Legal and Tax Aspects of Relocating from the Czech Republic to Switzerland

ARROWS law firm in Prague, a leader in providing international legal advisory, leverages the extensive network of ARROWS International with a presence in 90 countries worldwide. This global reach enables our clients to execute cross-border transactions and structural changes with confidence, backed by professional liability insurance coverage of up to CZK 400 million. The following article, prepared by our relocation specialists, provides a comprehensive overview of all aspects of the relocation process, emphasizing the interplay between the Czech and Swiss legal frameworks.

The Swiss Confederation represents the pinnacle of stability, security, and efficient wealth management for the global business elite. For Czech entrepreneurs and investors considering moving their operations and private lives, however, this step is not merely a physical change of address, but primarily a complex legal and tax transformation.

Relocation to Switzerland involves the synchronization of several critical areas: from obtaining specific residence permits and meeting the world's most demanding banking standards to navigating a restrictive real estate market defined by the Lex Koller legislation. In this field, our Prague-based law firm, ARROWS, provides comprehensive international law services.

Quick Summary

The process of relocating to Switzerland requires precise timing and a deep understanding of local specifics. The table below summarizes the key pillars of relocation.

Strategic Framework of Residence Permits for Czech Residents

The relocation of an individual to Switzerland is primarily a matter of migration status, which subsequently determines options for real estate acquisition and tax regimes. Although Switzerland is not a member of the European Union, the Agreement on the Free Movement of Persons (AFMP) provides citizens of the Czech Republic with a privileged position compared to third-country nationals. The process is categorized by the intended length of stay and economic activity.

Short-term stays of up to 90 days in a calendar year can be carried out without a work permit; however, when performing gainful activity, this process is subject to strict registration obligations. Exceeding this limit without proper legalization can lead to fines of up to 30,000 CHF and a ban on activity. For permanent relocation, the following types of permits are essential:

• Type L Permit (Short-term Permit): Intended for stays usually up to one year, tied to a specific employment contract or a time-limited project under Swiss regulations.
• Type B Permit (Residence Permit): A key tool for relocation. It is issued for 5 years to individuals with an indefinite employment contract or to entrepreneurs (self-employed) who demonstrate the viability of their business plan. Switzerland applies quotas for EU citizens for this type of permit, which are reviewed annually. You might be interested to know that ARROWS offers services in the field of employment law, which is crucial when relocating employees.
• Type C Permit (Settlement Permit): Represents the highest level of residential status, equivalent to permanent residence. It can be applied for after 5 or 10 years of continuous residence depending on nationality and integration criteria. Type C permit holders are treated almost on par with Swiss citizens regarding real estate purchases and taxation.

The relocation of an entrepreneur who does not intend to be an employee but wishes to live in Switzerland requires proof of sufficient financial resources to ensure they do not become dependent on the social system. Details on the responsibilities of company management can be found in the article Practical Duties of Directors: Insights from Corporate Lawyers. Our Prague-based law firm, ARROWS, assists at this stage with the preparation of documentation for cantonal migration offices, where precise documentation of the source of funds and a clean criminal record are essential.

Tax Architecture and the Lump-Sum Taxation System (Pauschalbesteuerung)

One of the most significant motives for relocating to Switzerland is the possibility of utilizing the expenditure-based lump-sum taxation regime (Pauschalbesteuerung). This system is intended exclusively for foreigners who do not engage in gainful activity in Switzerland (though they may manage their private global assets) and have not been tax residents there in the last ten years. Our article on taxation of investment income 2026 and portfolio tax optimization strategies can advise you on the tax aspects of asset management.

The essence of this regime is that the tax base is not worldwide income, but the estimated annual living expenses of the taxpayer and their family in Switzerland. The calculation is subject to strict rules:

1. The tax base must correspond to at least seven times the annual rent or the rental value of owner-occupied property (Eigenmietwert).
2. As of January 1, 2025, the federal minimum for taxable income is set at CHF 434,700.
3. Individual cantons set their own additional minimums, which can vary significantly. For example, cantons in Central Switzerland (Obwalden, Nidwalden) or the canton of Ticino are known for their friendliness toward this regime, while cantons like Zurich have abolished it for cantonal and municipal tax purposes following public pressure.

In addition to income tax, taxpayers are subject to cantonal wealth tax, which in the Pauschal regime is calculated from a modified wealth base rather than full global wealth. This regime provides a high degree of discretion, as the taxpayer does not have to disclose all foreign assets in detail unless they require relief under double taxation treaties.

An important element is the so-called control calculation (Kontrollrechnung). The tax derived from expenditure must not be lower than the tax the taxpayer would pay on their income from Swiss sources (real estate in CH, Swiss securities, bank interest in CH). The ARROWS Czech legal team provides a comprehensive comparative analysis so that the client can objectively assess whether the lump-sum regime or standard taxation—which is also very attractive in some cantons (e.g., Zug or Schwyz) due to low progressive rates—is more advantageous for them.

