Moving to, living and working in Lugano

Moving to, living and working in

Lugano Switzerland

Denti della Vecchia

LUGANO AT A GLANCE Monte Tamaro Rivera Schaffhausen Basel Zurich Bern

St. Gallen Vaduz

Lucerne

Fribourg

GERMANY

SWITZERLAND

Lausanne Geneva

Gazzirola

Monte Tamaro

AUSTRIA

Chur

Valcolla

St. Moritz LUGANO

ITALY

Monte Bar

Capriasca

FRANCE

Tesserete

Milan

Switzerland

Canton Ticino

District of Lugano

Area: 41,285 km²

Area: 2,812 km²

Municipalities: 52

Population: 8,530,100

Population: 353,343

Area: 308.0 km²

Neighbouring countries: Italy, Germany, Austria, France, Liechtenstein

Borders: Canton Grisons, Canton Uri, Canton Valais, Lombardy (Italy), Piedmont (Italy)

Population: 151,592

Official languages: German (65,6%) French (22,8%) Italian (8,4%) Romansh (0,6%)

Official language: Italian Capital: Bellinzona

Capital: Bern

Alto Malcantone Monte Lema

Gandria Monte Boglia

Municipality of Lugano Area: 75.8 km² Population: 67,082

Lugano Airport

LUGANO Agno

Sorengo

Caslano

Collina d’Oro

San Salvatore

Monte San Giorgio

Distances from Lugano: Milan > 81 km 1h 06 min (car) 1h 17 min (train)

Basel > 268 km 3h 16 min (car) 2h 56 min (train)

Rome > 537 km 6h 27 min (car) 4h 53 min (train)

Geneva > 378 km 4h 33 min (car) 4h 47 min (train)

Paris > 589 km 7h 53 min (car) 7h 26 min (train)

Monte Gandria Brè

Lugano Lake

Basso Malcantone

Ponte Tresa

Zurich > 204 km 2h 23 min (car) 1h 55 min (train)

Denti della Vecchia

Melide

Morcote Morcote

Campione (I)

Monte San Salvatore

MOVING TO, LIVING AND WORKING IN LUGANO

Dear Reader, First of all, thank you.

Thank you for accepting our invitation to browse through these pages and to visit, albeit virtually, Lugano.

For those who, like me, were born here, telling the story of the City of Lugano is both fascinating and challenging.

Firstly, it’s fascinating, because I truly believe that Lugano represents the best of the virtuous Swiss system, known worldwide for its high living standards and quality of services, safety, moderate taxation and limited bureaucracy. At the same time, it is challenging to describe Lugano without falling into the rhetoric of its exceptional efficiency and regular top spots in global rankings or putting excessive emphasis on the beauty of the main urban centre of Italian-speaking Switzerland.

“Let the facts and places, that make Lugano a cosmopolitan and vibrant city, speak for themselves!”

Let the facts and places that make Lugano a cosmopolitan and vibrant city speak for themselves! Lugano has a vast territory and varied landscapes and offers an enviable quality of life without the disadvantages that inevitably characterise large urban areas.

This brochure presents the city and its region, what makes it an ideal place for those seeking prosperity and security, and particularly attractive for raising a family or growing a business. In addition, in this brochure you will find the practical things that you need to know when, and if, you consider moving to Lugano.

I hope you enjoy your read and I look forward to meeting you as you stroll through the streets of our beautiful city.

Michele Foletti Mayor of the City of Lugano

INDEX Living and working in Lugano 05 06 08

Lugano is freedom The Green City Switzerland’s virtuous model Lugano is safe Quality of services

11 12 14 16

Integrate and live well Dual education system links school and work Health first Reduced bureaucracy, efficient services Taxation

19 20

A country with moderate taxes The ideal location for your company headquarters Lugano is tax friendly Economy

21 24

Leader in global competitiveness The challenge of innovation Region

27 28 29

Between lake and mountains From 0 to 2,000 meters in 30 minutes La dolce vita in Lugano

LIVING AND WORKING IN LUGANO

LUGAN O I S FREEDOM AN INTERNATIONAL CITY OFFERING OPPORTUNITIES, SECURITY AND PRIVACY. TO LIVE YOUR FREEDOM TO THE FULL. With a population of less than 70,000, one may find it surprising to know that over 140 different nationalities live in Lugano. Many foreign individuals choose Lugano because they value its safety, attention to privacy, quality of services, from finance to health and education, but also its undoubted fiscal attractiveness and the simplicity of its administrative system, without forgetting the great outdoors and the lake breeze.

It is no coincidence that, sometimes, when passing in front of the shop windows of Via Nassa or accessing the car park of the Convention Centre, one meets a well-known face, who finds in Lugano the ideal combination of comfort, efficiency and freedom. Those who choose Lugano have no need to hide. They enjoy their freedom. This has always been the case and it continues to be so even today with many sports champions, artists, businessmen and women, who have decided to call home the economic capital of Italian-speaking Switzerland.

This is because Lugano protects people’s privacy while allowing them to fully enjoy the benefits of their status.

