Modified lump sum and Swiss tax treaties

Swiss lump-sum taxpayers can still claim relief under Switzerland's double tax treaties, but seven treaties set a condition: with Belgium, Germany, Italy, Norway, Canada, Austria and the United States, treaty benefits are only granted if all income from that country is taxed in Switzerland as under ordinary taxation. This is known as the modified lump sum, and it can change the numbers considerably.

Key facts (as of September 2026)

• Lump-sum taxpayers can claim treaty relief (for example reduced foreign withholding tax), but must declare it.
• Foreign income for which relief is claimed enters the control calculation.
• Modified lump sum required for treaty benefits under the treaties with Belgium, Germany, Italy, Norway, Canada, Austria and the USA.
• Under the modified lump sum, all income from that country is added to the base and taxed at the rate for total income; without full data, the maximum rate applies.
• No flat-rate foreign tax credit for lump-sum taxpayers, except under those seven treaties.
• France is mentioned by the ESTV among treaties with special rules. The UK is not on the list.

Why treaties matter for lump-sum taxpayers

A double tax treaty decides which country may tax which income, and often reduces the tax withheld at source in the other country. A typical example is a dividend paid by a foreign company: without a treaty, the full foreign withholding tax may be lost; with treaty relief, part of it can be reduced or reclaimed.

Lump-sum taxpayers are Swiss residents and can in principle claim that relief. The ESTV's Circular 44 attaches two conditions. First, you must declare the income on which you claim relief. Second, that income becomes part of the control calculation, the check that your lump-sum tax is at least the ordinary tax on certain items. We explain the control calculation step by step in how the lump-sum tax is calculated.

So even under the ordinary lump sum, claiming treaty relief on a large foreign income stream can raise the floor of your tax.

What is the modified lump sum?

Seven treaties go further. Under art. 14 para. 5 of the federal tax act and §5.2 of Circular 44:

• if you want treaty benefits from one of these countries, all income arising in that country must be taxed in Switzerland as it would be under ordinary taxation;
• that income is added to the lump-sum base, and taxed at the rate that applies to your total income;
• if you do not provide full information on that income, the maximum rate applies.

In other words, for income from that country the lump sum no longer shelters anything. It is still possible to use the lump sum for income from other countries, but you give up its effect on the country whose treaty you rely on.

The choice is made country by country: is the treaty relief worth more than the cost of bringing all income from that country into the Swiss base? The answer depends on the size and type of the income, and it is worth working through before you decide.

Which countries are affected?

Source: ESTV Circular 44 (24 July 2018), §3.3.4 and §5.2. Checked 30 September 2026.

Cantons ask about this directly. Uri's lump-sum checklist, for example, asks whether you claim treaty relief from the USA, Germany, Belgium, Norway, Italy, Canada or Austria.

The flat-rate foreign tax credit

Switzerland has a flat-rate foreign tax credit (in German pauschale Steueranrechnung). According to Circular 44, lump-sum taxpayers generally have no right to this credit. The exception is income covered by the seven treaties above, where the modified lump sum brings the income into ordinary-style taxation.

Country notes

Germany

Germany is on the modified-lump-sum list. Separately, German residents with significant shareholdings should look at the German exit tax before leaving: under § 6 AStG, people who were fully taxable in Germany for at least 7 of the last 12 years and hold at least 1% of a company are treated as having sold those shares at fair value when they leave, with the tax payable in seven annual instalments. That is a German question, but it shapes the timing of a Swiss move.

Italy, Austria, Belgium, Norway and Canada

For income from these countries, the choice is the same: claim treaty relief and accept that all income from that country is taxed as under ordinary taxation, or forgo the relief and keep that income outside the Swiss calculation. Practice on documentation varies by canton, so settle it in your ruling.

United States

The US treaty also requires the modified lump sum. There is a further layer: US citizens remain subject to US tax on their worldwide income wherever they live, and US reporting duties continue, such as the FBAR for foreign accounts above USD 10,000 at any time in the year and, above certain thresholds, Form 8938. We do not give US structuring advice. If you are a US person, plan the Swiss and US sides together, with a US adviser alongside us.

France

The ESTV mentions France among treaties with special rules. How the France–Switzerland treaty treats a lump-sum taxpayer, in particular for residence under the treaty, is a point to confirm for your situation rather than assume. Take advice on the French side and settle the Swiss side in your ruling.

United Kingdom

The UK is not on the ESTV's list of treaties requiring the modified lump sum. Whether any other UK-specific treaty rule affects your position should be checked individually, especially with the UK's own changes for former non-domiciled residents since April 2025.

Practical steps

1. List your income by country: dividends, interest, rents, pensions and business income.
2. Mark where treaty relief matters: large withholding taxes, pensions and real-estate income are typical.
3. Compare both options for each treaty country: relief with the modified lump sum, or no relief.
4. Collect full data for any country where you will use the modified lump sum, to avoid the maximum rate.
5. Put it in the ruling request, so the canton confirms the treatment before you move.

How we help

We map your income by country, test whether claiming treaty relief is worthwhile, and build the answer into the lump-sum calculation and the ruling request. Where another country's rules matter, we work alongside your adviser there. Start with the eligibility check to see which questions apply to you.

This guide is general information as of 30 September 2026; your own situation needs a ruling or personal advice before you rely on it.