A foreigner’s guide to purchasing property in Switzerland

Lex Koller’s legislative guide provides a brief overview of Swiss real estate acquisition.

Lex Koller – its origins

           In 1961, Switzerland introduced legislation that restricted the purchase of real estate by foreigners. The Swiss Federal Acquisition of Real Estate by Persons Abroad, or “Koller’s Law” as it is now called, states that foreigners must be specially authorized to purchase real estate in Switzerland. This law was implemented to prevent wealthy foreign investors to purchase real estate in an already scarce market. If an individual meets any of the following conditions, they are subject to prior authorization prior to purchasing real estate:

  • The purchaser is a foreign non-resident
  • The real estate incurs that authorization obligation by virtue of how it is to be used
  • The right acquired in the purchase is deemed to represent the acquisition of property within the meaning of the ARNA

What Purchases Are Subject to Lex Koller Legislation?

           The following groups are subject to Lex Koller Laws:

  • Foreigners who reside abroad
  • Foreigners who are residents of Switzerland but are not citizens of an EU or EFTA country and a lack of a valid permanent residence permit.

People under the following category are easily able to purchase real estate in Switzerland:

  • All citizens of Switzerland, including those with dual nationality, or are residents abroad
  • EU/EFTA citizens who legally reside in Switzerland
  • Citizens of other countries who hold a C permit re are actually resident of Switzerland

It should also be stated that real estate purchased through a legal entity must be controlled by residents of Switzerland, with a registered office in Switzerland.

Exceptions to Lex Koller Legislation

           There are several exceptions to Koller’s Law, allowing foreign nationals to purchase land in Switzerland. 

           Exception #1: No authorization is required if the land purchased is being used for a business or other commercial establishment. Examples of these include restaurants, doctors’ offices, or manufacturing businesses. The purchase of these properties becomes problematic if they are used for residential and commercial purposes. 

           Exception #2: Tax-paying, non-Swiss nationals may also purchase real estate in Switzerland. Under Koller’s Law, these individuals have the same status as Swiss citizens and do not require prior authorization to purchase real estate.

           Exception #3: Purchasing shares of a real estate company are not subject to Lex Koller laws.

Non-Swiss nationals cannot acquire shares in real estate companies that are not listed on a Swiss stock exchange and that own or hold residential real estate or property that is otherwise not used for business purposes.

A key factor here is the percentage of real estate held by the company that requires authorization. Residential real estate percentages of 10 to 20 percent require authorization since there is no specific threshold value.

           Exception #4: Vacation homes in certain areas of Switzerland are Lex Koller exempt. 

In Appenzell, Bern, Ausserrhoden, Freiburg, Grisons, Glarus, Jura, Neuchâtel, Lucerne, Nidwalden, St. Gallen, Obwalden, Schaffhausen, Ticino, Schwyz, Uri, Valais, and Vaud, holiday apartments do not require an authorisation (Lex Koller-exemption).

There are, however, threshold values for plot and living space measurements: The plot must not exceed 1,000 square meters and the living space must not exceed 200 square meters.

Non-Swiss nationals cannot acquire holiday apartments in Switzerland unless they meet a quota. Foreign nationals not residing in Switzerland may purchase only 1,500-holiday apartments per year, and the availability of apartments varies greatly between cantons.

Legal entities under Lex Koller

Lex Koller legislation also applies to legal entities. Thus, they must also obtain authorization before purchasing a property. Foreign legal entities must also follow the Lex Koller. They include the following categories:

  • Companies with headquarters abroad, regardless of whether Swiss nationals or foreign residents own shares.
  • Companies with a Swiss headquarters that are controlled directly or indirectly by resident persons of another country. 

A resident of another country can hold a ‘dominant position’ in an entity or business if they:

  • Control more than a third of the company capital,
  • Directly or indirectly own more than one-third of the voting rights or
  • Awarded a specific amount of loans to the company.

In this case, foreigners who wish to acquire real estate in Switzerland must also obtain approval from the relevant authorities.

In addition, the above exceptions apply here – including the fact that real estate acquired for manufacturing, manufacturing equipment, or workshop purposes is exempt from the Lex Koller Act.

In contrast, real estate acquisition to construct or lease housing in Switzerland is prohibited.

Lexpro banner