBG).

For direct federal tax, the base is at least the highest of the following amounts (art. 14 para. 3 DBG):

• a minimum base of CHF 435,000 per year for 2026 (CHF 434,700 in 2025, indexed by the FDF) — this is a tax base, not a minimum tax;
• for taxpayers running their own household: seven times the annual rent or rental value of the home;
• for other taxpayers: three times the annual price of board and lodging;
• the result of the control calculation described below.

Cantons set their own minimums for cantonal and communal taxes, as well as how wealth tax is taken into account.

What counts as expenditure: housing, food, clothing, travel, leisure, household staff, children's education, vehicles, and spending on dependent family members.

The control calculation

The base also cannot be lower than the gross total of certain income (art. 14 para. 3 let. d DBG): income from real estate located in Switzerland, from movable property located in Switzerland and from capital invested in Switzerland (including mortgage-backed loans), income from copyrights or patents used in Switzerland, Swiss-source pensions, and foreign income for which the taxpayer claims relief under a double taxation agreement. At cantonal level, the control calculation also includes the corresponding wealth items (art. 6 StHG).

Eligibility conditions

To qualify for expenditure-based taxation, the following conditions must be met (art. 14 paras. 1 and 2 DBG):

1. Not holding Swiss nationality — Swiss dual nationals are excluded.
2. Becoming subject to unlimited tax liability in Switzerland for the first time, or after an absence of at least ten years.
3. Not carrying on any gainful activity in Switzerland — neither employed nor self-employed. Receiving income from one's own assets (dividends, interest) is not a gainful activity.
4. Spouses living in the same household must both meet these conditions.

The cantons

Not every canton offers the regime for cantonal and communal taxes. Zurich, Schaffhausen, Appenzell Ausserrhoden and Basel-Stadt have abolished it; Basel-Landschaft now grants it only for the year of arrival. Thurgau, St. Gallen, Lucerne and Bern kept it but tightened the rules. Cantons that apply it include Geneva, Vaud, Valais, Ticino and Graubünden.

Cantonal conditions vary: expenditure minimums, treatment of wealth tax, application procedure. A cantonal comparison is essential before any decision on domicile.

Multi-jurisdiction coordination: the central challenge

For an international family, lump-sum taxation is only the first piece of a complex puzzle. The coordination challenges include:

Double taxation agreements (DTAs): Switzerland has concluded more than 100 DTAs. A lump-sum taxpayer can claim their benefits (for example, a reduced foreign withholding tax), but the income concerned then enters the control calculation. With seven states — Austria, Belgium, Canada, Germany, Italy, Norway and the USA — treaty benefits require a so-called modified lump sum: all income from that state is taxed in Switzerland as under ordinary taxation (art. 14 para. 5 DBG). Each DTA therefore needs to be analysed individually.

Withholding taxes in countries of origin: foreign-source income may be subject to withholding taxes in its country of origin. Recovering these depends on the applicable DTA.

Residual reporting obligations: some countries maintain a reporting obligation for their former residents for several years after departure. Close monitoring is necessary.

The dispersed family: when family members live in several countries, each individual situation creates distinct tax obligations. Coordinating between national tax regimes is a highly technical exercise.

The role of the coordinating family office

In this context, the family office is not a tax adviser — that role belongs to licensed specialists in each jurisdiction. It is the conductor who:

• Maintains an up-to-date map of the family's tax obligations in each jurisdiction
• Coordinates local tax advisers and ensures consistency in the positions taken
• Integrates tax impacts into consolidated wealth reporting
• Anticipates legislative changes likely to affect the regime

The successful relocation of an international family is the result of thorough preparation, a well-founded choice of domicile and continuous coordination. To discuss your situation in full confidence, Ridger invites you to get in touch.

References

• Fedlex – DBG art. 14 (expenditure-based taxation)
• Fedlex – StHG art. 6
• FDF – Lump-sum taxation
• SIF – Double taxation agreements