How can I get a visa, a residence permit or the citizenship in Andermatt?
Although Switzerland’s ‘Lex Koller’ laws require that foreigners looking to purchase non-commercial property must seek a permit from the canton before doing so, Andermatt Swiss Alps AG (ASA) has received special exemption from those laws. This exemption, given in 2007 and scheduled to last until 2030, allows for unrestricted purchasing of residential property by non-residents directly from ASA. Along with the exemption from the initial purchasing restrictions, ASA is also exempt from all ‘Lex Weber’ laws, which specify that for certain cities and regions, the percentage of homes owned as ‘holiday homes’ cannot rise above 20% of the total number of houses. These exemptions mean that no residence permit or special visa is required to purchase a second home as long as the purchase is directly from ASA.
Outside of properties directly purchased from ASA, the same Swiss laws apply to properties in Andermatt as any other city or canton. Non-residents may then go two routes to receive a permit in order to purchase a house, either the “lump sum taxation” or the “Swiss company formation” programs. The lump sum taxation program is recommended for retirees or foreigners not seeking employment, since “gainful activity” is not allowed for residences abiding in Switzerland under this program. Using the lump sum tax program means that the non-citizen will pay a yearly tax to the canton in order to receive temporary residency. The tax ranges from 250,000 CHF to upwards of 1,000,000 CHF based on both the wealth of the individual and the laws of the canton.
Who takes care of managing property or letting it out?
For individuals who obtain a property outside of the Andermatt Swiss Alps AG (ASA) project, the letting of the property is handled on a case by case basis and the responsibility of maintenance, upkeep, and bookkeeping is determined between the owner of the individual apartment and the owner of the building as a whole. However, it is typical that most holiday homes will come with a service that will rent out the apartment or chalet while the owners are gone.This is the case for properties bought directly from ASA as well. Each property has the ability to be rented out while the owner is not staying there and all responsibilities for renting it out are handled by ASA on behalf of the owner.
What does buying property enable me to do? Can I acquire a residence permit, buy a car, enroll a child in school?
The purchasing of property in Switzerland has different effects on the purchaser depending on the purpose of the property being bought. For the purchase of a holiday or second home, the owner may stay in the house for up to 6 months a year, at a maximum of 90 consecutive days per visit. Some cantons will set a minimum of 3 visitation weeks per year as a requirement to own the home. However this does not count as receiving a “residence permit” in the eyes of the Swiss government.
A residence permit is possible to obtain with the purchase of property in Switzerland. However, strict limits are enforced by each canton as to the amount of permits given each year in an effort by the Swiss government to regulate the extremely sought after Swiss market, making it highly competitive amongst non-residents. EU residents that do manage to receive a residence permit (either C or B) are treated as Swiss citizens and enjoy all the same rights as a native Swiss. This means that purchasing a car, and utilizing the free public school system are available along with the prestigious private and international Swiss schools.
Can I let a property (short-term/long-term)? How much profit will it generate?
Switzerland allows for the renting of holiday homes both for short and long term periods. However, certain cantons require that the owner of the house spend at least three weeks out of every year in Switzerland and may limit renting to eleven months per year. That being said, when renting out a property, the owner can expect a revenue of 3-5% depending on the location of the property, and the specific times that it is being rented out. While this is not particularly high when compared to other countries, it is worth noting that rental yields in Switzerland experience very little change over the past 15 years and it is one of the most consistent markets in Europe. Using a local agency to rent out a property is advised and the usual fee for this service is around 20%.
What will I get for a confirmation of property ownership?
After the process of reserving the property and signing the deed is done, the notary, who acts on behalf of both the vendor and the purchaser, will send the deed of sale to the purchaser once it is completed in full. In most cases both parties will sign a power of attorney in order to negate the need to travel to Switzerland for each signing. Following all the signings, the notary will submit the property to the Swiss registry under the new ownership’s name. The title does not transfer until the signing over of the property is registered in the daily journal.
How long does the transaction arrangement take? How long till I can start to use my property?
For non-residents, the process of notarizing and finalizing the purchase of the property can take up to two or three months depending on the canton, and the overall price of the property. Following the purchasing of the property the deed must be registered by the notary and out into the Swiss database, this process can take up to sixteen days. Following the registration the property may be used by the new owner.
