Property Acquisition by Foreigners (Lex Koller) in Switzerland
The legislation on the acquisition of properties by persons abroad, commonly known as the Lex Koller, constitutes a fundamental pillar of Swiss real estate law. This regulation strictly governs the possibilities for foreign nationals to purchase real estate on Swiss territory. Its primary objective is to prevent foreign domination of Swiss land and to maintain a property market accessible to Swiss citizens. Given the complexity of this legislation and the numerous exceptions it contains, mastering its subtleties is essential for any foreign investor wishing to acquire property in Switzerland. Our law firm assists clients through this complex legal process.
Acquisition Conditions According to the Foreign Buyer's Status
| Buyer Status | Primary Residence | Secondary / Holiday Residence | Commercial Property |
|---|---|---|---|
| Swiss citizen | Free | Free (subject to Lex Weber) | Free |
| Foreigner with C permit (establishment) | Free | Free (subject to Lex Weber) | Free |
| Foreigner with B permit (residence) — domiciled in CH | Free (place of domicile) | Authorisation required | Free (economic activity) |
| EU/EFTA national active in CH | In principle free | Authorisation required | Free |
| Non-resident foreigner | Authorisation required | Authorisation + cantonal quota | Free (effective use) |
| Foreign / foreign-controlled company | Authorisation required | Authorisation + cantonal quota | Free (economic activity) |
Legal and Historical Foundations of the Lex Koller
The Lex Koller, officially designated as the Federal Act on the Acquisition of Immovable Property by Persons Abroad (LFAIE), has its origins in the 1960s, a period marked by growing concerns about the mass purchase of Swiss properties by foreigners. The current version of this law, which entered into force in 1985, represents the culmination of a legislative evolution aimed at protecting national land.
This regulation rests on a fundamental principle: any acquisition of a property by a person abroad is subject to authorisation. The definition of "person abroad" encompasses:
- Natural persons who do not have Swiss nationality and do not hold an establishment permit (C permit)
- Legal entities with their registered office abroad
- Legal entities with their registered office in Switzerland but controlled by persons abroad
The concept of acquisition is interpreted broadly and includes not only the direct purchase of a property but any legal transaction economically equivalent to an acquisition. This includes in particular the acquisition of shares in real estate companies or the obtaining of long-term rights of use.
Over the decades, the Lex Koller has undergone several amendments, reflecting the evolution of Switzerland's international economic relations. Relaxations have been introduced, notably with the entry into force of the bilateral agreements with the European Union, but the restrictive framework remains substantial for non-resident investors.
Scope and Main Restrictions
The Lex Koller does not apply uniformly to all types of real estate in Switzerland. Its scope varies according to the nature and intended use of the property concerned.
Properties Subject to Authorisation
The following acquisitions are generally subject to the authorisation regime:
- Dwellings and homes (single-family homes, apartments, chalets)
- Building plots intended for the construction of housing
- Undeveloped land outside building zones
- Shares in real estate companies whose activity consists in acquiring residential properties
The main restriction concerns the acquisition of secondary or holiday residences. For these properties, the number of authorisations is limited per canton, creating a quota system that can make acquisition particularly difficult in certain sought-after regions such as ski resorts or tourist areas.
Notable Exceptions
Certain acquisitions are exempt from the authorisation regime, in particular:
- Purchase of properties serving as a permanent establishment for an economic activity (offices, commercial premises, industries, hotels)
- Acquisition by a foreigner of a primary residence at their effective place of domicile in Switzerland (under certain conditions)
- Statutory inheritances or acquisitions between close relatives under Swiss law
These exceptions reflect the legislator's desire to allow certain transactions while maintaining control over the residential property market. The distinction between commercial and residential property is therefore fundamental in the application of the law.
Restrictions vary considerably between cantons, which have some latitude in applying federal law. Some cantons, particularly in tourist regions, have established very restrictive quotas, while others take a more flexible approach.
Authorisation Procedure and Criteria for Obtaining Authorisation
The acquisition of a property by a person abroad requires a rigorous administrative procedure involving several levels of authorities.
Course of the Procedure
The application for authorisation must be filed with the competent cantonal authority, generally designated by each canton. This application must contain:
- Precise identification of the property concerned
- Detailed information about the acquirer
- Justification of the application with regard to the grounds for authorisation provided by the law
- Documents attesting that the legal conditions are met
The procedure generally takes place in two stages: a first decision is made by the cantonal authority, which is then submitted for approval by the competent federal authority (Federal Office of Justice). This double validation ensures uniform application of the law throughout Swiss territory.
