International Mobility

This seminar examines the tax and residency law aspects of the international relocation of high-net-worth individuals to Switzerland. The focus is on the requirements for the relocation of EU/EFTA and third-country nationals, taxation based on actual expenses, and the implications of changes in residential property and individual tax laws. In addition, the tax implications of various asset structures—such as holding companies, family foundations, and trusts—are analyzed prior to relocation using practical case studies.

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Case 1: Settlement—EU/EFTA Citizen or Third-Country National?

1.1 Facts of the Case

Mukhtar Hassan would like to establish his residence in Switzerland at the end of 2026. He was born on August 1, 1990, in London (UK). He is a Saudi Arabian national and a Muslim. He has also held a Maltese passport for several years. Mr. Hassan is single and has no children. He currently lives in Saudi Arabia but also spends a lot of time in the U.S., France, and the U.K.

Mr. Hassan has family ties to Switzerland. His grandfather lived in Zurich for several years and later spent his vacations regularly in St. Moritz. Even as a child, Mr. Hassan traveled repeatedly to the canton of Graubünden with his father. He has also vacationed in other regions of Switzerland, such as Zermatt. In Switzerland, he enjoys skiing and hiking. He has friends in the Upper Engadine. He intends to take up residence in St. Moritz.

Mr. Hassan is financially independent. His assets consist mainly of financial investments such as hedge funds, stocks, and private equity, as well as real estate abroad. He also owns various works of art. He regularly receives gifts from his father in Saudi Arabia and from his mother in the United Kingdom.

Mr. Hassan leads a secluded life and is not active on social media. He travels frequently to pursue his hobbies: skiing, fishing, horseback riding, and flying. He has no plans for extended stays abroad. Despite his travels, he intends to return regularly to Switzerland, where he plans to make his primary residence.

1.2 Questions

How will Mr. Hassan’s residency status be established? Does it matter that he holds a Maltese passport in addition to his Saudi Arabian passport?
How will Mr. Hassan’s income and assets be taxed in Switzerland?
Does the Maltese passport affect his tax liability?
Variation: Mr. Hassan is 55 years old and has close ties to Switzerland. He holds only Saudi Arabian citizenship. To what extent does this change the assessment under residence and tax law?

Case 2: Taxation Based on Income in the Canton of Graubünden

2.1 Facts

Ferran Lopez (born in 1966), his wife Claudia (born in 1972), and their son Juan (born in 2010) are Spanish citizens and live in Barcelona. They plan to take up residence in St. Moritz in mid-2027, where Ferran Lopez has owned a condominium for years. Neither Ferran Lopez nor his wife Claudia will be engaged in gainful employment in Switzerland. Juan will attend the Lyceum Alpinum in Zuoz. Afterward, he will study mathematics at ETH Zurich.

Ferran Lopez is interested in the lump-sum taxation system in the canton of Graubünden. His net worth amounts to approximately CHF 100 million. In addition to foreign assets, Ferran Lopez owns the following Swiss assets:

An apartment in St. Moritz with a tax value of CHF 4 million,
an account at UBS AG in Zurich with CHF 500,000,
a portfolio with UBS AG containing domestic securities worth CHF 3.5 million, and
a 5% stake in FLCM AG, headquartered in Zug, held as part of his personal assets, with a market value of CHF 4 million.

Ferran Lopez expects the account and the securities portfolio at UBS AG to generate income of CHF 200,000 in the calendar year 2026, after deducting allowable administrative expenses. Furthermore, he anticipates a dividend from FLCM AG of CHF 400,000. The imputed rental value of the apartment in St. Moritz is CHF 80,000 (or CHF 64,000 after deducting the flat-rate deduction for property maintenance of 20%). For the purposes of assessing this case, corresponding income from Swiss sources is assumed for the calendar year 2027.