05

LIVING AND WORKING IN LUGANO

THE GREEN C IT Y FROM PARKS TO LARGE-SCALE INFRASTRUCTURE, LUGANO FAVOURS SUSTAINABILITY.

The City of Lugano’s development plan pays special attention to the environment and intelligent management of urban spaces, increasing the number of green and leisure areas for its residents, with year-round accessibility. The plan provides for the creation of new parks, adding to the existing eight public parks and dozens of play areas distributed throughout the city’s 21 neighbourhoods, totalling almost 20 square kilometers of urban greenery and 48.5 square kilometers of forest area.

The mild climate, Mediterranean flair and rich natural heritage make Lugano one of Switzerland’s most popular tourist destinations. The city is very easy to reach. By train, with the high-speed lines on the North-South European axis, which use the Gotthard base tunnel; at 57 kilometres the longest railway tunnel in the world, inaugurated in 2016, and the new Monte Ceneri base tunnel, which became operative in December 2020 (The New Rail Link through the Alps - NRLA). By car, with motorway connections. Or by air, with the local airport of Lugano - Agno (LUG) that guarantees the operation of private flights, cargo connections and helicopters or easy access to the international airports of Zurich - Kloten (ZRH) and to those in the Milan area, i.e. Malpensa (MXP), Linate (LIN) and Orio al Serio (BGY).

06

THE CITY OF LUGANO’S DEVELOPMENT PLAN

PAYS PARTICULAR ATTENTION TO THE ENVIRONMENT AND INTELLIGENT MANAGEMENT OF URBAN SPACES

07

LIVING AND WORKING IN LUGANO

S WITZE RLA ND’S VIRTUO U S M O DEL LUGANO CONTRIBUTES TO SWITZERLAND’S VIRTUOUS MODEL, BASED ON SUSTAINABLE COMPETITIVENESS AND THE PURSUIT OF THE COMMON GOOD. Switzerland is a politically and financially stable nation. This means efficient services and quality infrastructure for its citizens, an independent and efficient judicial system and a predominantly peaceful and secure environment, as well as a constant focus on innovation.

Citizens can also submit parliamentary decisions to a referendum. For example, in 2021, Swiss people were asked to vote on a new law on digital identity (rejected) and on the acceptance of the free trade agreement with Indonesia (approved). Finally, constitutional amendments must obtain a double majority, of both the citizens and the cantons.

The European Union is its most important economic and political partner. A historically neutral country following the 1815 Federal Treaty, Switzerland has been a member of the United Nations (UN) since 2002. It is one of the major centres of multilateral cooperation and the seat of countless international organisations and foundations covering a wide range of fields: from peace and disarmament to sport, economics, trade, finance, telecommunications and sustainable development.

Switzerland has four linguistic regions – German, French, Italian and Rhaeto-Romance – and quadrilinguism is recognised in the Federal Constitution.

Over the years, and also as a result of the most recent waves of migration, a multitude of other languages are spoken throughout the country, in particular English, which is also the language of instruction in many international schools. Zurich and Basel, as well as the federal capital Bern, are the main centres of the German-speaking region, while Geneva and Lausanne are the main centres of the French-speaking region. Lugano is the main centre of the Italian-speaking region, located on the south side of the Alps, which includes the Canton of Ticino, established in 1803, and part of the Canton of Grisons, known as Grigioni italiano.

Politically, Switzerland is a direct democracy, where citizens can actively participate in political decisions, through ‘popular initiatives’ and referendums.

Popular initiatives are propositional referendums, which allow a wide range of issues to be put to vote by collecting at least 100,000 signatures.

08

LUGANO IS SAFE

AWAY FROM THE MADDING CROWD Switzerland is known for being one of the safest countries in the world.

According to Eurostat, in 2022 the country recorded one of the lowest robbery and homicide rates in Europe. Lugano is considered the safest city in Switzerland.

According to data from the Federal Statistical Office, as illustrated in the graph on the following page, Lugano maintained the lowest crime rates among Switzerland’s largest cities in 2023. This marks the ninth consecutive year that Lugano has held this distinction, reflecting the city’s continued focus on public safety and security.

The consistently low crime rate contributes to Lugano’s reputation as one of Switzerland’s safest urban areas, enhancing its appeal as a place to live and work.

The overall stability, combined with the proverbial Swiss reserve, discretion and safety is one of the main reasons for the attraction of the economic capital of Ticino for those who shun the trappings of notoriety or animosity towards economic prosperity. Many celebrities from the worlds of entertainment and sport find refuge from the hassle of photographers and onlookers in Lugano. Here they can live in peace, without the need to take special measures to protect themselves from unwanted attention.

II

Low risk of homicide in Switzerland Latvia

4,05

Malta

1,54

Belgium

1,54

Finland

1,50

Luxembourg

1,39

Estonia

1,35

France

1,21

Sweden

1,11

Romania

0,91

Germany

0,74

Portugal

0,72

Spain

0,69

Italy

0,55

Switzerland

0,48

The graph shows the average annual number of intentional homicides recorded by the police per hundred thousand inhabitants in selected European countries in 2022. Switzerland is among the countries with the lowest average number of intentional homicides.

