News

I.   Introduction

The Federal Act on the Acquisition of Real Estate by Persons Abroad (LFAIE; SR 211.412.41), also known as the Lex Koller, is a law which aims to limit the acquisition of real estate by persons domiciled outside the country in order to "prevent foreign ownership of Swiss soil".

This law varies according to the type of residence permit, the country of origin and the place of residence. Its operation is therefore complex. Moreover, the law changes according to the type of use one wants to make of it: secondary residence, main residence or holiday home. Foreign investors are not entitled to acquire residential property, but are still allowed to invest in commercial, craft and subsidised property.

The acquisition of a property subject to the authorisation regime requires the granting of an authorisation by the competent cantonal authority (art. 2, para. 1, LFAIE). Thus, the application of this law is first and foremost the responsibility of the canton in whose territory the property is located. It is the competent authority designated by the canton in question that decides whether a legal act is subject to authorisation and whether authorisation should be granted (art. 15, para. 1, letter a, FL). Authorisation is granted only on the grounds set out in the FL and, where applicable, in cantonal law (Art. 3, 8 and 9 FL).

II.  Conditions

In principle, three cumulative conditions must be met for a legal transaction to be subject to the authorisation regime:

- The purchaser must be a person abroad within the meaning of the FL (subjective liability).

- The object of the legal transaction must concern a property that is subject to taxation under the FL (objective taxation according to the use of the property).

- The acquired right must be assimilated to an acquisition of real estate under the FL (objective liability according to the type of right).

Even if these three conditions are fulfilled, further exceptions to the obligation to obtain authorisation in accordance with Art. 7 FL may apply.

III.   Persons abroad

The Lex Koller defines persons abroad in art. 5 para. 1 let. a and abis FL (supplemented by art. 2 OFL). These are foreigners domiciled abroad and foreigners domiciled in Switzerland, but who are not nationals of a member state of the European Community (EC) or the European Free Trade Association (EFTA), nor do they possess a valid C settlement permit.

This regime also applies to companies with headquarters abroad even if they are Swiss-owned and considered to be Swiss from an economic point of view.

IV. Holiday accommodation

A foreigner subject to authorisation may acquire a flat in an aparthotel or holiday home (Art. 9, paras. 2 and 3, and Art. 10 FL). The location of the accommodation must be designated as a tourist area by the canton in question. Each authorisation is subject to the annual quota allocated by the Confederation to the canton for holiday homes and flats in an aparthotel (art. 11 FL, art. 9 OFL and Annex 1 OFL), although there is an exception if the authorisation for the acquisition of this home or flat had already been obtained by the seller at the time.

Quota units may also be transferred to non-taxable persons to enable the sale of dwellings to foreign nationals (so-called "de principe" authorisations). Consequently, individual purchases by foreign nationals still require authorisation, but no longer have to be counted in the quota. Cantons and tourist municipalities may impose restrictions. For example, they may decide to block a location completely, or allow the purchase of multi-storey properties and only up to a certain quota, or limit the annual number of permits, or restrict the purchase of dwellings that are already in foreign hands (Art. 13 FL).

The following cantons allow the purchase of a holiday home or flat in an aparthotel: Appenzell Ausserrhoden, Bern, Fribourg, Glarus, Graubünden, Jura, Lucerne, Neuchâtel, Nidwalden, Obwalden, St. Gallen, Schaffhausen (only for flats in an aparthotel), Schwyz, Ticino, Uri, Valais and Vaud.

Holiday homes cannot be rented out on a year-round basis, but can only be rented out on a short-term basis. The purchaser must be able to use the accommodation himself in accordance with the purpose for which he has applied. The flats in a hotel apartment must be left at the disposal of the hotelier so that he can operate them as a hotel, especially during the high season (Art. 10, letter b, OAIE).

According to Art. 8 OAIE, holiday homes can only be acquired by natural persons directly in their own name; indirect acquisition of a home through a legal entity is not possible.

In principle, according to Art. 10, paras. 2 and 3, OAIE, the net floor area of a property may not exceed 200 m2 and the plot area 1,000 m2 (Art. 10, paras. 2 and 3, OAIE). In accordance with established practice, in the event of additional need, up to 250 m2 of net floor area and 1,500 m2 of plot area may be permitted, and in exceptional cases, higher excesses.

Mizgin CADIR, Alain AGUPYAN & Cassandra JOCHUM

The year 2022 saw an important legal victory for ELC, our law firm.
On September 28, 2022, the Swiss Supreme Court (the Federal Court) issued a decision that put an end to a case of unlawful removal of children from Greece to Switzerland for seven months. Our Law firm, representing the father of the children and requesting their return, won the case at all levels.

The phenomenon of child abduction has grown in recent decades for several reasons, including globalization, the evolution of family law and the increase in binational couples.
The Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction (hereinafter referred to as the "Hague Convention") is the main legal instrument in this field, as it is currently binding on 100 States (for more information, we invite you to read our article of 1 February 2022)
The most controversial issue before the cantonal courts was whether the mother, according to Greek law, could move to Switzerland with the children without the father's permission, since she had temporary sole custody of the children and the couple had been separated for years. The mother, on the other hand, obviously argued that the father's consent to the move abroad was not necessary because of her sole custody of the children.

