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A Legal Guide to Investing in...

SEPTEMBER 2014

Investing in Switzerland

Daniel Hayek is a partner of Prager Dreifuss Ltd and a member of the management

head of Prager Dreifuss’ “Corporate and M&A” team

Contact:

PRAGER DREIFUSS Attorneys at Law Prager Dreifuss AG Mühlebachstrasse 6, CH-8008 Zürich Web: www.prager-dreifuss.com

committee and

Switzerland is a favourable location for capital investments from abroad. It has successfully overcome the global economic crisis. According to a recent study, foreign direct investments in Switzerland have increased by 25% in 2013 compared to 2012. Due to its political and economic stability and a business-friendly climate including legal framework, it is likely that foreign investments in Switzerland will continue to grow. Sectors which still offer high potentials are in particular Banking, Insurance, Finance and Pharmaceutical Industry and Biotechnology. We speak to Daniel Hayek, a partner of Prager Dreifuss Ltd and a member of the management committee and head of Prager Dreifuss’ 'Corporate and M&A' team to find out more.

Acquisition of real estate

The most significant law to bear in mind when it comes to investing in Switzerland is the federal law on the acquisition of real estate by persons abroad (known as “Lex Koller”). This law restricts the acquisition of real estate in Switzerland by persons abroad. The Lex Koller could for example be relevant for an investor from the United Arab Emirates who plans a real estate project in Switzerland. A prior authorisation from the appropriate cantonal authority to purchase certain real estate must be obtained if the following conditions are met: (i) The acquiring person qualifies as person abroad, (ii) the Lex Koller applies to this kind of real estate and (iii) the acquisition or transaction leads to actual control over real estate by the person abroad.

Persons abroad are foreigners who are not Swiss citizens and have their main place of residence outside of Switzerland. Even foreigners domiciled in Switzerland qualify as individuals abroad, unless they are a member of the EC or EFTA member

www.lawyer-monthly.com states or hold a valid C residence permit.

Companies are subject to the Lex Koller if they have their registered offices in Switzerland and are controlled by persons abroad or if they have their registered offices outside of Switzerland. Fiduciary transactions and the transfer of a property to a trust, if any of the trustees or beneficiaries qualifies as a person abroad, are subject to the authorisation requirement, too. An

authorisation must be obtained for

constructions, rental or leasing of properties for residential purposes. It is, however, important to note that a transaction concerning real estate (including reasonable land reserves), which is used for commercial purposes is not subject to the Lex Koller. The same applies to the purchase of a dwelling by persons abroad in their place of residence if they are domiciled in Switzerland and have a valid residence permit. Further, no authorisation is required for living accommodation run on a hotel basis and secondary residences for nationals of an EC or