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07 April 2017
Foreign investments in Swiss real estate are governed by a federal law known as the 'Lex Koller'(1) and additional cantonal rules. The law restricts the acquisition of certain real property by non-Swiss residents.(2)
Even though the federal Parliament recently rejected two motions to tighten the legal regime governing foreign investments in Swiss real estate, the federal government has now submitted a number of proposals that head in the same direction.
The proposals are in public consultation until June 30 2017. Any interested individual or organisation may submit comments and suggestions. Based on the result of the public consultation, the government will either drop its plans or submit draft legislation to Parliament. It is likely that the entire legislative process will take a few years.
Considering that in the past 10 years Parliament has discussed a wide range of proposals – from completely abolishing the Lex Koller to substantially tightening it – the outcome of the latest initiative appears open. The first reactions of a number of industry organisations have been sceptical.
Under the guise of closing loopholes and improving law enforcement, a substantial tightening of the legal regime governing foreign investments is under discussion. Additional limitations for the acquisition of Swiss real estate by non-Swiss residents are being considered, especially in the following application areas:
In addition, a number of technical and procedural obstacles are proposed for non-Swiss residents to acquire Swiss real estate, particularly the consideration board members (besides shareholders and other criteria) to determine whether Swiss domiciled companies are dominated by non-Swiss residents.
Even though the federal government announced an initiative to modernise the Lex Koller some time ago, the reasons invoked to justify the proposals appear questionable:
Experts agree that excessive tightening of the legal regime, as proposed, is likely to substantially harm the industry and the national economy.
For further information on this topic please contact Anne-C Imhoff or Michael Lips at Pestalozzi Attorneys at Law by telephone (+41 44 217 91 11) or email (firstname.lastname@example.org or email@example.com). The Pestalozzi Attorneys at Law website can be accessed at www.pestalozzilaw.com.
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