By Uglobal Staff
The Switzerland Residence Program (SRP) grants foreigners from non-European countries an opportunity to gain residency in a location many consider to be a dream destination.
Switzerland is heralded around the world for its high quality of living, as it offers a place to live with a low crime rate, a secure financial environment and a well-established education system.
There are numerous residence categories in Switzerland, with a distinction made between the European Union and European Free Trade Association Citizens (EU/EFTA citizens) and other foreigners who do not reside in Europe.
EU/EFTA citizens have benefitted due to the Free Movement of Persons Agreement between Switzerland and the EU. This agreement makes it easier for EU/EFTA citizens to obtain residence in Switzerland. The key requirement is employment in Switzerland or being a person of independent financial means, according to Uwe Zirbes, board member of Global Citizens Investments.
Non-EU/EFTA citizens may also receive a residence permit based on gainful employment. This may be subject to a strict quota regime. To obtain a residence permit through SRP, applicants must be 18 years of age. If the applicants will reside in Switzerland with their immediate family, they can be included on the same application and there is no age requirement.
"Switzerland is a very expensive country and only suited for ultra-high net worth clients,” said Zirbes. “A minimum $1 million, before applying for Swiss residence program is required, business or lump sum."
Applicants must pay a certain amount of taxes per year. Applicants must also pay a fixed one-time application fee for residence and the negotiation of a favorable lump-sum tax arrangement on their behalf.
"The applicant must undertake to pay a certain amount in net taxes per year," said Peter Krummenacher, partner at Henley & Partners Switzerland. "The annual lump-sum tax amount primarily depends on various factors, such as the applicant’s standard of living in Switzerland, and which canton and municipality they choose to reside in. The actual tax liability is decided on a case-by-case basis and may range from $250,000 Swiss franc to over $1 million francs per year."
SRP applicants should expect a two- to six-month waiting period for their application to be processed. The waiting period may vary depending on the canton and individual circumstances. The application to obtain Swiss citizenship may not be offered for a longer period. In most instances, one must spend a minimum of 12 years in Switzerland to have a chance to become a full citizen. However, the amount of time spent between the age of 10 and 20 years of age will count as double. For instance, if one resides in Switzerland from the age of 13 to the age of 19, he or she will then be able to apply for full citizenship.
"It is very difficult to acquire Swiss citizenship for foreigners and there is no guarantee of Swiss citizenship to foreigners, even after having spent 12 years of residence in Switzerland," said Zirbes.
The wait is worth it to live in a country that grants the benefits offered in Switzerland, many investors say. SRP applicants, who are granted residency receive the benefit of living in a safe and secure nation with a stable and enticing taxation system. Switzerland also have a great banking and business infrastructure, as well as world-renowned schools and an education system that ranks amongst the top in the world. As a multilingual nation, Switzerland’s national languages consists of German, French and Italian. English is also prominently spoken. As a resident of Switzerland, people can also enjoy visa-free travel to Europe's Schengen area, according to Krummenacher.
Applicants aren't the only beneficiaries of SRP. The program presents an opportunity for both parties to reap benefits. SRP provides a solution that meets the economic needs of the country while helping the growing movement of global citizens.
"In the case of high net worth individuals taking up residence in Switzerland, the country benefits from increased tax revenues," said Krummenacher. "Perhaps more importantly, by attracting wealthy individuals with proven business success and valuable networks, the Swiss economy profits on the overall private consumption and private investments of these people in the country."
There has yet to be data that depicts a spike or regression observing specific trends or challenges. Though SRP may be more expensive than neighboring immigrant investor programs, it remains a popular option for those in love with the land, lakes and Alps that are prevalent across Switzerland.
For those interested in SRP, it's advised to be aware of the new Swiss Citizens Act that will be implemented January of 2018. The act will substantially alter the Swiss citizenship requirement. Some of the most notable changes will be that applicants must hold a settlement C permit to qualify for residency, a requirement to show language proficiency, as well as not accessing any social welfare benefits in the three years before an application is submitted. This new measure is estimated to impact about 650,000 foreigners in Switzerland. It's strongly advised to review whether the rights of non-EU/EFTA residents’ citizenship will be revoked under the new Swiss Citizens Act.
In addition, a vote was passed, after being on the ballot for the fifth time in the last 34 years, that gives hope to non-EU/EFTA citizens who wish to gain Swiss residency. The act was approved by 60.4 percent of voters and a majority of cantons, in February of 2017. This makes it easier for the grandchildren of Swiss immigrants to gain nationality and it will also affect previous laws that did not grant nationality to children born on Swiss soil.