Alternative Investments in Switzerland: Product Innovation Meets Perimeter Control

Overview

Switzerland is creating more flexible ways to structure alternative investments, but innovation does not remove regulatory limits. This article explains how the market is developing and where legal boundaries remain important. It first examines the L-QIF, which allows qualified investors to pursue a broad range of strategies without Swiss Financial Market Supervisory Authority (FINMA) product approval, while the fund manager remains supervised. It also explains why Swiss managers may still establish funds abroad, particularly where European market access, investor familiarity or Swiss withholding tax are important.

For real estate, the proposed Lex Koller reform could restrict certain investments by persons abroad, including commercial property and interests in listed real estate companies and funds. The final rules remain uncertain.

The article also considers the revised Anti-Money Laundering Act (AMLA) duties applying from 1 October 2026, and Switzerland’s growing market for tokenised investments. Blockchain can make private assets easier to divide, transfer and administer, but the underlying rights still determine the applicable legal, tax, custody and compliance rules.

The central message is simple: product innovation must remain within the correct regulatory perimeter.

The L-QIF

Purpose and legal framework

The L-QIF, or Limited Qualified Investor Fund, is a major development in the Swiss fund market. The relevant amendments to the Swiss Collective Investment Schemes Act and its ordinance entered into force on 1 March 2024.

An L-QIF can be launched without FINMA authorisation or product approval. It must be limited to qualified investors and managed by an appropriately FINMA-supervised institution. The regime aims to strengthen Switzerland as a fund centre through less restrictive investment rules than those for FINMA-approved funds.

Flexible investment opportunities

An L-QIF is not limited to a fixed statutory list of eligible assets. In principle, it may invest in any lawful asset class permitted by its governing documents. Possible investments include:

• private equity;
• direct and indirect real estate;
• mortgages;
• loans;
• infrastructure;
• bonds;
• equities;
• absolute-return strategies;
• Sharia-compliant investments; and
• tangible assets.

The range of registered funds suggests that the L-QIF can support many different strategies.

Practical advantages and responsibilities

Without FINMA product approval, an L-QIF can often be established quicker. Its investment limits, liquidity, valuation methods and governance can also be adapted to the intended strategy. This is useful for funds holding illiquid or long-term assets, or funds designed for professional investors who can assess the risks themselves.

However, an L-QIF is not an “unregulated fund”. Its manager remains supervised by FINMA, notification and reporting duties apply, and compliance is audited.

Tax treatment

General tax position

A Swiss L-QIF has no special tax regime. It is taxed in the same way as other Swiss collective investment schemes. The result depends on its legal form, investments, distribution policy and investors.

An L-QIF may be established as a contractual investment fund, a SICAV or a limited partnership for collective investment, known in German as a Kommanditgesellschaft für kollektive Kapitalanlagen, or KmGK. For Swiss direct income and profit tax purposes, these forms are generally tax-transparent: ordinary investment income and assets are usually allocated to investors rather than taxed at fund level.

If an L-QIF holds Swiss real estate directly, the fund itself is taxed on the income and gains from that property. Other income generally remains tax-transparent and is attributed to investors.

Swiss withholding tax

Taxable income distributed by an L-QIF, or accumulated and reinvested within the fund, is generally subject to Swiss withholding tax at 35%. Certain amounts may be exempt if the accounting and disclosure requirements are met. These may include separately disclosed capital gains, qualifying capital contribution reserves, repayments of investor capital and income from directly held Swiss real estate. The final result also depends on the investor’s tax residence, beneficial ownership and right to a domestic or treaty-based refund.

The affidavit procedure, also called the domicile declaration or Domizilerklärung, may allow a qualifying foreign investor to receive certain income without an initial withholding-tax deduction, provided all conditions are met.

The result may also differ depending on whether real estate is held directly by the fund or indirectly through a company.

Choosing the appropriate structure

An L-QIF may be suitable where its regulatory and operational advantages outweigh the disadvantages of Swiss withholding tax and cross-border distribution restrictions. The choice between a Swiss L-QIF, a foreign alternative investment fund and another investment structure must be assessed case by case. Relevant factors include the strategy, asset location and holding structure, expected distributions and investor base.

Why Fund Sponsors and Investors Often Choose Foreign Domiciles Over Switzerland

Switzerland is a respected fund centre with experienced banks, asset managers and advisers. It offers regulated retail and professional-investor funds, as well as a newer option for qualified investors, the L-QIF, that does not require FINMA product approval. Even so, many Swiss managers establish funds outside Switzerland. The reason is usually not regulation alone; market access, tax, investor familiarity and operating infrastructure are important. The Swiss government itself notes that most funds managed in Switzerland are foreign-domiciled.

