Lump-Sum Taxation in Switzerland: The Forfait Regime Explained

Lump-sum taxation is an expenditure-based way of being taxed in Switzerland. Instead of declaring worldwide income and assets, an eligible foreign resident is taxed on an agreed figure that reflects their annual cost of living. The same regime carries four names: the forfait fiscal in French, Pauschalbesteuerung or Besteuerung nach dem Aufwand in German, imposizione secondo il dispendio in Italian, and expenditure-based taxation in English. It rests on federal law (DBG art. 14) and cantonal law (StHG art. 6), and is negotiated with the cantonal tax authority before arrival.

It is often described loosely as a tax break for the rich, but the eligibility rules are strict and several cantons have removed it. Only foreign nationals taking up Swiss residence for the first time, who carry on no gainful activity inside Switzerland, can elect it. This guide explains who qualifies, how the tax base is built, how the control calculation works, which cantons retain the regime and which abolished it, the residence-permit route, the social-security obligation, when ordinary taxation is cheaper, the abolition risk, and how the application is filed.

Under ordinary Swiss rules, a resident is taxed on worldwide income and worldwide wealth. Lump-sum taxation replaces that with a tax base built on the taxpayer's annual living expenditure, including the cost of housing, food, travel, staff and lifestyle for the household. The agreed expenditure figure is then taxed at normal federal, cantonal and communal income-tax rates, and a parallel wealth-tax base is set at cantonal level.

The four names all describe one regime: forfait fiscal (FR), Pauschalbesteuerung or Besteuerung nach dem Aufwand (DE), imposizione secondo il dispendio (IT) and expenditure-based taxation (EN). The legal basis is DBG art. 14 for federal direct tax and StHG art. 6 for the cantonal layer. A reform that took effect on 1 January 2016 tightened the rules: it raised the housing multiplier from five to seven times rent, introduced a statutory federal minimum base, and gave existing taxpayers a transition period to roughly 2021. The point of the regime is administrative as much as fiscal: a person with complex foreign holdings does not file a full worldwide return, and Switzerland collects a predictable amount each year.

The taxable base is not simply whatever the taxpayer claims to spend. Federal and cantonal law impose minimums, and the authority applies the highest of several reference figures. As of 2026 the base is the greater of:

• the taxpayer's actual worldwide annual living expenditure;
• seven times the annual rent or rental value of the home the taxpayer occupies (a lower multiple of housing cost can apply in hotel or lodging cases);
• the federal minimum base: a CHF 400,000 statutory floor, which firms commonly cite at around CHF 434,700 as the current indexed minimum for federal direct tax. The exact figure is adjusted periodically by the federal tax administration, so treat it as the 2026 position and confirm it with ESTV before relying on a single number.

Cantons then set their own minimum on top, which is frequently higher than the federal floor. Because the housing multiple drives the base for many applicants, the rent or rental value of the chosen home is the single biggest variable in the calculation.

The federal minimum base governs the federal direct tax even where a canton's own income base would be lower. Each canton then sets its own minimum, usually higher than the federal floor, and adds a wealth-tax component derived from the expenditure figure (commonly a multiple of it). In practice the cantonal layer is where most of the bill is paid.

Indicative cantonal positions circulate widely, for example an elevated minimum plus a wealth uplift in Geneva and competitive low-tax terms in central-Switzerland cantons such as Zug. Treat any specific cantonal figure as indicative and subject to confirmation by the cantonal tax administration, because these numbers are not centrally published in a single current table and move year to year. The facts-backed point is the structure: federal floor for the federal portion, a higher cantonal minimum, and a parallel wealth base on top.

The tax mechanics of the forfait are identical whatever your nationality. What differs is the immigration path that gets you to Swiss residence in the first place. For EU and EFTA nationals, residence as a non-working person of independent means is comparatively straightforward. For non-EU/EFTA nationals, the route is narrower and discretionary.

In both cases the regime supports a residence permit rather than guaranteeing one. A canton may grant a discretionary B permit where there is a predominant cantonal fiscal interest in the applicant relocating, with a retiree-style residence basis available under the foreign nationals act (FNIA/FNIG art. 28). There is no automatic entitlement, and the no-work residence basis must stay consistent with the no-gainful-activity tax condition. Our Swiss residence permit guide sets out the permit categories in detail.

The forfait is not automatically cheaper than ordinary taxation. It caps the income and wealth side at the agreed expenditure base, so it pays off when the taxpayer's worldwide income and assets would otherwise generate a far larger ordinary bill. People with substantial untaxed or lightly taxed foreign income, large diversified portfolios, or significant offshore business income are the classic winners.

For someone with modest worldwide income, ordinary taxation can be cheaper, because the forfait sets a high minimum base regardless of actual income. To weigh the alternative, compare our guides to ordinary income taxation and Swiss wealth tax, which set out the rates a non-forfait resident would face. The honest test is arithmetic: model the ordinary bill on your real worldwide position against the forfait base in your target canton, and elect the regime only when it wins clearly.

Lump-sum taxation is not claimed on a normal tax return. It is agreed in advance through a tax ruling negotiated with the cantonal tax administration before, or shortly after, taking up residence. The taxpayer submits details of the household, the intended home, expected expenditure and the absence of Swiss gainful activity, and the canton confirms the agreed annual base, ideally before relocation so there are no surprises.

After that the obligation is an annual return on the agreed base, which the canton can review, with practice varying from canton to canton. The steps run in parallel with the residence-permit application, since the no-work residence basis and the tax election support each other. For families building a longer-term Swiss presence around investment and succession, the forfait often sits alongside a Swiss family-office structure, which handles the worldwide assets the tax base is designed to keep outside the Swiss return. We work on a custom-quote basis, so speak to our team with your target canton and household position and we will scope the ruling and the relocation together.