Switzerland Amongst the Cheapest Countries for Real Estate Investment
Research conducted by Taxand, the world's largest global organisation of tax advisors to multinational businesses, has shown that Switzerland is one of the cheapest countries for real estate investment across a range of different sectors when comparing the impact of total tax takes.
The latest Taxand total tax take (T3) research into the real estate market, now expanded to 29 countries across the globe, clearly demonstrate Switzerland's attractiveness for buy-to-let investors. With just 22.0% tax recouped from rental income, the country is one of the three cheapest locations for this kind of investment globally. The UK has the second lowest rate of just 21.00%, explained by the lack of VAT on rental of residential units and medium income tax rate. The most expensive jurisdiction in this sector is Columbia, where 46% of the income is absorbed by tax due to the high real estate tax rate on land and building (3.30%) and high capital duty on financing (7%), as well as the high rate of income tax (33%).
Switzerland also has one of the lowest tax rates applicable to homes for sale. At just 11.98%, this compares highly favourably with the average of 17.83%. Switzerland's rate is less than half that charged in neighbouring Austria, which tops Taxand's table with a rate of 27.14%.
The research also shows that Switzerland ranks in the bottom quartile for almost all real estate investment scenarios. For example, commercial rent in Switzerland is taxed at just 13.99%, in contrast with the top rate of 43.04% in Japan. In this category, only Finland (11.88%), India (11.19%) and Cyprus (8.05%) beat Switzerland's low rate of tax on commercial properties.
Keith O'Donnell, Head of Real Estate at Taxand, said:
"Each edition of Taxand's T3 research shows ever more interesting conclusions regarding the benefits and disadvantages of locations from a real estate investors' perspective. The addition of four new countries this year allows Taxand to provide an even broader view across all regions around the world.
"The disparity shown across the globe was surprising, with a number of asset classes showing a 500% increase from the lowest to the highest rankings. It is not necessarily the developed countries that experience the highest rates of tax taken, with many Western European countries sitting at the cheaper end of the tables."
Stephan Pfenninger, from the Taxand Switzerland Real Estate team, said:
"This latest research confirms the attractiveness of Switzerland when it comes to real estate investment. The country's draw as a buy-to-let location is particularly striking. With low tax takes in the residential sector also, the country represents a serious opportunity for investors in Europe. Nevertheless, there are other countries - both European and in emerging markets - where, surprisingly, Switzerland's tax rates can be beaten, which proves how invaluable and illuminating in-depth tax advice can be for investors of all sizes."
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