(Source: Eurostat, 2022)

Lugano is the safest city in Switzerland Lugano

35.7

St. Gallen

41.6

Winterthur

45.1

Lucerne

64.5

Zurich

67.1

Lausanne

67.5

Biel/Bienne

71.3

Geneva

81.2

Bern

92.7

Basel

102.8

The graph shows the rate of selected crimes in cities of 30,000 inhabitants and above in 2023. The crimes considered for statistics include: theft (without shoplifting), criminal damage (without theft), fraud, computer fraud, acts of aggression, threatening behavior, assault, violence and threats against authorities and public officials and violent offenses (robbery).

(Source: Federal Statistical Office, 2023)

III

LUGANO IS THE ECONOMIC CAPITAL

OF ITALIAN-SPEAKING SWITZERLAND, WHICH INCLUDES THE CANTON OF TICINO AND GRIGIONI ITALIANO

09

QUALITY OF SERVICES

INTEGRATE AND LIVE WELL LUGANO OFFERS THE BEST OF THE SWISS VIRTUOUS MODEL, HIGH-QUALITY AND EFFICIENT SERVICES ARE A PREREQUISITE FOR WIDESPREAD WELL-BEING. Emphasizing that Switzerland is a safe country with a strong propensity for privacy and a low tax burden inevitably calls to mind countries where these conditions do not apply.

However, a description by contrast does not do justice to the Swiss and, above all, Ticino context. The economic and social systems are geared towards competitiveness, both internally and externally, and the public and private sectors adhere to international standards.

This is reflected in Lugano’s healthcare, public administration as well as education sectors. Pupils study music, art, sport and languages – French, German and English – from primary and secondary school onwards.

11

QUALITY OF SERVICES

D U A L E D U C AT I O N S Y S T E M THAT LINKS SCHOOL AND WORK LUGANO’S HIGH QUALITY EDUCATION SYSTEM ESTABLISHES A DIRECT LINK TO THE WORLD OF WORK, REDUCING YOUTH UNEMPLOYMENT. The Swiss education system is not governed by a central education ministry, but is mainly the responsibility of the municipalities, as far as preschool and primary schools are concerned, while secondary schools are managed at cantonal level.

Access to university in most cases is unlimited (no “numerus clausus”), but applicants have to comply with specific procedures and enrolment deadlines: usually between February and April of the previous year.

In this context, Lugano offers a very rich and articulated educational service, well distributed throughout the municipal territory, which guarantees a high-quality service to the entire resident population, from pre-school to higher education.

Students can easily find a public or private school that meets their specific educational needs within a radius of a few kilometres. Schools can be reached quickly, often on foot, and are well served by local public transport. There are 21 public primary schools in the city, as well as seven private institutions, including international ones.

The instruction language in Lugano’s schools is Italian; several private international schools in Lugano and the surrounding area offer multilingual education, from kindergarten to university, also with boarding options.

One of the strengths of the Swiss education system is the so-called dual education system, which combines on-the-job training with lessons in a vocational school. Thanks to this system, apprentices receive a high-quality vocational education, which then gives them direct access to the labour market and helps to maintain an exceptionally low rate of youth unemployment throughout the country. This is one of the success factors of the Swiss economy.

In addition to its compulsory and high schools, which offer International Baccalaureate (IB) education for children aged 3-19 (IB Continuum), Lugano is home to competitive universities. The City hosts three key institutions: Università della Svizzera Italiana (USI), the University of Applied Sciences and Arts of Southern Switzerland (SUPSI) and Franklin University Switzerland (FUS). USI and SUPSI features a large number of research institutes and, along with FUS, offer a variety of academic programs. These include Bachelor’s, Master’s, PhD, and a broad range of specialisation courses, further enhancing Lugano’s reputation as a center for higher education and research.

An apprenticeship lasts two to four years, depending on the profession. Those who choose the vocational path, can reach successive higher levels of education through extra training.

12

STUDENTS CAN EASILY FIND THE RIGHT

ITALIAN-OR ENGLISH-LANGUAGE SCHOOL WITHIN

A FEW KILOMETRES, OFTEN WITHIN WALKING DISTANCE

13

QUALITY OF SERVICES

H EALT H F IRST HEALTHCARE FACILITIES AND SERVICES ACCESSIBLE TO EVERYONE, THANKS TO COMPULSORY INSURANCE. EXCELLENT TREATMENT CENTRES AND AN ENVIABLE LIFE EXPECTANCY. Lugano’s healthcare system is internationally recognised and is based on a private and compulsory health insurance system with treatment offered by public and private providers.

Lugano also proves to be a particularly welcoming city for people who have given up work and wish to maintain a high standard of living, with a state-of-theart healthcare service and a vibrant cultural environment. It is worth mentioning that the Canton of Ticino holds a European record for life expectancy.

Alongside certain regions in Spain, it is one of the few areas in Europe where average life expectancy exceeds 85 years (Eurostat data, 2021).

Medical facilities include hospitals, private clinics and specialist medical centres, such as the renowned Cardiocentro Institute for cardiovascular treatment, and the Istituto di Neuroscienze Cliniche della Svizzera Italiana. Medical centres also operate on a competitive basis, which leads to constant alignment with the most advanced medical practices and innovation in treatments and diagnostic equipment.

