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EXPLAINED: How rich Russians ‘buy’ the right to live in Switzerland

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EXPLAINED: How rich Russians ‘buy’ the right to live in Switzerland
The waterfront in the Swiss canton of Zug. Photo: Peter Wormstetter/Unsplash (Photo by Peter Wormstetter on Unsplash)

The invasion of Ukraine has shed more light on how Russian wealth opens doors the world over, including the right to live in Switzerland.

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For those from outside the European Union, moving to Switzerland can be relatively difficult for those without a job offer or a close familial connection. 

However, the Swiss visa framework has been set up in such a way that the über-wealthy can move to Switzerland without active employment or a family connection. 

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Swiss news outlet Watson reports that 362 people have taken advantage of the visa scheme, 172 of whom are of Russian origin. 

Russians far outnumber any other foreigners in Switzerland pursuant to the scheme, with 52 Chinese, 31 Canadians, 29 Americans, 24 Turks, 20 from Saudi Arabia and 19 from Ukraine and Brazil. The figures show 16 Mexicans have taken advantage of the scheme, along with 13 people from India. 

Despite some indications from Swiss politicians that the scheme should come to an end, it remains in force. 

Here’s what you need to know. 

READ MORE: How wealthy foreigners can ‘buy’ a Swiss residence permit

How do rich Russians and non-EU foreigners buy a residency permit? 

There are a variety of ways in which wealthy foreigners can move to Switzerland. 

This includes buying a Swiss company, investing in a Swiss company or opening up a subsidiary of another company in Switzerland, along with purchasing real estate which generates jobs and revenue. 

Under the Swiss Aliens Act, wealthy non-EU foreigners can move to Switzerland. 

Article 30 of the Act allows people to move to Switzerland if they agree to ‘flat-rate’ taxation, whereby they pay tax on their expenses rather than their income. 

While the system allows people to move to most parts of Switzerland, those utilising an Article 30 visa tend to stay primarily in Geneva, Ticino, Bern, Vaud and low-tax Zug. 

EXPLAINED: Why Switzerland is a magnet for Russian money

Tax lawyer Christopher Steckel told Swiss news outlet Watson that Switzerland and its cantons benefit financially from this program. 

“This system is practically the by-product of globalisation. People, families and wealth no longer stay in one place.” 

"Of course, a country benefits when the wealthy move in, buy houses, send their children to private schools, eat out and generally spend a lot of money."

Although the exact amount a person needs to be taxed on is not explicit, experts estimate it starts at 500,000 francs. 

Members of the Greens, Social Democrats and the GLP have called for the rule to be abolished. 

EXPLAINED: What’s the difference between permanent residence and Swiss citizenship?

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Is Switzerland really an ‘oligarch’s paradise’?

Commentary since the invasion has focused on how prevalent Russian money is in Switzerland. 

Swiss broadsheet NZZ said Switzerland over the years became a “paradise for Russian oligarchs”, with few restrictions provided people could invest enough to stay. 

Jon Knight wrote in Germany’s FAZ magazine that the permissive regulatory structure has rendered Switzerland a “pirate haven” for Russia and its oligarchs. 

“Switzerland is very often the point of contact for people who don't always follow the law. The spectrum is broad, ranging from entrepreneurs who bribe from here, to sports associations with corrupt members, to financial institutions that are open to potentates and oligarchs… (The Swiss people) no longer want to be the port where pirates meet to stock up on everything they need for their raids.”

While Switzerland has taken some steps to curb the practice, including imposing sanctions on some of the Russian elite, the NZZ reports that few Russians in Switzerland fear losing their assets in the long term. 

“For the time being, the oligarchs do not have to fear that the Swiss authorities will confiscate their luxury properties and cars, as is the case in France and Great Britain.”

KEY POINTS: What you need to know about golden visas in Switzerland

“The Swiss Sanctions Ordinance stipulates that all assets and economic resources of persons against whom sanctions have been imposed are frozen. They can still use their houses and cars - they just can't sell them or use them commercially.

Switzerland has imposed sanctions on 874 Russians, freezing a total of six billion francs since March. 

The sanctions do not however allow Switzerland to revoke a person’s residency permit. 

While this can take place, the process is difficult and has not yet been invoked, Swiss media reports. 

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