The Swiss judge did not have to decide on the matter by applying Greek law, since on May 10, 2022 the Court of First Instance of Athens ruled that the move was illegal. Indeed, art. 14 THC 80 allows the authorities of the requested State to rely directly on a judicial or administrative decision formally recognized in the State of the child's habitual residence in order to determine the existence of an unlawful removal in the sense of art. 3 THC 80.
The Swiss judicial authority thus had to analyze the exceptions to return provided for in art. 13 THC 80, which were lacking in this case, before ordering the immediate return of the children to Greece, in accordance with art. 12 THC 80.
The decision of the cantonal court confirms the rigidity of THC 80, which was rightly designed to protect children from the harmful consequences of abduction by ensuring, among other things, that existing rights of custody and access in a contracting state are effectively respected. In this case, neither the rapid integration of the children in Switzerland nor their preference for this country could prevent their return to their country of habitual residence, Greece, since the law of that country had been violated.
In her appeal to the Federal Court, the children's mother mainly contested the fact that the cantonal court based its decision (in the sense of art. 14 CLaH 80) on the Greek decision of May 10, 2022, which she claimed was null and void.
The Swiss Supreme Court's response to this complaint was clear: art. 14 THA 80 serves the principle of expediency that should apply to this type of case; its purpose is not to recognize a foreign decision in advance or to examine its conformity. Therefore, the cantonal authority had not violated federal law.
Moreover, the Federal Court confirmed its case law not only with regard to the restrictive application of the exceptions to return (art. 13 CLaH 80) but also with regard to the burden of proof and the requirement to state reasons (art. 42 para. 2 FSCA).
In the present case, the complaints raised by the appellant were of a purely appellatory nature or expressed her point of view, but did not show precisely in what way the cantonal court had violated the law.
The appeal was therefore dismissed.
The children, represented by a lawyer of their choice and not by the curator who had been appointed in the cantonal proceedings, also appealed to the Federal Court.
However, the appeal was declared inadmissible. Indeed, lacking the capacity of discernment regarding the dispute between the parents, which had been determined by the cantonal court, the appellants could not free themselves from the services of their curator in order to mandate a lawyer of their choice.
After seven months of legal battle, for a dispute which proved to be very delicate not only for its nature but also for the tense relations between the parties, we welcomed the decision of the Federal Court. Justice has been rendered for a father whose rights were violated!

Carmela Telemaco
Constantin Kokkinos

Following parliamentary debate, a new law of succession will come into effect in 2023 in Switzerland. The new legal provisions will apply to all estates of persons who die on or after January 1, 2023.

Today, the system provides, among other things, that the legal reserve allocated to a descendant is ¾ of his or her inheritance right; that of the surviving parents is ½ each; and the legal reserve of the surviving spouse or registered partner is 1/2 (art. 471 CC).

The major changes planned for 2023 are in the legal allocation of the hereditary reserves. Indeed, the reserve share of the descendants is reduced to half of the legal share (½), thus ¼ of the estate; and the reserve share of the surviving parents will be eliminated.

However, the decedent's legal partner will still be awarded ½ of the reserve. In addition, there is still no right to the estate for the cohabitant.

This new distribution of legal shares gives the testator greater flexibility in the distribution of his or her estate. Now, half of the total estate can be distributed freely by the testator, instead of ⅜ of the estate previously.

Implications for usufruct:  

Spouses/registered partners maintain the possibility of providing for the granting of a usufruct on the entire share of the estate devolving to the joint children. However, they can extend this advantage granted to the partner; indeed, they can now attribute half of the estate in full ownership to the spouse/registered partner (i.e. the available portion of ½ of the estate, instead of the ¼ currently) and the other half in usufruct (½ instead of the ¾ currently).

However, in the event that the spouse / registered partner remarries or enters into a new registered partnership, he/she loses the usufruct on the children's inheritance reserve. The latter become full owners of their share of the estate, which is no longer subject to a usufruct.

Couple involved in divorce proceedings:

As soon as divorce proceedings or the dissolution of a registered partnership are initiated, the protection of the inheritance reserve will cease, even before the divorce or registered partnership is finally pronounced.

For this purpose, it is sufficient that:

- a divorce proceeding has been initiated by joint petition, or

- the spouses have lived separately for at least two years, and

- one of the spouses dies, and

- that this deprivation of inheritance is provided for in the deceased's will.

Finally, the surviving spouse will legally lose:

- his or her reserved portion of the estate

- his or her rights resulting from dispositions of property upon death

- the gifts provided for in the marriage contract.

Inter vivos gifts:

Whereas the current law provides that a gift made by the testator after the conclusion of a contract of succession may be voidable only if it contravenes the provisions of the contract of succession or if there is an intention to prejudice the instituted heirs, the new law of 2023 will allow the contracting party to the contract of succession to object to dispositions upon death or liberalities between living persons without the need to prove that they cause prejudice to the contracting party.

