Target Strategy: Wealth Preservation & Growth without triggering the “Control Calculation”
As we discussed, the “Control Calculation” is the enemy of the Lump-Sum taxpayer. To keep your tax bill fixed at your negotiated rate (e.g., CHF 170k/year), you generally need to avoid generating Swiss-sourced income or Foreign income where you claim tax treaty relief.
If you want to invest efficiently while on the Forfait, shift your portfolio toward these “Lump-Sum Friendly” asset classes.
1. Zero-Dividend “Compounders” (Growth Stocks)
The holy grail for Swiss residents is Capital Gains, because they are 100% tax-free for private investors.
- Why it works: If a stock pays $0 dividend, there is no “income” to report in the Control Calculation. You only have a capital gain when you sell, which is invisible to the taxman.
- Examples: Berkshire Hathaway (famous for 0% dividends), early-stage tech stocks, or specific “Growth” funds that structurally avoid payouts.
- The Strategy: Buy, hold, and sell only when you need liquidity. You keep 100% of the upside.
2. Physical Gold & Commodities
Precious metals are the ultimate “neutral” asset for the lump-sum regime.
- Why it works: A bar of gold yields 0% interest. It produces no income stream that could trigger a tax re-evaluation. It merely sits in your vault (allocated storage) and appreciates (or depreciates) in value.
- Bonus: In Switzerland, you can buy/sell gold without VAT (for bank-grade bullion) and with high privacy.
- Caution: Avoid “Gold ETCs” or derivatives if they generate internal “interest” or phantom income. Physical allocated gold is the safest path.
3. Foreign Real Estate (The “Exemption” Play)
Many clients fear buying property abroad, but under Swiss rules, it is surprisingly safe.
- Why it works: Switzerland generally exempts foreign real estate from taxation.
- Wealth Tax: The value of your London flat or Miami villa is used only to determine your tax rate (progression), but it is not directly taxed.
- Income Tax: Rental income from foreign property is excluded from the Control Calculation (because it is not Swiss-sourced and relies on the “location of the property” rule, not a treaty claim).
- The result: You pay taxes in the country where the house is (UK/USA), but it usually won’t increase your Swiss Lump-Sum bill.
4. Private Equity (Co-Investment / LP Interests)
- Why it works: Private Equity returns are often structured as Capital Gains (upon exit/IPO) rather than regular annual dividends.
- The Strategy: Invest in funds that accumulate value over 5-7 years and payout in a single “liquidity event.” Since this is a capital gain, it falls outside the Swiss income tax net.
- Warning: Ensure the fund does not distribute “interest income” or “dividends” during the holding period. Pure growth equity is best.
⚠️ The “Danger Zone” (Avoid These)
- Swiss Blue Chips (Nestlé, Novartis, UBS): They pay good dividends, but Switzerland withholds 35% tax. To get that money back, you must declare the income, which triggers the Control Calculation.
- High-Yield US Stocks (if you want the Treaty rate): If you hold Coca-Cola and want to reduce the US tax from 30% to 15%, you must ask the Swiss taxman for help. That request automatically pulls that income into your Swiss tax assessment.
- The Fix: If you must hold them, accept the 30% US withholding tax as a “sunk cost” and do not declare them in Switzerland.
💡 Executive Summary
The perfect “Lump-Sum Portfolio” is boring on purpose. It produces zero annual cash flow but high capital appreciation.
- Good: Gold, Growth Stocks, Art, Crypto (Buy & Hold, no staking).
- Bad: Dividend ETFs, Bonds, Swiss Property.