Swiss Constitutional Referendum: What Australian Expats Need to Know About September 28

On September 28, 2025, Switzerland will hold a critical constitutional referendum that could fundamentally reshape how homeowners are taxed – and this has significant implications for Australian expats living in Switzerland. At Atlas Wealth Group, we’re closely monitoring this development as it will directly impact our Australian clients who own property in Switzerland.

The Double Majority System

For this constitutional amendment to pass, Switzerland requires what’s known as a “double majority”. This means the proposal must achieve both a majority of the popular national vote (more than 50% of all valid votes cast), and a majority of Switzerland’s 26 cantons. Each canton’s collective result counts as one vote, with six historical “half-cantons” each counting as half a vote. If either criterion fails, the amendment doesn’t pass.

What’s Actually Being Voted On in the Constitutional Referendum

While the ballot officially concerns cantonal property taxes on second homes, this vote will determine the fate of Switzerland’s imputed rental value system (“Eigenmietwert”). Currently, Swiss homeowners – including Australian expats who own property – must pay income tax on a fictitious rental income representing what they could earn if they rented out their property to someone else.

This imputed rental value is calculated at 60-70% of what a comparable property would rent for on the market. For Australian homeowners in Switzerland, this creates an additional tax burden on top of their regular income tax.

How the Outcome of the Constitutional Referendum may Impact Australian Homeowners

Current System Benefits:
Under the existing system, Australian homeowners in Switzerland can deduct mortgage interest and maintenance costs from their taxable income, which often substantially reduces the net tax impact. Many of our clients have structured their Swiss property financing to take advantage of these deductions.

Proposed Changes:
If the referendum passes, homeowners would no longer pay tax on imputed rental value. They would also lose the ability to deduct mortgage interest and maintenance costs. However, new property buyers would receive a transition benefit – they could still deduct mortgage interest for the first ten years, with the deduction gradually decreasing each year.

Who Benefits Most:
According to government calculations, Swiss pensioners would benefit most from abolishing imputed rental value. This is particularly relevant for retired Australian expats who often face challenges when their professional income ceases, but the imputed rental value tax burden remains.

Implications for Australian Renters

Australian renters in Switzerland currently benefit from the existing system’s balance between homeowners and tenants. The Swiss Tenants’ Association opposes the reform, fearing it will disrupt this equilibrium and potentially lead to indirect cost increases.

Implementation Timeline and Transitional Arrangements

If the referendum passes, the reform would not take immediate effect. The implementation timeline is structured as follows:

Implementation Date: The new system would come into force on January 1, 2026, if approved. Some sources suggest it could be delayed until 2027, allowing for a transition period of approximately two years.

Transitional Provisions: Current property owners would not need to take any immediate action during the transition period. The system would change automatically once implemented, with existing homeowners seamlessly moving from the current imputed rental value system to the new regime.

Legislative Process: Following voter approval, Parliament would need to pass the necessary implementing legislation during the transition period to operationalise the constitutional amendment.

Financial Impact and Timing

The reform’s fiscal impact depends heavily on mortgage interest rates. At current rates around 1.5%, the change would cost the Swiss government approximately CHF 1.8 billion annually. However, if mortgage rates rise to 3% or above, the government would actually benefit financially from the change.

For our Australian clients, this rate sensitivity is crucial for financial planning. Those with significant mortgage debt may prefer the current system when rates are low, while debt-free homeowners would likely benefit from the new system.

Political Landscape and Recommendations

The proposal has support from the Federal Council, Parliament, and centre-right parties. Opposition comes mainly from left-wing parties and the Tenants’ Association. Importantly, several cantons, particularly those with significant tourism, remain skeptical due to potential revenue losses.

Strategic Considerations for Australian Expats

At Atlas Wealth Management, we recommend our Australian clients in Switzerland:

1. Monitor the transition timeline carefully – if passed, you’ll have until January 2026 (or potentially 2027) to optimise your current tax position
2. Review your current property financing structure before the implementation date to maximize benefits under either system
3. Consider accelerating planned renovations to capture current tax deductions before the transition period ends
4. Evaluate your long-term Swiss residency plans in light of the potential changes and transition arrangements
5. Assess how the changes might affect your Australia-Switzerland tax treaty benefits during and after the transition period

The transition period provides Australian expats with valuable time to plan and adjust their financial strategies. Rather than rushing into immediate decisions, property owners can use this window to carefully evaluate their options and make informed choices about their Swiss property holdings.

Final Thoughts on the Swiss Constitutional Referendum

The September 28 referendum represents a pivotal moment for Swiss property taxation. Whether you’re a homeowner or renter, Australian or Swiss, this vote will shape the country’s tax landscape for generations. The structured transition period provides reassurance that changes, if approved, will be implemented thoughtfully rather than abruptly.

As your trusted financial advisors, Atlas Wealth Management will continue monitoring these developments throughout the transition period and their implications for your comprehensive financial strategy.

For personalised advice on how these potential changes and transition arrangements might affect your specific situation, contact Atlas Wealth Management for a consultation tailored to your circumstances as an Australian living in Switzerland.

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