All-round specialist coverage is provided: from maternity to orthopaedics, from neurology to cardiology, from aesthetic medicine to geriatrics. In total, more than 1,800 beds are available throughout the Canton of Ticino, equivalent to 5.2 beds per 1,000 inhabitants.

Lugano also hosts highly specialised schools – such as the European School for Advanced Studies in Ophthalmology (ESASO), for continuing education for ophthalmologists – and is home to important international professional bodies, which allow constant exchange with local medical professionals.

One of these is the European Society for Medical Oncology (ESMO).

The new facilities of Lugano’s “Ospedale italiano”, renovated in 2018

14

LUGANO’S NUMEROUS MEDICAL FACILITIES INCLUDE

HOSPITALS, PRIVATE CLINICS AND SPECIALIST MEDICAL CENTRES, OFFERING OVER 1,800 BEDS IN TOTAL

15

QUALITY OF SERVICES

R EDUCED BU REA U C RA C Y, EFFICIEN T SERV IC ES TRANSPARENT LAWS, RAPID DECISION-MAKING PROCESSES, LOW COSTS: SWITZERLAND’S SUCCESS ALSO DEPENDS ON AN EFFICIENT ADMINISTRATION. Moreover, foreign citizens who choose to live and work in the region will find in Lugano specialised service providers that can accompany them, according to an integrated consultancy approach, i.e. a single point of contact to handle the various needs and requirements: from assistance in finding a house (or an office or manufacturing premises for a company) to the issuance of permits, from tax advice to insurance coverage and the search for the most suitable schools for their children.

The Swiss administrative apparatus is an excellent example of bureaucracy at the service of its citizens who trust their authorities, and are generally satisfied with the services the government provides.

This seems to be quite a contrast to many other countries which witness growing political disenchantment among their citizens, facing increasing complaints about a too rigid and inefficient bureaucracy, and encounter political and administrative difficulties in finding solutions for the many pending policy challenges.

Finally, the Swiss social security system guarantees a generally peaceful environment, with low levels of social conflict and one of the lowest average crime rates in Europe.

For the public, such an approach minimises problems and misunderstandings and provides advance knowledge of the procedures, timescales and costs of various administrative obligations. Including the amount of taxes to be paid.

16

FOREIGN NATIONALS WHO CHOOSE TO MOVE TO LUGANO

CAN COUNT ON EXPERIENCED CONSULTANTS TO TAKE CARE OF ALL PERSONAL AND PROFESSIONAL MATTERS RELATED TO RELOCATION 17

TAXATION

A COUNTRY WITH COMPETITIVE TAXES INTERNAL TAX COMPETITION AND EFFICIENT ADMINISTRATION ALLOW FAIR TAXATION OF INDIVIDUALS AND BUSINESSES. The Swiss tax system is characterized by a generally low level of taxation, mainly resulting from internal competition between cantons and municipalities, while the Constitution limits the imposition of new federal taxes.

As a result, Lugano offers particularly attractive fiscal conditions for both individuals and companies.

Examples include the lump sum taxation regime for foreign nationals who do not carry out gainful activity in Switzerland (see pages XI and XII of the insert “Lugano is tax friendly”), as well as the complete exemption from taxes on financial capital gains, inheritances and direct donations.

Local regulations define in detail every possible scenario that may affect foreign citizens and businesses that choose to settle in the Canton of Ticino. Through the competent tax authority or the many fiduciary consultancies in Lugano, it is possible to determine in advance and with precision the tax burden for specific personal or corporate situations.

19

TAXATION

T HE IDEA L LO C AT IO N FOR YOU R C O M PA NY H EADQ U A RT ERS LUGANO-BASED COMPANIES CAN COUNT ON FAVOURABLE TAXATION, STRATEGIC LOCATION, TALENTED HUMAN RESOURCES, AND AN EXTENSIVE NETWORK OF INTERNATIONAL AGREEMENTS. Thanks to Switzerland’s political, economic and legal stability, Lugano is the ideal location for administrative headquarters, including for foreign companies. The tax environment is particularly attractive (see the in-depth analysis on pages V-IX of the insert “Lugano is tax friendly”).

Currently, free trade agreements are in place with almost 40 non-European countries, including major Asian economies such as China, Japan and Indonesia. Free trade negotiations with India were successfully concluded at the end of 2023, whereas negotiations with MERCOSUR, Malaysia and Vietnam are ongoing. Exporting companies can therefore count on preferential access to the main world markets for their goods and services as well as on increased legal certainty and predictability for their international activities.

Moreover, Ticino offers a strategic geographical position, in the very heart of Europe and next to the three major European markets: Germany, France and Italy. The languages of these three countries are also official languages of Switzerland and the population is often fluent in two or three of these languages, along with English.

Lugano is highly appealing to qualified foreign professionals and managers, thanks to its high standard of living and excellent working conditions.

Switzerland, benefits from a labor market characterized by liberal legislation, low regulation, and exceptional social stability, making it a hub for retaining top talent.

