The Federal Act on the Acquisition of Real Estate by Persons Abroad (FL) restricts the possibility for “foreigners” to acquire real estate in Switzerland. The aim of the acquisition restriction is to prevent “alienation of the domestic soil” in the case of very limited land reserves. Persons abroad need therefore to obtain a permit for the acquisition of residential real estate (including holiday apartments).
Persons abroad
Persons abroad include both persons resident abroad (with the exception of Swiss nationals) and – in principle – nationals of a foreign country resident in Switzerland. However, citizens of a member state of the European Community (EC) or of the European Free Trade Association (EFTA) with actual residence in Switzerland as well as citizens of other foreign states with actual residence in Switzerland who hold a permanent residence permit are not considered to be persons resident abroad. These persons are not subject to a permit requirement. Citizens of other foreign countries who hold a valid temporary residence permit but do not hold a permanent residence permit may only acquire a single-family house or condominium without a permit if this is their main residence.
Persons abroad shall further be deemed to be legal entities or companies capable of generating assets without a legal personality, which have their actual registered office abroad. If they have their statutory and actual registered office in Switzerland, these companies are also deemed to be persons abroad if they are controlled by a person abroad, or if they acquire the property for the account of a person abroad (e.g. trust business). Control by persons abroad is presumed in particular if persons abroad individually or jointly own more than one third of the share capital or cooperative capital and/or hold more than one third of the votes in the general meeting or shareholders’ meeting. Foreign control is also presumed if persons abroad have granted significant loans to the company.
Land subject to authorisation
The acquisition of ownership of single-family and apartment buildings, condominiums and building land to be used for such buildings, or a co-ownership share thereof by persons abroad, is subject to authorisation. The same applies to the acquisition of other rights to such residential properties, such as building and residential rights or usufruct, as well as to the establishment and exercise of purchase, pre-emption and repurchase rights.
The acquisition of shares in a real estate fund and real estate SICAV whose shares are not regularly traded on the market, as well as shares in real estate companies that are not listed on a stock exchange in Switzerland, is also subject to authorisation. A real estate company is any legal entity whose actual purpose is the acquisition of real estate. When acquiring shares in real estate companies, it does not matter whether the acquisition creates a controlling position for the company to be subject to the licensing requirement. The acquisition of a property is not subject to authorisation if it serves as a permanent establishment of a commercial, manufacturing or other commercially managed trade, craft business or liberal profession. This includes, for example, manufacturing buildings, offices, hotels, workshops and medical practices. Business premises can be acquired without a permit, regardless of whether they are to be used by the acquirer her-/himself or leased to a third party as business premises.
Clear exclusion from the authorisation requirement
The legal transaction or the acquisition of real property are only entered in the land register (or in the case of the acquisition of company shares in the commercial register) if it is immediately apparent that the acquirer is not a person abroad or that the obligation to obtain permission can otherwise be excluded.
For this purpose, natural persons who are nationals of a foreign state must prove to the land registry office (or the commercial registry office) their nationality, their temporary residence permit in Switzerland and their actual place of residence in Switzerland and declare that they are not acquiring the property for the account or with financial means of persons abroad.
Legal entities with their registered office and actual place of business in Switzerland must submit a recent excerpt from the commercial register. In addition, the share register – signed by the Board of Directors and the auditors – must be submitted, stating the place of residence, nationality and the shares in the share capital of the shareholders, as well as the most recent annual financial statements, stating the most significant creditors and lenders. In addition, a list needs to be submitted of how the acquisition of the property and any planned buildings are to be financed.
If the obligation to obtain a licence cannot be excluded without further ado, the purchaser must apply to the competent cantonal authority for a licence or a decision that the purchaser does not require a licence for the acquisition at the latest after the legal transaction has been concluded.
Granting of approval
The competent cantonal authority issues a licence for acquisition if the property serves as a capital investment from the business activities of a foreign or foreign-controlled insurance institution that is licensed to conduct business in Switzerland. A licence may also be granted if the property is used for the employee benefits of a Swiss permanent establishment or is acquired exclusively for charitable purposes. If the property is used to cover pledge-secured claims of foreign or foreign-controlled banks and insurance institutions admitted to business operations in Switzerland, authorisation may also be granted to register the corresponding lien in favour of the financing bank or insurance company.
In addition, the cantons may authorise a natural person to purchase a holiday home or a flat in an apparthotel within the quotas set annually by the Federal Council of the Swiss Confederation (government).
Apart from a few very specific exceptions, it is not possible to grant a permit outside the above listed reasons. The acquisition of residential properties (including holiday homes) by persons abroad is therefore only possible within the framework of the cantonal quotas.
schochauer ag, Attorneys-at-Law
lic. iur. Nicolas Keller, LL.M.
Dr. iur. Matthias Raschle