Buying property in Switzerland as a foreigner: Lex Koller rules

Buying a flat in Geneva or a chalet in the mountains looks, from the outside, like an ordinary property transaction. In Switzerland it is not. A federal law restricts the acquisition of real estate by people who live abroad, and it bites before the notary, before the land register and before the mortgage. Get it wrong and the deal is not merely delayed: it is void.

That law is the Federal Act on the Acquisition of Real Estate by Persons Abroad, known by its French acronym LFAIE and, to almost everyone in Switzerland, as the Lex Koller. It is one of the most commonly misunderstood rules for internationally mobile buyers, and the misunderstanding is rarely about the small print. It is usually about one word: domicile.

The question that decides everything: where is your domicile?

The Lex Koller does not ask what passport you hold. It asks whether you are a "person abroad". Exemption from the authorisation requirement presupposes an effective domicile in Switzerland (art. 5 para. 1 let. a no. 1 LFAIE). Holding the nationality of an EU member state is not, in itself, an exemption.

That single sentence overturns the assumption most expatriate buyers arrive with. A French, German or Italian passport does not open the Swiss property market by itself. What counts is where your life actually is.

What "domicile" means in Swiss law

Domicile is defined by article 23 of the Swiss Civil Code: the place where a person resides with the intention of settling there. Two ingredients are needed, physical presence and the intention to stay, and the intention is assessed on objective facts, not on declarations.

Consequences that surprise people:

• A signed lease on a Geneva flat does not, on its own, create domicile.
• A stay for studies does not, on its own, create domicile.
• If your real centre of life remains abroad, you remain subject to the authorisation regime, whatever your paperwork looks like.

The practical test is closer to "where is your life" than "what does your file say". Where does your family live? Where do you work day to day? Where do you spend most of your time, and where do you intend to remain? If the honest answer is still the country you came from, the Lex Koller treats you as a person abroad.

Main home, secondary home: two very different regimes

Once you know whether you are a person abroad, the next question is what you want to buy.

A secondary residence (a holiday flat or a second home, as opposed to the home you actually live in) acquired by a person abroad is subject to authorisation and to strict federal quotas: at most 1'500 units per year for the whole of Switzerland. Authorisation is granted only in cantons and communes with a tourist vocation that have expressly provided for it (art. 9 para. 2 and 3 LFAIE).

Two things follow. First, the quota is national, not per canton and not per buyer, so availability is genuinely limited. Second, geography is decisive: if the commune you have fallen in love with has not opted into the regime, no amount of goodwill from the seller will produce an authorisation. Check the commune before you fall in love with the property, not after.

The cross-border worker exception

There is one clean exception that matters enormously around Geneva. Nationals of the EU or EFTA who hold a permit G (the Swiss cross-border commuter permit, for people who work in Switzerland but live in a neighbouring country) may acquire a secondary residence in the region of their place of work without authorisation (art. 7 let. j LFAIE).

Note the two conditions built into that sentence: the nationality condition (EU or EFTA) and the geographic condition (the region of the workplace). It is a targeted exception for commuters, not a general permission to buy anywhere in Switzerland.

Summary table

Three traps we see again and again

Trap 1: assuming a B permit or an EU passport is enough

This is the most frequent one. A residence permit is an immigration document; the Lex Koller is a separate regime with its own test. The exemption runs on effective domicile, and nothing else substitutes for it. People who have "moved to Switzerland" on paper while their family, their main home and their working life remain abroad are exactly the profile the law was written for.

If your situation is genuinely mixed (a new job in Geneva, a family still abroad, a move planned in stages), that is not a detail to smooth over in the deed. It is the thing to clarify with the competent cantonal authority before you commit.

Trap 2: using a Swiss company as a screen

The idea sounds elegant: incorporate a Swiss SA or Sàrl (the two standard Swiss company forms, a public limited company and a limited liability company), have the company buy the property, and the Lex Koller problem disappears. It does not.

The acquisition of shares in a non-listed company whose real purpose is the acquisition of real estate, by a person abroad, is itself treated as an acquisition subject to authorisation (art. 4 para. 1 let. e LFAIE). And a company that is financed or controlled predominantly from abroad is itself qualified as a person abroad (art. 6 LFAIE). The corporate veil does not change the analysis; it just adds a layer that has to be unwound later, usually at the worst moment.

There are perfectly good reasons to set up a Swiss company, and our team advises on company formation regularly. Circumventing the Lex Koller is not one of them, and any adviser who presents it as a workaround is selling you a future problem.

Trap 3: underestimating the sanctions

This is where a paperwork issue becomes a serious one.

• Nullity. Legal acts carried out without the required authorisation are struck with absolute nullity (art. 26 LFAIE). The purchase does not become valid with time, and it does not become valid because everyone acted in good faith. It simply never produced its effects.
• Criminal liability. Intentionally providing false information to the authorities, to the land register or to the commercial register (for example, misstating your real domicile or who actually holds the shares) is a criminal offence, punishable by a custodial sentence of up to three years or a monetary penalty (art. 28 and 29 LFAIE).

Read those two points together and the calculation changes. The downside of a structure that "should be fine" is not a fine and a correction. It is an unwound transaction and a criminal file.

A short checklist before you sign anything

1. Establish your status honestly. Where is your centre of life today, not where you intend it to be at some point in the future?
2. Classify the property. Is it the home you will actually live in, or a secondary residence? The regimes are not the same.
3. Check the commune, not just the canton. For a secondary residence acquired by a person abroad, the commune must have expressly provided for it.
4. If you are a cross-border commuter, check the region. The permit G exception is tied to the region of your place of work.
5. Never rely on a holding structure to solve a status problem. Article 4 and article 6 LFAIE are designed to look through it.
6. Get the answer in writing from the competent cantonal authority before the deed, not after. Nullity is not something you negotiate your way out of.

The wider picture: property is also a tax event

The Lex Koller is a gatekeeping rule, not a tax rule. But owning Swiss real estate changes what has to appear in your annual filings, and the treatment depends on your canton and on your personal situation. If you are new to the system, the sequence to get right is: confirm your Lex Koller position, then map the tax consequences with your adviser or the cantonal tax administration, then sign.

Klear works with expatriates and international founders in Geneva on exactly this sequence. We handle the personal tax return side of property ownership, the broader tax advisory questions that come with relocating, and the structuring questions that follow. If you are weighing a purchase and are not certain which side of the line you fall on, get in touch before you make an offer. Clarifying your position before you commit is far less costly than unwinding a purchase after the fact.

This article provides general information on Swiss law as it applies to the acquisition of real estate by persons abroad. It is not individual tax or legal advice, and it does not take account of your personal circumstances. Lex Koller assessments are made case by case by the competent cantonal authority. Please seek advice tailored to your situation before entering into any commitment.