Switzerland: Overview

RENTAL YIELDS

Last Updated: Aug 18, 2009

Stable rental yields

In Switzerland, there is a surprisingly large difference in yields between Geneva and Zurich. Average yields for Geneva city apartments are poor, at 4.03%. However in Zurich, Switzerland’s biggest city and the financial capital, apartments return much higher yields, with an average yield of 7.65%. The best yields are on small apartments in Zurich, which produce excellent investment returns, with yields of 8.93%.

Read Rental Yields  »

TAXES AND COSTS

Last Updated: Nov 22, 2008

Swiss rental income tax is very high

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	48.6%	53.2%	54.5%
Click here to see a worked example
Source: Disclaimer

Rental Income: Income is taxed at the federal, cantonal and municipal levels. The total tax liability could easily exceed 50%. Federal tax rates range from 0% to 11.5%.

Capital Gains: Capital gains are tax-free at the federal level (unless the gains are from the sale of business property). All cantons, however, levy their own taxes on gains from the disposal of immovable property located in the canton.

Inheritance: Inheritance tax is levied at the cantonal level, on the net assets transferred to the beneficiaries.

Residents: Residents are liable to pay federal, cantonal and municipal income taxes on their worldwide income.

Read Taxes and Costs  »

BUYING GUIDE

Last Updated: Mar 23, 2007

Total transaction costs are low in Switzerland

Closing costs are relatively low in Switzerland. Roundtrip transaction costs, i.e., the total cost of buying and selling a property, range from 3.5% to 9%. The estate agent’s fee comprises a large chunk of the cost at roughly 3% - 5% (plus 7.6% VAT), usually paid by the seller.

The buyer pays the Real Estate Transfer Tax which ranges from 0.2% to 3.3%, depending upon the canton. Since January 2005, Transfer Tax has been abolished in Zurich.

Read Buying Guide  »

LANDLORD AND TENANT

Last Updated: May 25, 2006

Swiss law is pro-tenant

Around 61% of all households are renters; so it is not surprising that the law in Switzerland is pro-tenant.

Rents: he initial rent can be freely agreed between the landlord and tenant. However, within 30 days the tenant can appeal against the rent as abusive.

Tenant Security: Tenancies tend to revert to indefinite duration tenancies. This is not necessarily a disaster for the landlord, because three months termination notice can be given by either side.

But the court may give the tenant an extension of up to four years, in cases where and eviction would cause hardship.

Read Landlord and Tenant  »

ECONOMIC GROWTH

Last Updated: May 26, 2009

Recession, deflation

Land-locked at the heart of central Europe with a population of 7.6 million, Switzerland is a small, majestic, scenic country with one of the richest economies in the world (GDP/capita US$56,711).

Despite being surrounded by the founding members of the European Economic Community (now the EU), Swiss voters have repeatedly rejected the idea of EU membership.

Economic growth was relatively strong from 2004 to 2007, with average annual GDP growth of 2.9%. However with the global financial crisis, economic growth slowed down to 1.6% in 2008.

Switzerland officially entered recession in Q1 2009 with the economy expected to contract by as much as 3.9% in 2009 and 0.5% in 2010, the worst recession in over two decades. The country was last in recession in 2003 with a minor contraction of 0.2%.

Although unemployment rate is less than half the EU average, the situation is deteriorating, rising from 2.49% in 2007 to 2.6% in 2008 and 3.4% in February 2009. Unemployment is expected to rise to more 4.5% in 2010.

Inflation shot up to 2.4% in 2008 due to high global food and fuel prices. It is higher than the average inflation of 0.89% from 1994 to 2007. However, with consumer demand weakening with the economy, deflation of 0.6% and 0.3% are expected in 2009 and 2010, respectively.