Swiss Federal Supreme Court Rules: No Transfer of Holiday Home to Trust Without Authorisation
In a significant judgment delivered on 5 February 2026 (2C_437/2024), the Swiss Federal Supreme Court has confirmed that the transfer of ownership of a holiday property from a foreign owner to a trust established under American law requires authorisation under the Federal Act on the Acquisition of Real Estate by Persons Abroad (Lex Koller). The judgement reinforces the broad scope of Switzerland's restrictions on foreign acquisition of real estate.
Background
The case concerned a British national who owned a holiday home in Grindelwald. In 2020, he, his wife, and their two sons entered into a trust agreement governed by the law of the US state of New York to establish a family trust. Under this trust agreement, all four family members acted both as trustees and beneficiaries of the trust.
When the question of transferring the holiday apartment to the trust arose, the Bern Administrative Court ruled in 2022 that no authorisation within the meaning of the Lex Koller was required for the transaction. Nevertheless, the court imposed various conditions on the transfer. The Federal Office of Justice subsequently appealed this decision.
The Federal Supreme Court's Judgement
In its public deliberations, the Federal Supreme Court upheld the appeal lodged by the Federal Office of Justice, reversing the lower court's determination.
The Court emphasised that the Lex Koller subjects the acquisition of real estate by foreign persons to an authorisation requirement that is deliberately broad in scope, consistent with the protective purpose of the legislation. While the law provides for certain exceptions, including transfers to relatives in the ascending and descending line and to spouses, a trust does not fall within any of these statutory exceptions.
The Court further noted that with regard to holiday homes specifically, the Lex Koller permits cantons to grant authorisation to foreign natural persons where certain conditions are satisfied. However, the Federal Supreme Court holds that a trust is not included within the concept of "foreign persons" under the Lex Koller, as a trust constitutes a "legal entity", despite the absence of legal personality. Consequently, a trust cannot benefit from provisions designed for natural persons.
The Nature of Trusts Under Swiss Law
The judgment provides important clarification on how trusts are to be characterised under Swiss law. A trust refers to the legal relationships created by a person establishing it, whereby assets have been placed under the control of a trustee for the benefit of one or more beneficiaries or for a specific purpose. A trust is not a legal person; accordingly, all assets placed in trust constitute a separate estate distinct from that of the trustee, with which it cannot be merged. Unlike the Anglo-Saxon system, Swiss law does not recognise a split of legal and equitable ownership. Consequently, the trustee must be regarded as the sole owner of the assets of the trust, which he or she administers for the benefit of the beneficiaries in accordance with the rules set out in the trust instrument.
Significance
The Federal Supreme Court rejected any suggestion that there exists a legislative gap concerning transfers to trusts that would require judicial intervention to close. The Court noted that deciding in this manner corresponds to the practice of the majority of cantons. The Court's reasoning confirms that the authorisation framework under the Lex Koller applies comprehensively to trust structures, regardless of the identity of the trustees and beneficiaries or their existing relationship to the property.
This judgment serves as an important reminder for foreign property owners in Switzerland who may be considering estate planning arrangements involving trusts. Such structures will not circumvent the authorisation requirements of the Lex Koller, even where family members retain both legal and beneficial interests in the property.
Notably, a direct transfer of the holiday home by the father to his spouse or children would not have required authorisation under the Lex Koller. The interposition of the trust structure, rather than a direct family transfer, is what triggered the authorisation requirement.
This case underscores the importance of careful advance planning in cross-border estate matters. Our firm is well placed to advise on estate planning and trust structures to help clients navigate the complexities of the Lex Koller
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Charles Russell Speechlys SA is a firm of Swiss and UK-qualified lawyers, combining civil law and common law expertise to advise families and entrepreneurs on complex wealth, estate and tax planning issues, with a particular focus on cross-border structures.
This combined expertise positions us particularly well to assist clients navigating the interaction between trust structures and the Lex Koller regime, ensuring that estate planning solutions are both legally robust and compliant with Swiss restrictions on foreign ownership of real estate.
