Despite limited serious implementation, Brexit will tighten Swiss Lex Koller law for British citizens

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With Brexit going into effect on December 31, 2020, British citizens will no longer benefit from the preferential treatment of EU citizens when purchasing Swiss residential real estate. Citizens of the United Kingdom now need a Swiss residence permit to purchase Swiss residential property without a permit. However, the grandfather applies: British citizens who legally and effectively reside in Switzerland before January 1, 2021, are exempt from this restriction, provided they maintain their legal and effective residence in Switzerland. All Swiss residential properties that were legally acquired by UK citizens prior to 1 January 2021 will remain the same.


Content

  1. Options for UK citizens to purchase Swiss residential property from 1 January 2021
  2. Other exceptions
  3. background

Options for UK citizens to purchase Swiss residential property from 1 January 2021

Citizens of the United Kingdom not legally residing in Switzerland with effect from 1 January 2021:

  • An unlimited residence permit is required to purchase a Swiss residential property.
  • Before obtaining a Swiss residence permit, holiday homes can be purchased in certain cantons, provided a specific permit is available, as well as private residence in the legal and actual place of residence in Switzerland.

Citizens of the United Kingdom who legally and genuinely reside in Switzerland on January 1, 2021:

  • These British citizens are ancestors and are allowed to purchase Swiss residential properties without permission.
  • However, it is imperative that these British citizens retain their legal and actual residency in Switzerland, at least until they acquire Swiss residential property in the future. Any cancellation of registration or change of actual place of residence from Switzerland after January 1, 2021 will result in the loss of the grandfather.
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Other exceptions

Swiss real estate ownership before Brexit

UK citizens who legally purchased Swiss residential property before 1 January 2021 reserve the right to own this property. Great Britain’s exit from the European Union does not affect the legal status of residential real estate in Switzerland.

Travelers across borders before Brexit

UK citizens who crossed the border into Switzerland on January 1, 2021 and subsequently maintained this status, will maintain post-Brexit status to purchase Swiss residential property. It continues to benefit from the Lex Koller law exception, which enables cross-border travelers to purchase a second home at their workplace in Switzerland.

background

The so-called “Lexcolor rule” in Switzerland prohibits foreign ownership of Swiss real estate unless the foreign buyer has permission to do so. Since commercial property is excluded from the Lex Koller law, its main application is Swiss residential real estate.

Thanks to bilateral agreements between Switzerland and the European Union, Lex Koller exempts foreigners from the European Union from the permit requirements once they reside legally and effectively in Switzerland. Foreigners from countries outside the European Union do not benefit from this exemption, and therefore they need a Swiss residence permit in order to be able to obtain Swiss real estate without a permit.

Buying Swiss residential property with a very limited permit and the permits are limited in their application. Some (tourist) cantons have an approval quota that enables them to purchase holiday homes that they use on their own.

With the United Kingdom leaving the European Union, the United Kingdom has become a country outside the European Union. According to the international treaty concluded between Switzerland and the United Kingdom on February 25, 2019 and approved by the Swiss Parliament on September 25, 2020, the transfer of Swiss real estate is regulated as follows:

  • Real estate lawfully acquired by a British citizen in Switzerland before 1 January 2021 will not be affected by Brexit.
  • Every British citizen who has his legal and actual residence in Switzerland on January 1, 2021, may acquire Swiss residential real estate without permission, provided that he maintains his legal and actual residence until the acquisition of Swiss real estate.
  • Every British citizen who obtained Swiss travel status on January 1, 2021, and who maintains this status, can benefit from exemption under Lex Koller and obtain a second home in his work area in Switzerland.
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The approval of the Swiss-British treaty is still subject to an optional referendum, which is highly unlikely. If there is no referendum by January 14, 2021, the Swiss-British treaty will officially enter into force on March 1, 2021. Meanwhile, the Swiss-British treaty has been formally implemented since January 1, 2021.

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