European market access

Switzerland is outside the European Union (EU) and European Economic Area (EEA). A Swiss fund therefore has no automatic marketing passport under the Alternative Investment Fund Managers Directive (AIFMD). Marketing it to professional investors in Europe may require separate filings under the national rules of each country.

Luxembourg, Ireland and Malta are EU fund centres, while Liechtenstein belongs to the EEA. EU or EEA funds managed by an authorised AIFM can generally be marketed to professional investors across the EEA through a notification process. This can be decisive when investors are based in several European countries.

Tax and distributions

Taxable income distributed or accumulated by a Swiss fund is generally subject to Swiss withholding tax at 35%. Refunds, exemptions and relief-at-source procedures may be available, but they can create delays, paperwork and uncertainty for foreign investors.

A foreign fund is not automatically tax-free. It may still pay tax on its investments, and investors remain subject to tax in their own countries. However, using a foreign fund may avoid the Swiss withholding tax imposed on distributions by a Swiss fund, depending on the structure.

Familiar fund platforms

Luxembourg Reserved Alternative Investment Funds (RAIFs), Irish Qualifying Investor Alternative Investment Funds (QIAIFs) and Maltese Notified AIFs provide established legal frameworks for international funds. Their recognised structures and specialised service providers can simplify administration, custody and investor onboarding.

Malta can place a complete Notified AIF on its official list within ten working days. Ireland also offers a rapid final authorisation process once the fund and its service providers have completed the required advance review. Liechtenstein combines proximity to Switzerland with access to the EEA market.

Cayman and the British Virgin Islands (BVI)

Cayman and the BVI are often considered for funds aimed mainly at investors outside Europe. They offer established corporate and partnership structures for private equity, hedge funds and other alternative strategies. Cayman funds remain subject to regulation by the Cayman Islands Monetary Authority.

Certain BVI incubator and approved funds may begin business two business days after a complete application, although investor and asset limits apply. Cayman and BVI funds have no EU passport. If marketed in Europe, they may still face AIFMD and national private-placement requirements.

When Switzerland remains the better choice

A Swiss fund may be preferable where investors are mainly Swiss, the Swiss regulatory brand is important and EU-wide marketing is not central. It may also avoid the cost of co-ordinating foreign entities and service providers.

There is no universally best domicile. The choice should be based on the target investors, marketing countries, tax treatment, legal form, launch timetable and total operating cost. In many cases, the investment manager remains in Switzerland while the fund itself is established abroad.

Proposed Lex Koller Reform: What Investors and Real Estate Funds Need to Know

What Lex Koller covers

Lex Koller (formally the Federal Act on the Acquisition of Real Estate by Persons Abroad) limits certain purchases of Swiss real estate by a “person abroad”. This includes many foreign individuals and companies based outside Switzerland. It can also include a Swiss company controlled by foreign persons.

Foreign control is presumed where persons abroad hold more than one third of a company’s capital or voting rights or provide financing above the legal threshold. It may also exist where foreign persons otherwise have decisive influence. The proposed reform would keep this definition but expand the types of transactions requiring authorisation.

The proposal is not yet law

The consultation ran from 15 April to 15 July 2026. The proposal remains a preliminary draft and may be changed, delayed or abandoned.

The consultation ended on 15 July 2026, and the Federal Office of Justice published the individual consultation responses on 27 July 2026. The responses reveal substantial disagreement among political parties, cantons and affected industries.

Separately, on 18 August 2026, a National Council committee recommended supporting the principal part of a parliamentary motion calling for a broader tightening of Lex Koller. The National Council has not yet decided on that motion.

As of 26 August 2026, the Federal Council had not published an official consultation-results report, a revised draft or a dispatch to parliament. The proposal therefore remains preliminary, may still be changed, narrowed, delayed or abandoned, and should not be treated as current law.

Principal homes

Today, a third-country national living in Switzerland without a C permit can generally buy a principal home without Lex Koller authorisation. Under the proposal, third-country nationals living in Switzerland without a C settlement permit would generally need authorisation. This would mainly affect B-permit holders. If they stopped using the property as their main home, they would normally have to sell it within two years.

EU and European Free Trade Association (EFTA) nationals resident in Switzerland, and third-country nationals with a C permit and actual Swiss residence, would generally not be affected. Special treaty rules may apply in some cases.

Commercial property

Persons abroad can currently buy Swiss commercial property without authorisation, including property bought as an investment and rented to another business. The proposal would keep this exemption only where the buyer uses the property for its own business in Switzerland, such as an office, factory, shop or hotel. Buying property only to rent it to an unrelated third party would generally require authorisation. Because authorisation is available only in limited cases, many such investments would no longer be possible.

Holiday homes

The annual national quota for holiday homes and aparthotel units would fall from 1,500 to 750. A sale from one person abroad to another would also count against the relevant cantonal quota.