Companies based in Lugano can benefit from Switzerland’s active free trade policy and trade agreements signed with EU countries (also adhering to the mutual recognition of professional diplomas), with the countries of the European Free Trade Association (EFTA) and with a growing number of partner countries worldwide.

20

LUGANO IS TAX FRIENDLY

SWITZERLAND AND EUROPE Switzerland maintains a close cooperation with the European Union (EU), which is by far its most important partner. The Swiss-EU relationship has developed by means of an ever-tighter net of sectoral agreements which ensure a high level of integration between the two markets.

Switzerland has signed double taxation agreements (DTA) with more than 100 countries – including all the EU and EFTA countries. These agreements prevent double taxation of income, wealth or inheritance and in some cases provide for reductions in withholding tax.

Notoriously, the general standard of living in Switzerland is extremely high. However, in Lugano, the cost of living is comparably lower than in other large Swiss cities and combines with an attractive tax environment.

Switzerland also enjoys a more balanced distribution of income than elsewhere. The graph on page III, shows that the purchasing power of Swiss citizens is above all other European countries. This contributes to maintaining a dynamic economy and the containment of social tensions.

II

High income and low inequality Switzerland

49’524

Luxembourg

47’636

Norway

41’814

Austria

31’443

Germany

26’274

France

24’179

Euro

22’570

European

20’350

Italy

19’819

Spain

18’316

Portugal

11’824

Greece

10’050

Hungary

7’423

The graph illustrates the median equivalised net income in various European countries for 2023. Switzerland leads with a figure of EUR 49,524, nearly double that of Germany (EUR 26,274) and France (EUR 24,179). It is also two and a half times higher than Italy’s median income, which stands at EUR 19,819.

(Source: Eurostat, 2023)

III

THE BENEFITS OF TAX COMPETITION The Swiss tax system offers two major advantages: regulatory stability and internal tax competition.

The so-called “lump-sum” taxation system or “expenditure-based” system offers an example of regulatory stability. This special taxation is reserved to foreign individuals with a high net wealth and important foreign source income and is comparable to a flat tax starting from approximately CHF 140,000. The original rule was introduced at federal level in 1934 and today remains a peculiarity of the tax policy of the Canton of Ticino.

Internal tax competition, on the other hand, stems from the high degree of cantonal autonomy in the area of taxation, which generates a downward pressure on tax rates for both individuals and companies. In addition, municipalities also have significant tax autonomy, which also leads to differences between municipalities.

At the same time, the federal government can only levy taxes within the narrow limits prescribed by the constitution. The value added tax (VAT), for example, is a federal tax. With a general rate of 8.1% (2.6% on foodstuffs) Switzerland boasts one of the lowest VAT rates among OECD countries. This contrasts sharply with neighbouring countries like Italy, the Principality of Monaco, France, Germany, Austria, or the United Kingdom, where VAT rates range between 19 and 22%. To find similarly favorable conditions one would have to look to other continents, such as Japan (with a standard VAT of 10%) or Canada (5%).

V

TAX FRIENDLY Lugano offers its residents a low tax burden, combined with strong financial stability and access to expert advisory services for comprehensive support.

The Cantonal revenue agency, the Lugano District Tax Office, adopts a collaborative approach, aimed at simplifying procedures, reducing disputes and retaining taxpayers in the Lugano area in the long-term. The main direct taxes of the Swiss tax system include income and wealth (i.e. assets owned) taxes, for individuals, and profit and capital taxes for legal entities.

INDIVIDUALS People living in Lugano are taxed according to two parameters: income earned and assets owned.

Income tax covers all income earned anywhere in the world (worldwide income), but income from commercial activities or properties abroad are taken into account solely for determining the tax rate to be applied to income earned in Switzerland.

A wealth tax is levied only at cantonal/municipal level on the difference between ‘gross assets’ (real estate, property, securities and bank deposits, dividends and interests etc.) and debts, including loans and mortgages.

On the other hand, no taxes are levied on capital gains from individual investments (capital gains on personal movable assets), inheritances and gifts to spouses, descendants and ascendants in a direct line.

Capital income, in particular interests and dividends, is instead subject to a withholding tax of 35%, which is, however, refundable in cash or recoverable in full as a tax credit. It is also possible to reconcile pension contributions paid in other European countries.

VI

Foreigners residing in Switzerland without working in the country can benefit from an all-inclusive annual lump-sum tax starting at approximately CHF 140,000 – as detailed in the next chapter. Additionally, “expatriates” – such as skilled professionals and company managers working in Switzerland for limited periods (up to 5 years) are eligibile for tax relief on certain expenses incurred during their stay.

LEGAL PERSONS In Lugano, corporate taxation is competitive, making it an attractive location for businesses. The average corporate tax rate in Switzerland is favorable, particularly when compared to other European countries.

The tax competitiveness of the Swiss cantons is high and has been significantly consolidated in recent years with the implementation of the Tax Reform and AHV Financing (TRAF).

Switzerland introduced the minimum tax applicable to international groups with a global annual turnover of at least EUR 750 million on 1 January 2024, at the same time as the majority of EU Member States and other major industrialized countries.

