A buyer may be
- an individual
- a legal entity (AG or GmbH – two Swiss legal forms)
- an investment trust pursuant to capital investment law
- limited partnership for collective capital investments
- Sicaf (investment company with variable capital)
- Sicav (investment company with fixed capital)
- a foreign legal entity.
- Tax optimized real estate investements (real-estate-transactions.ch)
- Real estate investment and the revision of the Swiss law on collective capital (real-estate-transactions.ch)
- real-estate-private-equity.ch (German)
Forms of purchase
Traditionally, real estate is held by a sole owner or joint ownership:
- sole ownership
- joint ownership
- apartment/condominium ownership
- joint ownership (community of property; simple partnership; KollG, KommG – both Swiss legal forms; etc.).
Types of purchase
Real estate may be purchased by:
- sole succession
- property purchase agreement
- donation/gift agreement
- exchange agreement
- inheritance agreement and/or will
- universal succession
- corporate merger
- corporate division
- asset transfer pursuant to merger law
In Switzerland real estate purchases are subject to two limitations:
For social and agrarian policy reasons, there are limitations on the purchase of agricultural property. Agricultural properties may only be purchased by qualified owner-operators.
Real estate purchases by foreign nationals
In 1961, the perceived threat of the country being overwhelmed by foreigners and foreign real estate ownership resulted in special permit conditions. In 1983, these federal decisions of limited duration became federal law (Swiss Approval Act, SAA, SR 211.412.41, better known by the name of the legislators concerned. Examples are Lex Friedrich [Lex F.] and Lex Koller).
These laws have been amended multiple times to render them more liberal. According to current consensus, the danger of overwhelming foreign land ownership is non-existent, and the Swiss Approval Act should be repealed and replaced by urban and rural planning restrictions that prevent an undesirable increase in vacation and second homes. Two initiatives, one allowing the sale of any property to foreign nationals and the other increasing the contingent for vacation apartments, while approved by Switzerland’s National Council, were rejected by its Council of States. Further liberalization, or a repeal of the Swiss Approval Act, has stalled due to an influx of wealthy foreign nationals in recent years which drove up land prices in low-taxation townships.
To fall under the Swiss Approval Act, real estate purchases must be within the Act’s geographic, personal and material purview.
Rather than discussing further the latest Swiss Approval Act and its exceptions, please read the article and table by attorney Urs Bürgi published in the March 25, 2009 edition of Neue Zürcher Zeitung:
In Switzerland property purchases (asset deals) are subject to special regulations.
To confer validity, property transactions, including purchase, right of purchase and repurchase, require notarization by a notary public except for preliminary contracts, which are merely rendered in writing.
Transfer of ownership
Ownership transfers to the purchaser on transaction entry in the Land Register.
Transfer of risk and benefit
Unless otherwise agreed, risk and benefit go to the purchaser at contract signing. A transfer of possession date is customarily agreed in the purchase contract, at which date rights and obligations, as well as risk and benefit, go to the buyer (frequently at the transfer of ownership date or end of the current quarter).
The law limits building-defect warranties to five years from the date of assumption of ownership. In the case of existing properties warranties are normally annulled, while with new constructions, warranties originally granted to the seller by the building contractor are passed on to the purchaser.
- Real Estate Transactions
- Real estate due diligence
- immobilien-ab-plan.ch (German)
- immobilien-schluesselfertig.ch (German)
- hotelimmobilien.ch (German)
- Urs Bürgi, Gewährleistung beim Immobilienkauf – eine Übersicht unter Berücksichtigung der „Altlasten“ Problematik, in Schweizer Treuhänder, Ausgabe 5/2005, S. 392 ff.
Value-added tax (VAT)
In the case of commercial properties subject to value-added tax according to law or seller’s option, a change of ownership may involve taxation of supplies. It should therefore be determined whether the seller’s VAT status applies or not.
Property taxes, surety
The property serves as collateral for the seller’s capital gains tax. The tax authorities have right of lien on the property for property taxes, whether owed by the present or the previous owner.
The investor should
- ensure all previous changes of ownership were assessed and the property taxes paid;
- determine the amount of taxes and charges arising from the transaction;
- demand that previously unpaid property taxes, including those arising from the upcoming transaction, are held in trust.
Notary and Land Register fees
Investors should be aware that both parties are jointly and severally liable for notarization and Land Register registration fees and expenditures.