Listed real estate companies and funds

Persons abroad would generally need authorisation to buy:

• listed shares in residential real estate companies;
• regularly traded real estate fund units; or
• shares in real estate SICAVs.

These investments are currently exempt because such investments are different from buying a building directly: investors receive a financial return but do not own or control a specific property.

The reform would remove the exemptions. Although authorisation could formally be requested, the legal grounds are narrow. For many investors abroad, the new rule could therefore operate almost like a ban.

Trading and fund compliance

Swiss exchange participants and professional securities dealers would have to check whether a buyer is a person abroad. If they could not confirm that a purchase was permitted, they would have to reject it unless the buyer produced an authorisation or an official decision confirming that none was needed. This may be difficult because securities are traded quickly and the ultimate investor may not be immediately known, especially where banks, custodians or nominees are involved. Breaches could result in significant fines.

According to the regulatory impact assessment prepared by Fahrländer Partner Raumentwicklung AG for the Swiss Federal Office of Justice, 44 listed Swiss real estate funds were identified as of the end of September 2025, with a combined portfolio market value of approximately CHF78.75 billion based on their latest annual reports. The assessment warned that the proposed restrictions could lead to delistings and reduce market transparency, tradability and liquidity.

Affected real estate funds, SICAVs and real estate L-QIFs would also have to exclude investors classified as persons abroad who require authorisation but cannot provide it. Fund managers may therefore need investor declarations, transfer restrictions, monitoring procedures and compulsory transfer or redemption rights.

Tokenised and multi-level structures

The proposal has no special rule for tokenised investments. Their treatment would depend on the legal rights represented by the token. A token representing a real estate fund unit could therefore be treated like the unit itself.

A Swiss company may also remain subject to Lex Koller if it is foreign-controlled. In multi-level structures, the full ownership, voting, financing and control chain may need to be reviewed.

What businesses should do now

The proposed rules should not be viewed as final requirements. However, long-term funds and transactions may benefit from flexible terms allowing them to respond if the law changes. These could include change-of-law clauses, investor information duties and transfer or redemption rights.

The final legislation may differ significantly from the current draft. Definitive restrictions should therefore be based on the law ultimately adopted.

Switzerland’s 2026 AMLA Reform: New Duties for Lawyers, Advisers, Family Offices, Fiduciaries, Dealers and Sanctions Compliance

From 1 October 2026, Switzerland’s revised AMLA will introduce two connected changes. Certain lawyers, family offices, fiduciaries that qualify as financial intermediaries and/or professional advisers will become subject to AMLA duties when they take part in specified transactions. Financial intermediaries and advisers will also have to organise their businesses to prevent breaches of Swiss sanctions.

Who is affected?

The reform does not automatically apply to every lawyer, notary, trustee, family office, fiduciary or consultant. The decisive question is what the adviser actually does.

The rules may apply where an adviser professionally participates in financial transactions involving real estate, the creation or administration of entities that mainly hold assets rather than operate a business, contributions to or distributions from such entities, certain company purchases or sales, or longer-term domiciliation services.

A law firm may therefore be covered for one mandate but not for another. Each mandate must be assessed separately.

What remains protected by professional secrecy?

Traditional legal work remains protected. This includes legal opinions, dispute strategy, representation before courts or authorities, and fact-finding carried out for legal advice or litigation.

However, an activity is not protected simply because a lawyer performs it. Company administration, transaction execution, asset management and routine compliance work may fall outside the core area of protected legal advice.

The revised AMLA does not generally override professional secrecy. For lawyers and notaries, a reporting duty may arise only in limited circumstances, broadly where they carry out a financial transaction for a client and the relevant information is not protected.

When does due diligence begin?

Once an adviser falls within AMLA, the adviser must verify the client’s identity, identify the beneficial owner, understand the purpose of the transaction or service and keep appropriate records.

Higher-risk cases may require further checks – for example, concerning the source of funds or complex ownership structures. A straightforward domestic matter will normally require less review than a cross-border structure involving several entities, politically exposed persons or unclear funding.

Why sanctions compliance is now part of AMLA

The revised law will require affected lawyers, family offices, fiduciaries and advisers to introduce organisational measures to prevent breaches of Swiss sanctions. A simple name check is not enough. A company may not appear on a sanctions list but may still be owned or controlled by a listed person. Restrictions may also apply because of the goods, services, financing, payment route, country or industry sector involved.

An effective system should therefore include clear responsibility, a sanctions risk assessment, screening procedures, escalation rules, staff training, record-keeping and regular testing. Software can support this process, but it cannot replace legal analysis.

A practical two-track approach

Lawyers should consider keeping legal advice and AMLA compliance in separate but co-ordinated files.