VII

TAX LEGISLATION IN DETAIL INDIVIDUALS TAXABLE PERSONS AND PRINCIPLES OF TAXATION

Individuals are subject to taxation if they have a permanent or temporary residence in Switzerland. Residents are taxed according to the ‘worldwide taxation principle’ (e.g. income from business activities or real estate abroad is exempt, but is taken into account in determining the tax rate).

TAXATION OF INCOME

Tax rates in Switzerland are generally progressive, with the federal tax capped at a maximum rate of 11.5%.

At the cantonal level, incomes between CHF 300,000 and CHF 1 million are taxed at a rate ranging from 14% to 15%. To calculate the municipal tax, a multiplier is applied to the cantonal tax – this multiplier is 77% in Lugano. Certain types of income, such as dividends, may benefit from reduced taxation (e.g., in Ticino, qualified dividends are taxed at 70%). Business expenses, as well as social and family expenses, are deductible, although deductions may vary by canton.

CAPITAL GAINS

Capital gains derived from the sale of personal movable assets are exempt from taxation for individuals. This includes gains from securities and cryptocurrencies as private investor.

WEALTH TAX

This tax is levied only at the cantonal and communal levels, based on an individual’s net wealth (assets minus debts), with deductions and rates differing by canton.

The tax rate ranges from 0% (for net assets up to CHF 200,000) to a maximum of 0.25%. Municipal tax is calculated by applying a multiplier to the cantonal tax – such as in Lugano, where the multiplier is 77%.

VIII

LEGAL ENTITIES The federal tax reform has introduced various measures to make Switzerland even more attractive to companies from 2020 onwards.

DETERMINATION OF THE TAX BASE

The statutory annual accounts are the basis for determining taxable profit and capital.

However, various deductions are allowed for tax purposes: - Write-down of receivables: 5% if domestic, 10% if foreign - Depreciation of stock: up to 1/3 - Depreciation: accelerated depreciation possible - Increased deductibility of 50% for R&D costs - Tax exemptions of up to 90% on ‘Patent Box’ income - Losses can be carried forward for 7 years and fully offset.

FEDERAL CORPORATE INCOME TAX

The Federal Government levies taxes on corporate profits at a fixed rate of 8.5% on earnings after tax. There is no corporate capital tax at federal level.

CANTONAL AND MUNICIPAL CORPORATE INCOME TAX

The cantonal tax rate in Ticino has been reduced recently and stands at 5.5% from 2025.

Municipal rates are determined by applying multipliers to cantonal rates: in 2025, the municipal multiplier in Lugano stands at 82% of the cantonal tax.

CANTONAL AND MUNICIPAL CAPITAL TAX

A capital tax is levied annually only at cantonal and municipal level. The basis for calculation is normally equity capital. Cantonal capital tax is 0.15%, while municipal capital tax is determined by applying a multiplier to the cantonal tax; in Lugano the multiplier is 82%.

STAMP DUTY

Stamp duties are levied on certain legal transactions, such as issuing shares or trading in securities. The 1% rate on capital increases of Swiss companies is levied on the market value of the contribution; an exemption on the first million CHF applies.

IX

X

A FLAT TAX FOR THOSE CHOOSING SWITZERLAND Foreign citizens residing in Lugano who do not work in Switzerland can benefit from a lump-sum taxation, a special tax regime whereby Swiss income tax is levied on the basis of worldwide expenses (i.e. standard of living) rather than on taxable income.

This tax regime, known colloquially as the lump-sum taxation regime, was introduced in Switzerland in 1934 and provides for a one-off levy of about CHF 144,000, applicable on a minimum tax base of approximately CHF 430,000 (income) and CHF 2.1 million (assets).

The Italian “flat rate” taxation regime is similar to Switzerland’s lump-sum taxation system. The tax is set at EUR 200,000, plus an additional EUR 25,000 for each family member. A key difference, however, is that the Swiss lump-sum taxation has no time limit, while the Italian regime is limited to a duration of 15 years.

This time restriction also applies to the ‘resident non-domiciled’ regime in Great Britain.

XI

TAXATION ACCORDING TO “EXPENDITURE” The taxation of an EU/EFTA national under the lump-sum taxation system (i.e., a foreign national domiciled in Lugano who does not work in Switzerland) is based on a minimum expenditure of CHF 429,100 (income) and CHF 2.145 million (assets), resulting in a tax of approximately CHF 144,000.

For non-EU/EFTA nationals, the minimum expenditure is CHF 805,000 and the taxable wealth is CHF 4.025 million, leading to an overall tax burden of approximately CHF 290,000.

WHO CAN CLAIM TAXATION ACCORDING TO EXPENDITURE?

Individuals entitled to a flat-rate tax based on expenditure (i.e. the value of the expenses incurred by the taxpayer and his or her family members to maintain their standard of living) are taxpayers that: - Do not have Swiss citizenship (foreign nationals) - Are subject to unlimited taxation in Lugano for the first time or after an interruption of at least ten years - Do not pursue a gainful activity in Switzerland WHEN IS IT CONVENIENT TO APPLY FOR EXPENDITURE-BASED TAXATION?