Banking Infrastructure: The Gateway to Financial Stability

The Swiss banking system is synonymous with security, but also with extreme complexity during the onboarding of new clients. In 2025 and 2026, non-residents and newly arrived residents face procedures that resemble a forensic audit in their depth. Swiss banks are forced by international standards and the domestic regulator FINMA to eliminate any risk associated with money laundering (AML).

Key requirements for opening an account:

• Identification and KYC: A valid passport (often with notarized certification or personal presence) and proof of address no older than 3 months are essential.
• Source of Wealth (SOW): The bank requires a comprehensive narrative of how the wealth was generated. If the client is a successful entrepreneur, they must document the history of company sales, dividend payments, or investment income over the last several years.
• Source of Funds (SOF): Specific documentation of the origin of every franc deposited into the account. Vague formulations like "savings from salary" are not accepted; the bank requires statements from previous accounts, tax returns, or purchase agreements.
• Tax Compliance: Signing a declaration of compliance with tax regulations in the country of origin and consent to the automatic exchange of information under the CRS.

The banking market is divided into several segments. Large banks (UBS) offer a broad portfolio of services but require a high degree of automation and standardization of documentation. Traditional private banks (e.g., Julius Baer, Pictet, Lombard Odier) focus on clients with deposits starting from CHF 1 million, while for politically exposed persons (PEP) or clients from higher-risk jurisdictions, minimum deposits can range between CHF 5 and 25 million. For operational relocation purposes (rent, fees), it is recommended to open an account with institutions such as PostFinance, which have lower entry barriers but more limited investment options.

Corporate Structures: Establishing a GmbH and AG

For international entrepreneurs and Czech business owners looking to transfer their business activities to Switzerland or create a holding structure there, the most suitable forms are GmbH (limited liability company) and AG (joint-stock company). The choice of legal form has a significant impact on the company's prestige, degree of anonymity, and capital requirements.

A fundamental requirement of Swiss law is that the company must be represented by at least one person residing in Switzerland who has individual signing authority. If an entrepreneur relocates their entire family, they can fulfill this role themselves after obtaining a B permit. If the company is established before the owner's physical arrival, it is necessary to use fiduciary services (resident director). Our Prague-based law firm, ARROWS, collaborates with Swiss partners who provide these functions, while all activities are coordinated from the Czech Republic to ensure business continuity.

The incorporation process includes opening a capital contribution account, preparing the articles of association (Statuten) and the deed of incorporation, notarization, and subsequent entry into the commercial register. Companies are required to maintain accounting records according to the Swiss Code of Obligations (Obligationenrecht) and archive documents for 10 years. The corporate tax burden consists of federal tax (8.5%) and cantonal/municipal taxes, which in total in attractive cantons like Zug amounts to approximately 11.9–15%.

Real Estate Acquisition and Lex Koller Restrictions

Investing in Swiss real estate is one of the most challenging disciplines for foreigners. The legal framework is defined by the federal law Lex Koller (officially the Federal Act on the Acquisition of Real Estate by Persons Abroad), the purpose of which is to prevent excessive acquisition of Swiss land by foreigners and speculative price growth.

Key restrictions under Lex Koller:

• Definition of a person abroad: Includes non-residents, but also residents with a type B permit if they are purchasing property that is not intended to serve as their primary residence.
• Residential real estate: The purchase of apartments and houses for investment purposes (buy-to-let) is practically prohibited for persons subject to Lex Koller.
• Commercial real estate: Represents a significant exception. Properties used for business (offices, hotels, warehouses, medical practices) can be purchased without a permit in most cantons.
• Holiday properties: Foreigners may purchase a holiday apartment only in designated tourist zones and within cantonal quotas. Only 1,500 permits are available annually for the whole of Switzerland. Maximum living space is usually limited to 200 m² and the plot area to 1,000 m².

When relocating, the optimal strategy is to first obtain a type B permit, which allows the purchase of a primary residence (including those under construction) without the need for a Lex Koller permit, provided the buyer actually resides there. After obtaining a type C permit, all Lex Koller restrictions are lifted, and the investor can purchase residential and investment properties just like a Swiss citizen. Our Czech legal team at ARROWS performs real estate due diligence and assists with the notarized deed (acte de vente), which is mandatory in Switzerland.

Wealth Management and Family Office Services

Switzerland is not only a place to live but also a global hub for Asset Management. For entrepreneurs who have successfully sold their Czech companies, relocating to Switzerland represents a transition to sophisticated family wealth management. The Swiss approach to asset management combines conservative capital protection with modern technologies and access to global markets.

Wealth management in Switzerland includes:

• Currency risk diversification: Holding assets in CHF, USD, and EUR within a single institution.
• Portfolio structuring: Utilizing Swiss fund structures (SICAV, SICAF) or trusts for intergenerational wealth transfer purposes.
• Fiduciary services: Managing the family's administrative and legal affairs under one roof (Family Office).