The legal file should contain legal analysis, advice and dispute strategy, with appropriately restricted access. The AMLA file should contain client and beneficial-owner information, the purpose of the transaction, risk assessments, source-of-funds checks and records of approvals or escalations.

This separation can help a lawyers demonstrate compliance without unnecessarily disclosing protected legal advice.

What firms should do now

Before 1 October 2026, affected firms should review their services, classify existing mandates, update engagement letters and onboarding procedures, assign responsibility, train staff and test their controls.

The reform does not abolish professional secrecy or turn every adviser into a financial intermediary. It does, however, require firms to draw a clear line between protected legal advice and regulated transaction work, and to show that their compliance systems are documented and effective.

Tokenised Investments in Switzerland: Legal Form, Tax and Custody

Tokenisation in practical terms

Switzerland is one of the leading locations in the area of distributed ledger technology (DLT) and blockchain. Especially in the financial sector, a growing fintech and blockchain ecosystem has developed in Switzerland. For Switzerland as a business location, it is crucial for the legal framework to enable innovation and for new technologies to be able to thrive.

Switzerland’s DLT legislation entered into force on 1 February 2021 and 1 August 2021, creating a legal basis for blockchain-based securities and DLT trading facilities. In March 2025, FINMA licensed BX Digital as Switzerland’s first DLT trading facility. The licence permits the multilateral trading of DLT securities, and BX Digital intends to provide post-trade settlement services.

Tokenisation is not simply another form of cryptocurrency. It is a way of representing legal or economic rights in an asset on a digital ledger. For example, in real estate, the building normally remains registered in the land register in the name of a company or other special-purpose vehicle (SPV). The SPV may issue tokens representing defined rights connected with the property. Blockchain records who holds those rights and how they are transferred; it does not own the building.

What can a token represent?

A token may represent a share in the SPV, a loan to it, a fund unit, a right to part of the profits, or a contractual claim linked to rental income or the property’s value. The documents behind the token determine whether the investor receives dividends, interest, voting rights, repayment rights or a share of sale proceeds.

This distinction is essential. A tokenised share remains a share, and tokenised debt remains debt. If money from several investors is pooled and managed for them, the arrangement may also be a collective investment scheme.

For Swiss real estate, Lex Koller must be considered by looking at the underlying property exposure, the investor and the level of control, not merely at the use of blockchain. Tokenisation does not, by itself, remove an investment from real estate ownership restrictions.

Why use tokens?

Tokens can make private investments easier to divide, administer and transfer. A smart contract may automate rental-income distributions, interest payments, voting or the allocation of sale proceeds. Investors can be admitted through identity, anti-money-laundering and sanctions checks, with only approved digital wallets allowed to receive the tokens.

Tokenisation may be particularly useful for private assets that lack an efficient market. Selling a traditional private loan may require assignment documents, consents and lengthy negotiations. Properly structured tokenised debt can reduce this friction because the legal rights move with the token.

Switzerland’s DLT legislation, in force since 1 February 2021 and 1 August 2021, allows certain rights to be created and transferred as legally recognised ledger-based securities. In March 2025, FINMA licensed Switzerland’s first DLT trading facility, providing regulated infrastructure for trading DLT securities.

Tax and custody still matter

Swiss tax treatment follows the token’s legal and economic function. Equity-like tokens may generate dividends, debt-like tokens may generate interest, and fund tokens generally follow the tax treatment of the underlying fund. A smart contract does not make an investment tax-neutral.

Custody requires more than storing a password. The structure must address who controls the private keys, how assets are segregated, what happens if a custodian becomes insolvent, and how access can be recovered.

FINMA’s January 2026 guidance stresses specialist expertise, suitable technology and effective bankruptcy protection. A regulated Swiss institution remains responsible when it appoints an external custodian.

Stablecoins may provide the payment side of token transactions – for example, when investors buy tokens or receive distributions. Switzerland is considering new licences for payment-instrument institutions and crypto-institutions.

Separately, the Organisation for Economic Cooperation and Development (OECD) Crypto-Asset Reporting Framework may apply in Switzerland no earlier than 1 January 2027. Providers should therefore prepare to collect customer, tax-residence and transaction data, although the Swiss crypto-reporting rules do not apply during 2026.

What tokenisation does not solve

Tokenisation can improve record-keeping and transfers, but it does not remove investment risk or create buyers. A poorly performing building remains a poor investment whether represented by paper, shares or tokens.

Blockchain also does not solve tenant defaults, issuer misconduct, insolvency, breach of contract or court enforcement. Liquidity still depends on market demand, income, interest rates and investor confidence.

The strongest use case is therefore not simply “putting a building on blockchain”; it is using digital securities to make private ownership, debt and fund interests easier to divide, transfer, settle and administer, while keeping the legal structure, tax treatment, custody and compliance rules clear.