Taxation based on expenditure may be advantageous in the following cases: - The tax burden turns out to be lower than under the ordinary tax regime

XII

- No, or insignificant, Swiss source income or “assets” (movable, immovable and financial assets) located in Switzerland in relation to the sum of the assets and income worldwide - There is significant foreign source income and assets, both movable and immovable, located abroad - The taxpayer wishes to make use of a simplified, flatrate tax procedure.

The agreement concluded with the tax authority at the time the taxpayer enters Switzerland will be based on the specific situation of the individual taxpayer. On the basis of the taxpayer’s actual assets and worldwide income (and consequently the taxpayer’s likely overall annual expenditure), this tax base is then negotiated with the tax authority.

By adhering to taxation according to expenditure, the tax documentation required from the taxpayer is reduced, which also means less paperwork and costs.

THE “MODIFIED” LUMP-SUM TAXATION

For some countries it is possible to apply the so-called “modified” lump-sum taxation, which allows for: - Taking advantage of the total or partial exemption of foreign tax collected at source or of its refund by the foreign country - Benefit from the offset of the residual and irrecoverable foreign tax (tax credit) against the Swiss tax due.

By opting for this “modified” lump-sum taxation, the taxpayer agrees to have all of his or her income – i.e. both income from Swiss sources and income from the individual foreign countries included in the ruling (see list below) – taxed at the highest ordinary rate in Switzerland. In this way, he or she will automatically be recognised as a Swiss tax resident and will benefit from the applicable Double Taxation Agreement.

The “modified” lump-sum taxation applies to the following countries: - Austria - Belgium - Canada - France - Germany - Italy - Norway - USA.

XIII

TICINO HAS A STRATEGIC GEOGRAPHICAL

AND LINGUISTIC POSITION AND IS WELL CONNECTED TO THE MAJOR EUROPEAN AND WORLD MARKETS

21

ECONOMY

L E ADER I N GLOBA L COMPETITIVENESS LEGAL CERTAINTY AND MARKET ECONOMY FAVOUR LONG-TERM DEVELOPMENT.

Switzerland has been among the top five countries as ranked by the World Economic Forum’s annual Global Competitiveness Report since 1979.

Macroeconomic stability is the most important factor in Switzerland’s competitiveness. This is based on legal certainty, stable social and political relations, an environment conducive to long-term investment and an independent monetary economy. The quality of education and research, a fruitful cooperation between the public and private sectors, and an efficient market economy that promotes competition and ensures a moderate tax burden are additional factors that significantly contribute to the country’s competitiveness.

THE MAIN STRENGTHS OF THE SWISS ECONOMIC SYSTEM AT A GLANCE: Macroeconomic stability Market economy Entrepreneurial freedom Quality of education and research Competitive fiscal and financial policies Efficient infrastructures Flexible labour markets Secure energy supply Effective environmental protection

23

ECONOMY

THE CHALLENGE OF INNOVATION FROM PATENT PROTECTION TO TAX BREAKS FOR START-UPS, SWITZERLAND HAS BEEN ABLE TO EFFECTIVELY FOSTER RESEARCH AND INNOVATION. Lugano is well-connected to other Swiss economic and scientific hubs and hosts key research institutes, including the Dalle Molle Institute for Artificial Intelligence USI-SUPSI (IDSIA) and the Swiss National Supercomputing Centre (CSCS), part of the Swiss Federal Institute of Technology in Zurich (ETHZ). In 2024, CSCS launched a cutting-edge infrastructure capable of advancing fields such as new material discovery, universe mapping, and AI-powered medical care. Once fully operational, the new supercomputer “Alps” will deliver a maximum performance of up to half an exaflop.

Innovation is one of the main driving forces of the Swiss economy, thanks to the country’s excellent universities, large investment in research and development, top high-tech production and effective patents and intellectual property regulation.

Private investments in innovative start-ups are treated favourably, with taxation limited to 1% for investments of CHF 50,000 or more. Lugano is the focal point between the north and south of the Alps for the innovation economy, which is at the heart of the city’s 2018-2028 development guidelines.

Thanks to strong collaboration with Lugano’s universities and the active support of municipal and cantonal institutions – through incentives, tax breaks and the availability of dedicated spaces – the region is experiencing growth in sectors such as medtech, robotics, AI, as well as lifestyletech.

Innovation is also the main drive behind the Lugano Living Lab, or “L*3”, an interactive platform created in 2018 in collaboration with the Università della Svizzera italiana (USI) as an urban laboratory for the promotion of innovation that tests and implements new technologies in real-life conditions. Its ultimate goal is to improve the quality of services for the public, enhancing the standard of living, increasing the attractiveness of the region and encouraging cocreation and collaboration among all stakeholders.

The plan also foresees the full accessibility of public data (Open Government Data).

Lugano is also an established hub for fintech and blockchain innovation. Since 2020, the City has introduced its own digital payment token (“LVGA”) and, in early 2022, launched “Lugano Plan ”, a public-private initiative positioning Lugano as global leader in the adoption of blockchain technology and cryptopayments.

24

SWITZERLAND HAS THE HIGHEST

NUMBER OF PATENT APPLICATIONS PER MILLION INHABITANTS IN EUROPE

25

REGION

BETWEEN LAKE AND MOUNTAINS A THOUSAND DIFFERENT E N V I R O N M E N T S T O S E E , TO EXPLORE, TO LOVE.