Within the ARROWS International network, we cooperate with leading Swiss asset managers and tax advisors to ensure that wealth management complies with Czech rules for Controlled Foreign Companies (CFC). This prevents the risk of Swiss structures being challenged by Czech tax authorities due to a lack of economic substance.

Tax Implications in the Czech Republic: Exit Tax and the Double Taxation Treaty

The relocation of assets and individuals also has consequences on the Czech side. Since January 1, 2020, the Czech Republic has implemented the so-called Exit Tax, based on the European ATAD directive. This tax applies if a Czech tax resident (legal entity) moves its assets or residency abroad, causing the Czech Republic to lose the right to tax these assets in the future.

In practice, this means:

• Assets are valued at market price at the moment of departure.
• The difference between the market price and the tax residual value is taxed at the corporate income tax rate.
• The rule does not apply if the assets return to the Czech Republic within 12 months.

For individuals, the key is the Double Taxation Treaty between the Czech Republic and Switzerland (Collection of International Treaties No. 12/1996) and its 2013 protocol. This treaty defines which country taxes specific income:

• Dividends: Withholding tax can be a maximum of 15%, but if conditions for parent companies are met (10% ownership for 1 year), it can be reduced to 0%.
• Interest and royalties: The treaty limits taxation at source to a maximum of 5%.
• Capital gains from real estate: Taxed in the country where the property is located.

During relocation, it is essential to perform a "severance of tax residency" in the Czech Republic to avoid the risk of dual tax residency. This requires terminating ties in the Czech Republic (selling/renting out housing, canceling insurance) and proving the center of vital interests is in Switzerland. ARROWS law firm in Prague provides comprehensive assistance in this area, including representation before the Czech Financial Administration, with all transactional advisory covered by insurance up to CZK 400 million.

Risk Table

The process of relocating to Switzerland involves specific risks that can have fatal legal and financial impacts.

Relocating to Switzerland is a strategic decision that requires a multidisciplinary approach involving law, taxation, and private banking. For a Czech entrepreneur, it opens a world of unique stability and tax predictability; however, the path to achieving this leads through demanding regulatory procedures. The success of the relocation depends on the ability to bridge the Czech legal context (tax returns, Exit Tax) with Swiss reality (migration quotas, Lex Koller, banking compliance).

ARROWS law firm in Prague, utilizing the ARROWS International global network, represents a stable partner for this transition. Thanks to professional liability insurance of up to CZK 400 million and a presence in 90 countries worldwide, we can guarantee the security and discretion of the entire process. Switzerland is not just a jurisdiction; it is a commitment to quality that our Prague-based law firm fully shares.

FAQ

1. What is the difference between Permit B and C regarding real estate purchases? A Permit B holder may purchase real estate without a Lex Koller permit only for their own permanent residence. If they wish to purchase investment property for rental, they are subject to the same restrictions as non-residents. A Permit C holder has the same rights in purchasing real estate as a Swiss national.
2. Can I obtain lump-sum taxation even if I have a company in the Czech Republic? Yes, provided you do not engage in gainful activity within Switzerland. Income from Czech companies (dividends) is considered investment income, which is permissible under the Pauschal (lump-sum) regime. However, this income enters into the control tax calculation.
3. Is it necessary to physically travel to Switzerland to set up a company? Founding documents can be signed via power of attorney with notarized signatures; however, opening a bank account almost always requires a personal meeting or video identification according to the bank's standards.
4. What are the living costs required for the authorities to grant residency without employment? There is no fixed amount, but generally, an individual is expected to prove assets or an annual annuity that allows them to live in the chosen canton without claiming social benefits. For lump-sum taxation purposes, however, a tax base of approximately CHF 434,700 is de facto required.
5. What happens to a Swiss account in the event of my death? Inheritance proceedings are governed by private international law. Switzerland usually recognizes the decisions of Czech courts if the assets are properly handled within the estate. Most cantons exempt direct descendants from inheritance tax.

Disclaimer: This document is an expert interpretation of relocation issues and does not serve as specific legal or tax advice. Every relocation case is unique and requires individual analysis with regard to the current wording of laws in Switzerland and the Czech Republic. ARROWS law firm in Prague (ARROWS advokátní kancelář, s.r.o.) bears no responsibility for any damages resulting from the interpretation of this text without consultation with our Czech legal team. All services are provided in accordance with the Czech Legal Profession Act and professional liability insurance up to CZK 400,000,000. However, it is necessary to have a signed agreement with the ARROWS law firm. We would be happy to discuss your specific case. E-mail: office@arws.cz

Read also:

• How to Open a Company or Branch in the Czech Republic as a Hungarian Business:
• Tax Implications of Closing a Company in the Czech Republic:
• How to Deregister a Dormant Company in the Czech Republic:
• Holding Structures and Beneficial Ownership in the Czech Republic: Compliance Checklist:
• Cross-Border Construction Law and Building Due Diligence in the Czech Republic: What Foreign Investors Should Know: