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Reader question: Are second homes in Switzerland subject to higher taxes?

Will you need to pay more tax on a second home in Switzerland? Here’s what you need to know.

Reader question: Are second homes in Switzerland subject to higher taxes?
Waterfront Houses on the Shore of Lake Lugano, Switzerland

When purchasing property in Switzerland you must become acquainted with the so-called ‘unity of residence’ (ZGB 23 para. 2) principle, which dictates that anyone living in Switzerland may only have one main residence within the Confederation. Since second homes – including holiday homes – are considered a luxury in Switzerland, you will sadly not be able to save much on tax when securing a second abode in the country.

First things first, what is considered a second home in Switzerland?

Whether your home is a second home as per Swiss regulations will depend largely on what purposes it is used for.

There are two categories of second homes in Switzerland: second homes and second places of residence.

A second place of residence, as the name suggests, is a place where a person lives while working or studying but is not their primary residence.

READ MORE: Does owning a second home in Switzerland give me the right to live there?

Technically speaking, second places of residence are not second homes.

These are common, for instance, with cross-border workers whose primary residence may be in a neighbouring country but who have a place of residence near their work in Switzerland.

A second home for the purposes of the law is therefore a second residence which is not uses for work or study.

The official government definition is as follows:

“In Switzerland, a second home is a house or apartment that is neither used by a person who is resident in the commune concerned nor used for work or education purposes. Second homes are often used either as holiday homes or are rented to private tenants.”

READ MORE: How can I buy a second home in Switzerland?

Do I need to pay higher tax on my second property?

In Switzerland, second homes are taxed in much the same way as primary homes. Just as with a primary property, if you use your second home yourself, you will still have to pay tax on the imputed rental value as income (rental value tax). Under Swiss law, owner-occupiers effectively “rent” their home to themselves. 

The rent that would be earned if the property were to be rented out on a permanent basis is extrapolated. This is also the case if you’re unable to use your property all year round due to unfavourable weather conditions, such as risk of avalanches or heavy snowfall.

As there is no actual rent, this is charged on a rate of roughly 60 to 70 percent of what the notional rental value of the home would be if it was leased on the open market.

READ ALSO: How prices of Swiss mountain homes are expected to drop

You can deduct this amount – and maintenance costs on the property – in your annual tax return.

If you do rent out your second home, income tax will be due on the rental income. In that case, taxation of the imputed rental value is suspended.

Among Switzerland’s 26 cantons, Bern is the only canton to have implemented a different rule when it comes to taxing second homes. Since January 1st 2011, only the slightly higher rental value for direct federal tax is applied to second homes, and thus also at cantonal level.

Moreover, owners of second homes should also note that if the property is partially let to guests, the imputed rental value will only be taxable proportionately and the rental income must also be taxed.

What other tax will I have to pay on my second home?

Additionally, just like with a primary property, with a second home too, you will be liable to pay cantonal property tax.

This usually amounts to less than one percent of the property’s value per year. The ‘value’ is the total market value of the property, regardless of mortgages or other debts.

Around half of Switzerland’s cantons charge this tax, with Zurich, Zug and Basel Country being some notable exceptions.

This tax is most common in areas where second home ownership is common, i.e. tourist areas and winter sports locations.

Although you will include both homes in the one tax return, the effective tax rate is based on the location of each home, rather than where you reside.

Additionally, you may also be liable for the annual capital tax, which is part of a broader wealth tax on all assets held in Switzerland or abroad.

As with the cantonal property tax, this is generally less than one percent of the value of the property (more commonly less than half a percent).

A home in Matt, Glarus Süd, Switzerland.

A home in Matt, Glarus Süd, Switzerland. Photo by Steffen Lemmerzahl on Unsplash

Unlike the cantonal property tax, the ‘value’ of the property also includes debts such as mortgages, meaning that the amount you pay is likely to be lower than the market value of the property.

Does capital gains tax also apply to holiday homes?