At the request of his tax advisor, Ferran Lopez fills out the following table of living expenses:

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2.2 Questions

Do the Lopezes meet the requirements for taxation based on actual expenses in the canton of Graubünden?
What is the tax base for federal, cantonal, and municipal income tax purposes?
Variant: What is the tax base for federal, cantonal, and municipal income tax purposes if Ferran Lopez holds a 10% stake in FLCM AG?
What is the taxable base for cantonal and municipal wealth tax?
Is Ferran Lopez entitled to a refund of the withholding tax on securities income?
How will his son Juan be taxed once he reaches the age of majority?
At age 25, Juan switches to regular taxation because he does not have substantial assets and works part-time (20%) as an assistant at ETH. On the side, he is writing his dissertation, primarily at his apartment in St. Moritz. On his 30th birthday, his father will transfer a substantial portion of his assets to him. May Juan switch to taxation based on actual income at that time?
For the purposes of this question, the following assumptions are made: In 2030, after completing his studies at ETH, Juan (born in 2005) will be taxed on a self-employed, expense-based basis. He assists his father in managing the family’s assets. Juan would like to marry his Italian girlfriend, Sonia, who has lived in Zurich for the past three years and worked at Google in Zurich. Sonia plans to move to St. Moritz after the wedding and stop working. Can Juan and Sonia be taxed on a time-based basis as a married couple? If joint taxation on a time-based basis is not possible, can Juan be taxed on a time-based basis while his wife Sonia remains subject to ordinary taxation?

Case 3: Taxation Based on Expenses Following the Change in the Home Ownership Tax System

3.1 Facts

The year is 2029. The Lopez couple has had their tax residence in St. Moritz since 2027 and is taxed on an actual-expense basis. The Lopez couple’s financial circumstances have not changed from those in Case 2, except for a second home in Arosa that Ferran Lopez purchased in early 2029 and which is used by his son and brother as a vacation home free of charge. The assessed value is CHF 3.5 million; the rental value, according to the official appraisal, is CHF 65,000.

3.2 Questions

Will the change in the system for taxing home ownership—specifically, the abolition of the imputed rental value tax—alter the taxation based on actual expenses for the Lopez couple in any way?
What new tax can Ferran Lopez expect to pay in the Canton of Graubünden following the change in the system for the taxation of home ownership, specifically as of January 1, 2029?

Case 4: Taxation Based on Expenses Following the Introduction of Individual Taxation

4.1 Facts

The year is 2031. The Lopez couple has had their tax residence in St. Moritz since 2027. They are taxed on an income basis.

Ferran Lopez was already very wealthy at the time of their marriage. His wife, Claudia, did not bring any significant assets into the marriage.

4.2 Questions

Will the introduction of individual taxation change anything regarding the Lopez couple’s taxation based on income?
What options regarding the type of taxation are available to the Lopez couple?
Ferran Lopez wishes to continue being taxed on a cost basis after the introduction of individual taxation. His wife is to be subject to ordinary taxation, as she has no significant assets or income. The tax advisor submits Ferran Lopez’s worldwide cost of living, amounting to CHF 580,000, to the tax administration of the Canton of Graubünden. To enable his wife, Claudia, to cover her annual living expenses of approximately CHF 200,000, Ferran Lopez will transfer CHF 250,000 annually to her account at UBS AG as a gift. Ferran Lopez has learned that gifts between spouses are tax-free in the canton of Graubünden. Will the tax authorities of the canton of Graubünden accept Ferran Lopez’s living expenses in the amount of CHF 580,000?

Case 5: Asset Structuring Before Relocation

5.1 Facts

Peter Müller (born in 1968) is a Portuguese citizen. He has been living in Monaco for several years. He is divorced and has two adult children who live in London. Mr. Müller would like to move to Zurich as a person living off his private income in early 2027. He will not be employed in Switzerland.

Mr. Müller has previously worked as a real estate entrepreneur. He holds the properties in his private assets. He intends to sell them before moving. The proceeds from the sale, amounting to approximately CHF 80 million, are to be managed by an external asset manager. The plan is to create a portfolio consisting of stocks, bonds, and mutual fund shares.

Mr. Müller would like to secure his assets for his family in the long term. At the same time, he does not wish to relinquish control over them for the time being. During the discussion, his advisor mentions a personal holding company, a Liechtenstein family foundation, and a trust.

5.2 Questions

Option 1: Mr. Müller transfers the portfolio to a newly established holding company. What are the tax implications of this? What changes if the company is domiciled in the British Virgin Islands (BVI)?
Option 2: Before moving, Mr. Müller establishes a Liechtenstein family foundation. The beneficiaries are he and his children. He reserves the right to revoke the trust. How is the foundation treated for tax purposes in Switzerland?
Scenario 3: Before moving, Mr. Müller establishes an irrevocable discretionary trust under the laws of Guernsey. The beneficiaries are his two children. In the trust deed, Mr. Müller reserves the right to remove the trustee and appoint another. How is the trust treated for tax purposes in Switzerland?