The ‘lump sum taxation’ is a term which ‘regular’ taxpayers in Switzerland may not even be familiar with, as it is reserved for very wealthy foreigners.
While the overall number of wealthy foreigners benefiting from this system of taxation is declining in Switzerland, tax revenues from this group continue to rise.
Of all the cantons, Valais has most foreign nationals – 841 in all – who are taxed on a lump-sum basis.
Most of these wealthy individuals live in Valais’ most expensive mountain resorts, such as Zermatt, Verbier, and Crans-Montana.
The second in this category is Vaud (705 people), followed by Geneva (505).
What is the lump-sum taxation anyway?
Residents of Switzerland – whether Swiss or foreign nationals – pay their aggregate taxes once a year, usually by March 31.
The amount due is calculated based on the residents’ tax declarations.
This system applies not only to people who are employed, but also to retirees who are taxed on their total assets, including pension and other income.
This is a good place to mention that Switzerland imposes taxes on all kinds of income, which would be considered odd by other nations’ standards:
READ MORE: Switzerland’s strangest taxes – and what happens if you don’t pay them
But let’s go back to lump-sum taxation…
Super-rich people can make arrangements with their cantonal tax authorities to be taxed not on their income and assets – as ‘normal’ people are – but on the basis of their cost of living in Switzerland.
Specifically, this means the amount of money they need to spend each year to support themselves at the level to which they are accustomed, which could add up to hundreds of thousands or even millions of francs per year.
Taxing these high-worth individuals on this basis is therefore a real windfall for the state coffers.
For instance, in Valais, they generated 122.5 million francs in 2025.
Not only that, but these wealthy residents also hire local workforce for household staff, purchase expensive things, and generally spend their money for the benefit of the canton’s economy.
So it is a win-win situations for all concerned.
Who is entitled to the lump-sum taxation?
First and foremost, you must be very rich.
Secondly, you must be a foreign national who wants to settle in Switzerland or is returning to Switzerland after absence.
Swiss citizens, including dual ones – even the very wealthy – don’t qualify for this tax regime.
Last but not least, you absolutely cannot seek employment in Switzerland.
Can these rich people choose any canton to settle in?
No.
According to the government, “Citizens in the canton of Zurich voted against expenditure-based taxation in a popular vote in 2009, and the practice was abolished at the start of January 2010. The cantons of Schaffhausen, Appenzell- Ausserrhoden, Basel-Country and and Basel-City followed Zurich’s example.”
Can all wealthy foreigners benefit from the lump-sum taxation?
Yes, but to a different degree of complexity.
Eligible (from a financial point of view) citizens of the EU and EFTA (Norway, Iceland, and Liechtenstein) have a free access.
Those from outside the EU/EFTA, on the other hand, need a visa to settle in Switzerland and take advantage of this tax regime.
However, if cantons determine that these people will benefit their economies, visas will be granted.
READ MORE: How many wealthy foreigners get one of Switzerland’s golden visas?