In Switzerland, with (almost) every property sale, the seller is obliged to pay tax on net profit made in the sale: the capital gains tax. In general, the longer you own your property, the lower your tax burden will be. This also means that if you buy a property and choose to sell up following short ownership, you will be liable to pay a much higher tax.

This also applies to second homes, but there’s more. If you are looking to sell your second property after only owning for less than five years, you may even be obliged to pay a tax surcharge in some Swiss cantons to counter real estate speculation.

Additionally, in the canton of Bern only full years are counted towards the ownership duration, hence why it makes sense to plan a potential sale in advance. Whether you own a primary or second property, however, it is crucial you keep track (receipts) of all maintenance work you have had done to the property that could lead to an increase in its value.

READ ALSO: Why you can be taxed four times over for owning a home in Switzerland

Can I reduce the capital gains tax on my second home?

When looking to sell your second home, you may be able to reduce the profit if you can prove increased acquisition costs. These would also include any maintenance or construction work you have had done to your property that may have led to an increase in value.

In Switzerland, you can also spread out larger maintenance work over several years, however, this would only make sense in the financial sense if the effective maintenance costs fall above the flat rate in all tax years concerned. If that is not the case, it would be smarter to benefit from the flat rate in one year and then deduct the full costs in different year.

In general, there is no tax-privileged replacement purchase for any type of second home, be it a house or an apartment.

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For members


Reader question: Can I use my EU health insurance instead of buying Swiss cover?

Given the high cost of the obligatory health insurance in Switzerland, you may be tempted to avoid purchasing one. Are you allowed to use insurance from another country instead?

Reader question: Can I use my EU health insurance instead of buying Swiss cover?

The announcement on Tuesday September 26th that health insurance premiums in Switzerland will go up by 8.7 percent on average in 2024 has upset many people, as such a significant hike is likely to strain their budgets. 

If you come from an EU or EFTA state, you may be wondering whether your health insurance from your home country can be used instead of the Swiss one.

The answer depends on your status in Switzerland.

If you are just a visitor who is staying in the country for up to 90 days, you are not required to take out Swiss insurance. Your European Health Insurance Card (EHIC) will cover you, free of charge, for medical emergencies (just as a Swiss tourist would be within the European Union / EFTA).

But if you are a permanent resident with a B, C, or L permit, you can’t rely on your EHIC to get you medical care in Switzerland.

Swiss law clearly states that “anyone settling in Switzerland must obtain insurance within three months after taking up residence.”

How do Swiss authorities know you are a resident and not a tourist?

If you comply with the law (as you should), you must register with your commune of residence within 14 days of your arrival. When you do so, you will no longer be able to remain under the radar, especially in a well-organised country like Switzerland.

Once you register, you will receive a letter from your canton saying that you must take out a Swiss health insurance policy within 90 days, and send them proof that you have done so.

Not complying with this rule will affect you in many ways, none of them good.

Firstly, the canton will keep sending you several letters reminding you of your obligation to buy insurance. If you still abstain from doing so, authorities will purchase a policy on your behalf and send you a bill.

If you still refuse to pay it, then legal proceedings will be filed against you. You will be ‘harassed’ by the debt enforcement office in your municipality and eventually taken to court.

There are other consequences as well.

Without proof of (Swiss) health insurance you will not be able to get a job or rent an apartment, and showing your EHIC instead will get you nowhere.

And, you will not be entitled to medical help without a proper insurance coverage, and will be treated only in case of emergencies.

All this to say that any attempts to beat the system will turn against you.

READ ALSO: What happens if I don’t buy Swiss health insurance?

However, there are some situations (aside from being a tourist) when you can be legally exempted from purchasing a Swiss health policy.

For instance, you are not required to take out insurance if:

  • You are retired and get a pension exclusively in an EU or EFTA state
  • You are a cross-border worker with healthcare policy in a EU or EFTA state
  • You are a foreign student and have comparable insurance from your country
  • You work for international organisations or are a diplomat