What is the reservation procedure?
The first step in the reservation process is receiving a mortgage that, when coupled with the purchasers savings towards the transaction, will cover the cost of the property. Next, the purchaser must put down an initial payment negotiated by either the notary or the vendor, typically 10%, in order to completely reserve the property and have it taken off the market. However, if the necessary permits required to purchase the property are not approved by the Swiss government, which is a rare occasion, the initial payment is returned and the property will be placed back on the market.
Is it possible to take out a loan under which conditions?
Mortgages are a relatively easy possibility for EU residences looking to purchase a property so long as the property is determined as ‘affordable’ for the purchaser. Affordability is calculated for both apartments and houses in that the monthly costs cannot be more that ⅓ the purchasers monthly income. Apartment affordability is directly calculated as the rent of the apartment along with any communal costs for maintenance (garbage disposal, pool maintenance, etc….) per month. For houses, the bank will take a minimum rate of 5% of the mortgage cost, 1% of the mortgage cost for amortisation, and 1% of the price for maintenance. If the total of those three figures is larger than ⅓ of the purchasers monthly income, the bank will most likely refuse the loan.
Swiss banks offer loans of up to 70% of the property price. EU citizens should find it relatively easy to receive a loan if their budget and documents are in order. However, non-EU residences, especially from the USA, may find greater difficulty in getting a mortgage approved from a Swiss bank. Interest rates vary by each canton but will never be more than 1.6% and currently the rates in Switzerland are the cheapest in Europe.
Can a company buy a property (offshore company ownership)?
This is not allowed in Switzerland, a foreigner must purchase residential property in their own name. However, investment in real estate companies sold on the Stock Exchange is not restricted so long as a majority of the real estate company (majority means 66% in this case) is invested in commercial properties.
What do I need to purchase a property?
Once a price has been agreed upon, a reservation of the property must be signed, this requires both a passport and a visa (if non-resident). Application for a permit to purchase the property must be submitted to the canton in which the property is located and requires a passport, visa (if resident), intentions for the property (holiday home, residence, etc…), and proof of ability to pay (both down payment and mortgage).In order to obtain a mortgage from a bank to finance the purchase, the buyer needs to provide a passport, visa (if resident), license to purchase (if non-resident), proof of income/salary, tax return, document proving no criminal convictions.
Switzerland offers many different kinds of permits to live in the country, and being an EU citizen greatly helps in the efficiency of getting these permits, but it is still a difficult process due to Swiss regulations. A ‘B’ permit, which must be renewed each year and sponsored by a single employer (making changing jobs nearly impossible). A ‘B’ permit must be held for five years before an application for a ‘C’ permit can be submitted. A ‘C’ permit allows recognizes the holder as an unrestricted resident of Switzerland and treats them as such.
How do I pay?
There are a few different options on how to pay in Switzerland, the most common of which is receiving a loan from a Swiss bank. Swiss banks will give out loans on the condition that the property is “affordable for the buyer” (parameters for affordability covered in an earlier question).Another way in which people pay requires for the construction to be incomplete. The buyer will pay for the property by depositing the money in a bank to receive the property and loan, and upon completion of each stage of the construction process, the bank will then pay off the equal portion of money owed per stage.
Which taxes are to be paid?
Taxes for non-residents of Switzerland who own a holiday or second home, are taxed based on rental income at the federal, cantonal, and municipal levels. The level of taxes for all three levels is based on a progressive system derived from the amount of income that the second home generates from rental and other services. Switzerland features some of the highest rental income taxes in all of Europe, making profits smaller than average. However, Switzerland makes up for this tax by featuring very consistent profit margins amongst rental real estate, regardless of the performance of the global market.
Under which conditions are the flats sold? Will it be necessary to do renovations?
All apartments/chalets built by the Andermatt Swiss Alps company come fully complete and fully furnished. Each of the new buildings was designed by one of thirty selected international or Swiss architects. Specific apartments, like the Gotthard Residences, come with full hotel service so there is no worry about the upkeep of the apartment on the owner/renter.Apartments and chalets bought outside of the Andermatt Swiss Alps vary on a case by case basis, but any renovations and repairs that are necessary will be specified by the seller as required by Swiss law.