Lugano has a population of just under 70,000 inhabitants and a large and diverse territory. Its mild climate and well-preserved natural heritage make it one of the most popular tourist regions in Switzerland. In German-speaking Switzerland, the region is nicknamed Sonnenstube (sun lounge).

From the gates of the city to the valleys, the landscape changes constantly as the visitor moves from urban environments to the countryside and from hills to the Alps. Along the way you will encounter masterpieces of modern architecture, ancient churches and evidence of old local traditions.

SUNNY LUGANO

Berlin 1,705

Lucerne 1,423

Lugano 2,067

Zurich 1,589

Amsterdam 1,775 London 1,630

annual hours of sunshine

(Source: MeteoSwiss)

27

Dublin 1,450

REGION

0 TO 2 ,000 M ET ERS IN 3 0 M INU T ES STRETCHING FROM THE LAKE TO THE PEAKS OF VAL COLLA, THE LUGANO AREA ENCOMPASSES A WIDE VARIETY OF ENVIRONMENTS, ATTRACTING TOURISTS, SPORTS ENTHUSIASTS AND FAMILIES ALIKE. The territory of Lugano covers 76 square kilometres and is second only to Zurich in size among the ten largest Swiss cities: from the urban area near the lake, the landscape gradually changes into woods and pastures forming the green lung of the region, reachable in half an hour by car from the city centre, to the stunning ridge of dolomite rocks of the Denti della Vecchia (Hag’s Teeth).

Lugano’s vast and diverse natural landscape is ideal for outdoor sporting activities: from swimming to stand-up paddling on the lake, from hiking to mountain biking on the slopes and from horse riding to paragliding. The town parks and easy hillside paths allow for medium and low-intensity physical activity for people of all ages.

Old mills and ancient convents take visitors back in time as they wander through Val Colla. The area is filled with gems of antique and modern architecture, one such gem is the “Fiore di pietra” the restaurantlodge designed by the architect Mario Botta at an altitude of 1700 metres on top of Monte Generoso.

28

TICINO’S NATURAL LANDSCAPE

OFFERS ENDLESS OPPORTUNITIES

FOR OUTDOOR AND SPORTING ACTIVITIES

29

REGION

L A D OLCE V ITA IN LU GA N O NOT ONLY PRECISION AND EFFICIENCY: LUGANO IS ALSO HOME TO A CULTURAL AND ARTS CENTRE OF EUROPEAN STANDING, A CASINO THAT HAS BEEN IN OPERATION FOR OVER TWO CENTURIES AND HUNDREDS OF INTERNATIONAL SPORTING EVENTS AND COMPETITIONS. The LAC (Lugano, Arte e Cultura) is Lugano’s main artistic and cultural hub; it offers 200 shows and a dozen exhibitions every year.

For gambling enthusiasts, the Casino di Lugano is the heir to the city’s first amusement arcade, opened in 1804, with several rooms and a wide range of games, including slot machines, roulette and card tables.

In addition to visual arts, LAC is also devoted to music and the performing arts. Thanks to the combined offer of LAC, MASI (Museo d’Arte della Svizzera Italiana) and MUSEC (Museo delle Culture), Lugano is a cultural crossroad between Northern and Southern Europe.

Lugano is also represented in professional sports at national level with numerous teams: football (Europa League), basketball, ice hockey (Champions League) and water polo.

Many independent operators, who curate and produce concerts, contemporary art exhibitions, theatres and leisure activities throughout the region contribute to the abundant and varied cultural offer of Lugano.

Ticino offers a unique culinary experience, combining Mediterranean flavors with traditional Swiss dishes and international cuisine. Local specialties like risotto, polenta, and freshwater fish are complemented by the region’s renonwned Merlot wines prepared by award-winning chefs. The cuisine ranges from rustic meals in traditional grottoes to refined, modern creations, offering a perfect blend of Alpine and Mediterranean influences for every palate.

30

EXHIBITIONS, CONCERTS, THEATRE, CINEMA, SPORT, MUSEUMS, FESTIVALS AND A CASINO: ONE CITY COUNTLESS EMOTIONS

31

CONTA C T U S The City of Lugano is at your disposal.

Contact us now by phone or e-mail.

Città di Lugano Piazza della Riforma 1 6900 Lugano Switzerland t. +41 58 866 71 09 relocate@lugano.ch

luganomycity

comunelugano www.lugano.ch

To see this magazine in digital format

www.lugano.ch/relocate

Photo credits Città di Lugano and Lugano Region: ©igorgrbesic (p.1), ©Enrico Boggia (Cover - back cover: Morcote - PP. 4,9, 10, 18, 26) ©Milo Zanecchia (Back cover: Monte Tamaro and San Salvatore - PP. 7, 17,13, 21, 22, 28, 31), ©Davide Adamoli (p.29) Other sources: ©Enrico Boggia (Back cover: Denti della Vecchia), EOC© Alain Intraina (p.14) Layout and graphics Lucasdesign.ch The magazine is edited by the Lugano Economic Development Division