Context: The Geneva Lump-Sum Regime (Forfait Fiscal)
Risk Level: High (if you invest carelessly)
Most people choose the Lump-Sum tax for certainty. You negotiate a deal based on your rent (e.g., 7x annual rent), and you expect your bill to stay flat every year.
But there is a trapdoor.
Every year, the Geneva tax authority runs a secondary check called the Control Calculation (Calcul de Contrôle). If this calculation results in a higher number than your negotiated lump sum, you pay the higher amount.
Here is the mechanics of the trap—and how to avoid triggering it.
The Mechanism: “The Greater of A or B”
When you file your tax return in 2026, the computer runs two parallel numbers:
- Side A: The Lifestyle Deal
- Based on: Your Rent x 7 (or the minimum CHF 400k+ threshold).
- Result: This is your “Floor” (e.g., CHF 170,000 tax bill).
- Side B: The Shadow Check (Control Calculation)
- Based on: Income you generate from Switzerland + Foreign income where you claim Treaty Benefits.
- Result: This is your “Ceiling.”
The Rule: You pay whichever is higher.
The 3 Most Common Triggers (How People Break the Deal)
The goal of the Lump-Sum is to keep “Side B” (Swiss Income) lower than “Side A” (Lifestyle). If “Side B” exceeds “Side A,” your Lump-Sum benefit vanishes.
1. The Real Estate Trap
- The Mistake: You get bored and buy a commercial building or an apartment block in Geneva to generate rental income.
- The Consequence: Net rental income from Swiss property is always added to the Control Calculation.
- The Result: If that rental income is high, your tax bill rises dollar-for-dollar with ordinary tax rates, effectively canceling your Lump-Sum status.
2. The Dividend Trap (Swiss Equities)
- The Mistake: You hold a massive portfolio of Nestlé, Roche, or UBS shares in your Swiss bank account.
- The Consequence: Switzerland levies a 35% Withholding Tax on dividends. To get that 35% back, you must declare the dividends in your Control Calculation.
- The Math: If you earn CHF 1M in Swiss dividends, that CHF 1M enters the control bucket. Suddenly, your tax bill is based on CHF 1M income, not your rent.
3. The “Treaty Benefit” Trap (The Modified Lump-Sum)
- The Mistake: You have a large US stock portfolio. You want the lower 15% withholding tax rate on US dividends (instead of 30%).
- The Consequence: To use the Double Tax Treaty (DTT), Switzerland requires you to declare all income from that country in the Control Calculation.
- The Trade-off: Is saving 15% on your US dividends worth exposing your entire US portfolio income to Swiss tax rates? Often, the answer is no.
🔍 Visualizing the Trap
💡 The Strategy: How to Stay Safe
To protect your Lump-Sum status in 2026, follow these “Hygiene Rules”:
- Segregate Assets: Keep your Swiss assets (Side B) to a bare minimum.
- Avoid Swiss Yield: Do not buy Swiss rental property or high-dividend Swiss stocks unless you have done the math. Focus on capital gains (tax-free) or foreign assets.
- Do the “Treaty Math”: Before claiming a tax refund on foreign dividends (e.g., form R-US 164), calculate if the refund is bigger than the tax hike it triggers in your Control Calculation. If it’s not, leave the money on the table. It’s cheaper to lose 15% withholding tax than to pay 45% Swiss income tax.
🚀 Next Step
Review your “Side B” Exposure.
Look at your portfolio statement. Sum up all Swiss Dividends, Swiss Interest, and Swiss Rental Income.
- If this sum exceeds CHF 400,000, you are likely already piercing your Lump-Sum floor and paying unnecessary tax.