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VerschiedenesLump-Sum Taxation: Interim Solution Expiration 2020

November 26, 2020

New Regime

On January 1, 2016, the new legal provisions concerning lump-sum taxation came into force in the Confederation and the Cantons providing for this sort of flat tax agreements (Art. 14 DBG and Art. 14/15 StG).

For those who were already taxed on the basis of lump-sum taxation on 1 January, 2016, the former law continued to apply for a transitional period of five years, i.e. until 31 December 2020 (Art. 205d DBG and Art. 187e StG). The transitional period will now expire at the end of this year

From 1 January 2021 onwards, the new provisions will apply to all persons who are taxed on the basis of expenditure (lump sum taxation) in particular to those residents who were already taxed on the basis of their worldwide expenditures before 2016. The conditions to be fulfilled, the basis of assessment, the declaration obligation and the control calculation are affected.

It has to be noted, however, that the lump-sum taxation is still available and has the advantage of being taxed based on the worldwide income and wealth/assets but only on the expenditures of the taxpayers (living cost).


What are the conditions?

The conditions for lump-sum taxation are as follows:

  • no Swiss citizenship,
  • no unlimited tax liability in Switzerland in the last 10 years,
  • no gainful employment in Switzerland
  • and must now be fulfilled by both spouses. Thus, a lump sum taxation is excluded if one spouse has Swiss citizenship.

The basis of assessment for lump-sum taxation is the worldwide cost of living of the taxpayer and the persons maintained by him or her.


The minimum taxable (fictitious) income

Basically, the taxes are computed on the fictious income generated / needed to fund the living cost declared. However, if these living cost tax calculations are lower than

  • Income of Fr. 400’000 or
  • Seven times the imputed rental value or rent of the property at the place of residence or
  • Three times the value of the annual pension price or
  • Gross income according to control calculation from Swiss source

the minimum taxable income is equal to the highest of the above amounts, irrespective of the declaration of the living cost by the table hereunder.

In other words, if the cost of living (worldwide) is CHF 350’000 p.a. the income will be that of the minimum amount of CHF 400’000 as stated above (if the other factors, rental value x 7 or the annual pension price x 3 or gross income from Swiss sources do not apply).


What about wealth taxes?

The taxable assets are 20 times the amount determined for income tax purposes unless the actual Swiss source assets are higher.


New declaration procedure

From the 2021 tax period onwards, a tax declaration in which the so-called control account is prepared must also be filled out annually for those subject to lump-sum taxation. The values that are taxable in Switzerland must thus be declared annually. The lump-sum taxpayers receive the special tax declaration in January and must submit it – like all other taxpayers – by the end of March.

The cost of living will be levied periodically and will be set out in an agreement as before. If the circumstances do not change fundamentally, the cost of living can be levied every three years, otherwise in a shorter time frame. The cost-of-living survey can be submitted on the enclosed form.

A change from lump sum taxation to ordinary taxation can be made annually. It must be declared in writing by the end of March of the tax year following the tax period at the latest. A change back to lump-sum taxation is not possible subsequently.

Further details can also be found in the Kreisschreiben Nr. 44 of the Swiss Federal Tax Administration dated 24 July 2018.

If a taxpayer remains subject to lump-sum taxation, he or she is asked to turn in a calculation of the cost of living using the enclosed form. Once the cost of living has been checked and all conditions are met, a new agreement for the years 2021 to 2022 will be issued. Please also note the 7-fold imputed rental value.

If you have any questions, please contact Dr. Michael W. Kneller, +41 44 296 59 90 or + 41 81 422 59 59.


Cost of living for lump-sum taxpayers

The worldwide cost of living of the taxable person(s) and the persons maintained by him/her must be recorded in CHF.



Imputed rental value or rent


Heating, cleaning, garden maintenance etc.


Food and clothing


Cash- and renumeration wages to employees


Alimony payments




Entertainment and pleasure






Travel, vacation and short-term stays


Keeping of pets (riding horses etc.)


Maintenance of vehicles, airplanes, yachts etc.


Maintenance and operation of real estate


Costs of asset management / family office


Security costs