This brings us closer to a restrictive practice in the freedom of the testator to dispose of his property. 

Furthermore, the reform modifies the order in which reductions of gifts can be made in the event of a violation of the legal reserve. Until the reserve is reconstituted, the order of reduction is as follows:

1.     Acquisitions on account of death resulting from the law

2.     Gifts in lieu of death

3.     Gifts between living persons

Clarity for Pillar 3a:

Pillar 3A pension assets will now be included in the calculation of reserves (for their surrender value) and will not be included in the estate.

This provision, which is already in force but vague at present, will be expressly written and clarified in the text of the law.

In conclusion, we are moving towards a modernization of the Swiss inheritance law. The Swiss Confederation fills its gaps in the field of inheritance law by means of standards that are already applicable in many other European countries.

Jacques DEGORS & Ilona ROUSSEL

Sources : ww.ubs.com / www.bdo.ch / arpr.ch / www.mll-news.com 

MORAL TORT

In Switzerland, Article 47 of the Federal Act supplementing the Swiss Civil Code provides that "The judge may, taking into account particular circumstances, award the victim of bodily injury or, in the case of death, the family, fair compensation as moral reparation.

It appears from the practice of Swiss courts that this moral damage is assessed according to a two-stage process.

The Swiss courts therefore analyse successively :

 the objective seriousness of your injury

the elements specific to the case in question

An objective amount is thus allocated as an indication in a first phase and in a second phase, all the circumstances of the case are taken into account to adjust the basic amount, this last phase being more important in serious cases.

Phase 1: In order to calculate the basic amount to which a victim's next of kin may be entitled, the maximum insured earnings at the time of death, i.e. CHF 148,200 under the LAA (Compulsory Accident Insurance Act), must be taken into account.

https://www.swissriskcare.ch/sites/default/files/src_chiffres_cles_2022.pdf

When calculating such an amount, the aim of providing the injured party with a certain feeling of enrichment should only serve as an overall criterion, applicable in the same way to all injured parties, and making it possible to set the range within which the total compensation should be situated.

Thus, the Swiss courts have based themselves on the figures used in the literature, in particular the figures used by Hütte, which are most probably the closest to the current case law. A basic compensation of 35% of the share of earnings insured by the compulsory accident insurance is awarded for the death of a child (Guyaz Alexandre, le tort moral en cas d'accident:une mise à jour, SJ 2013 II p. 215 ss, 250 s.)

Therefore, in the case of a human death following a road accident, a parent would be awarded CHF 52,000 (i.e. 35% of CHF 148,200) as basic moral compensation.

Phase 2: Using the example of parents who have lost their child, the basic amount of CHF 52,000 could be increased to some extent, given the mitigating or aggravating circumstances in each particular case.

The fact of having directly witnessed the accident, the intensity of the bond between a mother and her deceased daughter, the pain caused by the loss of the child or the moral suffering resulting from the fact that no one was found guilty in the criminal proceedings, for example, are elements that may well be taken into consideration by the judges in order to increase the compensation.

However, this compensation must be fixed in a "fair" manner, thus leaving a wide margin of appreciation to the courts. As mentioned above, compensation is also assessed in comparison with similar situations and the amounts awarded in those cases.

Case law and doctrine take into account, among other things, the seriousness of the fault committed by the wrongdoer when determining the compensation. The latter should be considered only insofar as it has aggravated the claimant's psychological pain and made it even more difficult to accept the situation suffered.

In sum, there are ultimately as many grounds for awarding 100,000 francs as there are for awarding 200,000 francs or 1,000,000 francs for the same injury and it would undoubtedly be preferable for this type of decision to be taken directly by the legislator rather than left to the discretion of the judge.

ECONOMIC LOSS

Article 45 paragraph 3 of the Swiss Code of Obligations provides for damages for the loss of support resulting from the death of a loved one. It is necessary to estimate the hypothetical income that an individual would have obtained from his or her deceased loved one from the day of his or her death. In order to do this, it is necessary to examine several criteria: the amount of income, the proportion of this income that was spent on the relative, possible reductions and the duration of the support. If the support was given in kind (in the form of work, household help, care, etc.), it is possible to estimate its value, but this is more difficult to demonstrate in court.

In conclusion, when a loved one is lost, a certain category of individuals close to the deceased can claim their rights before a court to receive both compensation for the moral suffering experienced and the economic damage that follows the death.

It has been observed that the amounts awarded to relatives are small compared to what some have suffered, such as the loss of a child or parents. Only in exceptional cases has Swiss case law doubled the compensation for moral damages and prevented claims from being made for sums that are too high compared to the latter, at the risk of having claims rejected.

Today, therefore, it seems that this process is not very representative of the pain endured. The moral issue should probably be examined by the legislator in order to revalue the amounts awarded in the event of death and avoid this issue being left to the arbitrariness of a judge.

Jennifer Gaumann & Ambre Schindler