The regime is aimed at foreign nationals who become Swiss tax resident for the first time or after a long absence and do not perform gainful activity in Switzerland.
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ESTV Kreisschreiben Nr. 44 · Editorial explanation
Expenditure-Based Taxation in Switzerland: FTA Circular 44
Current FTA administrative guidance for direct federal tax, not standalone legislation. Availability and calculation require separate review of cantonal law, facts and applicable treaties.
Key takeaways
Key takeaways
This material explains the official publication without reproducing it and is not an official translation or individual advice. Current legislation, cantonal practice and the facts must be checked before application.
For spouses living together, both must satisfy the conditions; Swiss citizenship or Swiss gainful activity of either spouse prevents the regime.
The tax base follows worldwide living expenditure of the taxpayer and supported persons but cannot fall below statutory minima and the control calculation.
The control calculation captures specified Swiss income and assets and foreign income for which treaty relief is claimed.
Cantons retain their own law and practice; federal guidance does not confirm that the regime is available in a particular canton.
01
Personal eligibility
Article 14 DFTA and the circular link the regime to foreign nationality, taking up Swiss residence for the first time or after at least ten years abroad, and no gainful activity in Switzerland. Gainful activity is assessed by substantive participation in the Swiss economy, not merely by where remuneration is paid. Entitlement ends when a condition ceases to be met. Spouses living together must both qualify; a paper-only separation does not replace review of the facts.
02
Expenditure base and control calculation
The starting point is the annual worldwide living expenditure of the taxpayer and supported persons, including housing, staff, education, travel, transport, asset upkeep and other lifestyle costs. The result is compared with statutory minima linked, among other matters, to housing or board costs and an indexed minimum amount. A separate control calculation then includes the Swiss income and assets listed in the DFTA and foreign income for which treaty relief is claimed; tax is charged by reference to the higher base.
03
Cantons, treaties and procedure
The circular addresses direct federal tax, while cantonal and municipal taxes also depend on the THA and the law of the relevant canton; some cantons have restricted or abolished the regime. Ordinary and modified expenditure-based taxation, required for access to certain treaties, differ in the control-calculation perimeter. An applicant needs a documented worldwide-expense budget, evidence of no Swiss gainful activity, residence analysis and an aligned position with the competent cantonal authority. Any ruling is limited to the disclosed facts and applicable period.
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Official source
This material explains the official publication without reproducing it and is not an official translation or individual advice. Current legislation, cantonal practice and the facts must be checked before application.
ESTV Kreisschreiben Nr. 44
Swiss Federal Tax Administration · 2018-07-24 · PDF · 8
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