1. Overview of Special Federal Tax Regimes

The DBG provides several exceptions to ordinary taxation. These special regimes:

• apply only in defined circumstances,
• can reduce or alter the federal tax burden,
• often require formal approval by tax authorities,
• may interact with double tax treaties and cantonal rules.

Common beneficiaries include high-net-worth individuals, foreign executives, mobile performers and non-resident directors.

2. Lump-Sum Taxation (Expenditure-Based Taxation)

Lump-sum taxation—known as “expenditure-based taxation”—is available only at the cantonal level for eligible foreign individuals who do not work in Switzerland. However, the Direct Federal Tax also incorporates this regime if a canton grants it.

Eligibility typically requires that the taxpayer:

• is a non-Swiss citizen,
• moves to Switzerland for the first time or after a long absence,
• does not engage in gainful employment in Switzerland.

2.1 Federal tax calculation

Under this regime, federal tax is calculated on a deemed income based on expenditure and lifestyle factors (e.g., housing costs, global living expenses), rather than true income.

The federal rules include minimum thresholds, and the tax authorities require detailed supporting documentation.

3. Taxation of Employee Equity Compensation

The DBG contains specific rules for employee participation plans, reflecting common international mobility situations. These rules apply to:

• Restricted shares,
• Stock options,
• RSUs and other deferred equity instruments,
• Share plans with vesting conditions.

3.1 Taxation at grant, vest or exercise

Depending on the nature of the plan:

• restricted shares may be taxed on grant, with discounts for restrictions,
• stock options are often taxed at exercise,
• globally mobile employees may have the benefit apportioned between countries.

3.2 Valuation rules

Switzerland uses specific valuation methods for restricted equity, based on discounts for lack of transferability and vesting conditions. Employers must often report valuations on official forms used for federal and cantonal taxation.

4. Taxation of Artists, Athletes and Performers

Non-resident artists, musicians, performers, lecturers and athletes who appear in Switzerland are subject to a special federal rule: they are taxed on remuneration earned from Swiss events, even if paid abroad.

4.1 Withholding taxation

The tax is usually levied via withholding tax at source. The rate and calculation depend on:

• whether the person is acting independently or as an employee,
• whether the payment relates to a single performance or multiple events,
• any applicable double tax treaty relief.

5. Board Member and Director Fees

Another special federal rule applies to board members of Swiss companies. Regardless of residency, director fees are:

• taxable in Switzerland at federal level, and
• typically subject to withholding tax.

This applies both to formal board members and individuals holding equivalent governance roles.

5.1 Treaty considerations

Most double tax treaties explicitly allocate the right to tax director fees to the state of the company paying the fees—in this case, Switzerland.

6. Cross-Border Workers and Expatriate Regimes

Swiss federal law provides special treatment for certain expatriates and cross-border cases, particularly where employees are sent to Switzerland for a limited period.

6.1 Expatriate deductions

Under conditions set by federal practice, expatriates may claim:

• housing-related deductions,
• relocation costs,
• costs for professional travel to the home country,
• school tuition for foreign-language private schools in limited cases.

6.2 Short-term foreign assignments

Where Swiss employees work abroad temporarily, the DBG may exempt certain income under the exemption-with-progression method, depending on treaty rules.

7. Severance Payments and Special Compensation

Certain forms of severance and termination-related compensation are subject to special federal tax treatment, especially when they represent:

• compensation for loss of income,
• payments replacing future pension benefits,
• indemnities for contract termination.

In certain cases, federal law allows such payments to be taxed at preferential rates or assessed separately, but the exact treatment depends on the nature of the payment.

8. Interaction With Double Tax Treaties

Most special federal tax regimes interact heavily with international tax treaties. Treaties may:

• limit Switzerland’s taxing rights (e.g., artists and athletes under special articles),
• reallocate taxing rights for mobile employees,
• provide tax credits or exemptions for foreign taxes,
• determine residence status under tie-breaker rules.

In many cases, special federal regimes apply only if consistent with treaty obligations.

9. Cantonal Differences and Combined Effects

Although special regimes are primarily defined under federal law, cantonal tax treatment can amplify or limit their overall benefit. Examples include:

• cantonal adoption of expatriate deductions (often with local variations),
• valuation differences for equity compensation,
• availability of lump-sum taxation only in certain cantons.

To assess the true tax impact of a special regime, taxpayers should consider:

• the rules of their canton of residence,
• relevant municipal multipliers,
• treaty implications in international cases.

See the overview here: Swiss Income Tax by Canton .

10. Next Steps and Related Guides

Special federal tax regimes should always be analysed together with ordinary taxation rules. Continue with the following guides to complete your understanding of the Swiss Direct Federal Tax:

• Taxable Income Under Swiss Federal Law
• Exempt and Non-Taxable Income
• Federal Tax Deductions
• Federal Tax Rates and Brackets
• Swiss Withholding Tax (Verrechnungssteuer)

Together, these pages build a comprehensive, English-language resource for understanding Swiss federal tax rules in ordinary and special cases.