Criteria for Obtaining Authorisation
The authorities examine several criteria to grant or refuse authorisation:
- The reason given by the acquirer must correspond to one of the cases provided by the law
- The existence of a sufficient link to the place of acquisition (for secondary residences)
- Compliance with cantonal quotas of available authorisations
- The size of the property, which must not be excessive in relation to the stated needs
For the acquisition of a holiday residence, the applicant must demonstrate a particular attachment to the region concerned. This link may result from regular stays, family ties or other significant personal circumstances.
Processing times vary considerably between cantons and the complexity of the file, generally ranging from a few weeks to several months. It is recommended to anticipate these delays in any property acquisition project.
Legal Strategies and Acquisition Structures
Faced with the restrictions imposed by the Lex Koller, various legal structures have been developed to facilitate real estate investment in Switzerland by foreigners, while complying with the legal framework.
Corporate Structures
The use of corporate structures is a frequently considered approach:
- Real estate companies: Although the acquisition of shares in real estate companies is generally subject to authorisation, certain structures allow, under strict conditions, investment to be facilitated
- Operating companies: Since the acquisition of properties serving as permanent establishments for a commercial activity is not subject to authorisation, the creation of an operating company may represent a viable solution
These structures must be carefully designed to avoid any characterisation as an evasion of the law, which would result in the nullity of the transaction. Federal Supreme Court case law is particularly vigilant on this point.
Acquisition as a Resident
Foreigners legally residing in Switzerland benefit from more favourable conditions:
- Holders of a C permit (establishment authorisation) are not considered persons abroad within the meaning of the law
- Holders of a B permit (residence authorisation) may acquire a primary residence at their place of domicile without special authorisation
This route however implies effective establishment in Switzerland, with all the fiscal and personal consequences this entails.
It should be emphasised that these strategies must strictly comply with legislation. Attempts to circumvent the law are severely sanctioned, potentially resulting in the nullity of transactions and criminal prosecution.
Recent Developments and Practical Considerations
The Lex Koller continues to evolve in response to transformations in the Swiss real estate market and international economic pressures. Recent years have seen the emergence of several significant trends that are changing the legal landscape for property acquisition by foreigners.
The interplay between the Lex Koller and the Second Homes Act (Lex Weber) creates a particularly complex regulatory framework in certain tourist regions. These two regulations may cumulate, making any acquisition even more delicate in municipalities already saturated with second homes.
In this context, support from specialised professionals is decisive. Our law firm offers sharp expertise in preliminary analysis of acquisition projects, optimal structuring of transactions and management of authorisation procedures.
Frequently Asked Questions About Property Acquisition by Foreigners
Who is considered a 'person abroad' under the Lex Koller?
Under the LFAIE, the following are considered persons abroad: (1) natural persons who do not have Swiss nationality and do not hold a C permit; (2) legal entities with their registered office abroad; (3) legal entities with their registered office in Switzerland but controlled by persons abroad. Conversely, foreign nationals holding a C permit (establishment) are not subject to the law, and B permit holders may acquire their primary residence at their place of domicile without authorisation. EU/EFTA nationals active in Switzerland also benefit from a simplified regime.
Can a non-resident foreigner buy a holiday apartment in Switzerland?
Yes, but under strict conditions: cantonal authorisation is required, the number of available authorisations per canton is limited, the property must effectively serve as a holiday residence (personal use, no systematic rental), and the living area is capped (generally max. 200 m²). Furthermore, the Lex Weber (second homes act) prohibits the construction of new second homes in municipalities where these exceed 20% of the housing stock. In practice, authorisations are rare in popular Alpine and Lake Geneva resorts.
Is the purchase of a commercial property subject to the Lex Koller?
In principle, no. The acquisition of a property serving as a permanent establishment for an economic activity in Switzerland (offices, commercial premises, hotels, industrial premises) is excluded from the authorisation regime. This exception is fundamental: a foreign investor may acquire commercial properties without restriction, provided the property is effectively used for an economic activity. Case law is vigilant against structures seeking to artificially qualify a residential property as commercial.
What are the deadlines and remedies if authorisation is refused?
The authorisation procedure goes through the competent cantonal authority (often the cantonal department of territory or economy), then by validation by the Federal Office of Justice (FOJ). Deadlines vary from a few weeks to several months depending on the complexity of the file. In case of cantonal refusal, an appeal may be filed with the cantonal government, then before the cantonal administrative court, and finally before the Federal Supreme Court. PBM Avocats assists foreign investors in Geneva and Lausanne at all stages of the procedure.
How can a foreigner structure their real estate investment in Switzerland?
Several structures are possible within the strict framework of the law: (1) Direct acquisition if the property is commercial or if the acquirer holds a B/C permit; (2) Establishment of a Swiss operating company for commercial properties; (3) Obtaining resident status (B or C permit) before the purchase; (4) Partnership with a Swiss investor. Any structure whose purpose is to circumvent the Lex Koller must be avoided — the Federal Supreme Court strictly sanctions such arrangements (transaction nullity, possible criminal prosecution).