Surrounded by debates internally and from international borders, the Lump-Sum Taxation Model of Switzerland is a unique tax arrangement for foreigners that don’t exercise gainful activities in Switzerland.
In essence, the lump-sum taxation system focuses on the worldwide living costs of the family (including taxpayer and depending family members) and not on income and wealth. How is the cost of living calculated?
To start, the cost of food and clothing is a primary inclusion. Subsequently, the cost of accommodation, utilities, personnel (wages), maintenance, and entertainment is added. The next category in the list includes sports, hobbies, holiday travels, insurance, vehicles, and further expenses
Although taxes may be higher than in other jurisdictions offering taxation-based residence schemes, many foreigners deem taxes as an acceptable cost for living in Switzerland.
Source: https://www.centrolaw.ch/en/insights/detail/lump-sum-taxation-in-switzerland
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