[1.1.] Do you pay inheritance tax in Switzerland?

Inheritance in Switzerland is taxed at the cantonal level. All cantons levy inheritance tax, except the canton Schwyz.
There is no inheritance and gift tax at the federal and municipality level.

If you don’t want to pay inheritance tax in Switzerland the best choice is living in canton Schwyz.

[1.2.] How much is inheritance tax in Switzerland?

The calculation is based on the degree of family relationship and the net estate value transferred to the heirs. Spouses and children are tax exempted, while non-related and appointed heirs can pay 45% of their part in certain cantons with a high inheritance tax in Switzerland.

[1.3.] Do foreign nationals pay inheritance tax?

Foreign nationals living in Switzerland have to pay inheritance tax such as Swiss nationals living in Switzerland do. Inheritance tax in Switzerland for non-residents has to be paid for real estate properties and companies domiciled in Switzerland.

The Swiss inheritance tax is calculated based on:

1. the worldwide assets of a deceased Swiss resident (incl. foreigners living in Switzerland);
2. the Swiss real estate properties owned by deceased non-resident foreigners;
3. the companies in Switzerland owned by deceased non-resident foreigners;

The inheritance tax in Switzerland for non-residents is only applicable for real estate and companies located in Switzerland.

[1.4.] How do I get out of inheritance without paying taxes?

Assets in a Swiss bank account owned by a non-resident investor are not taxed in Switzerland. The country of residence of the heirs of the account holder will tax the assets inherited with a Swiss bank account. The applicable inheritance Swiss bank account law is the law at the last residence of the account holder.

Inheritance tax in Switzerland is levied when the assets of the deceased person are transferred to the heirs. Personal goods (sports equipment) or certain types of assets are not subject to the inheritance tax. The inheritance tax rules in Switzerland can be very different from canton to canton.

[2.1.] Is there inheritance tax in Switzerland?

There is neither inheritance tax nor gift tax for spouses and children of a deceased person in all cantons. There is no distinction between blood-related children, step-children or adoptive children. There are cantons without inheritance and gift tax.

As a general rule, the inheritance tax depends on the value of the estate of the deceased person and the family relationship of the heirs. Far-related family members with the deceased person pay more tax compared to close-related family members (degree of relationship).

The transfer of assets by inheritance to the spouse or children is tax-free in all cantons because of close family ties.

[2.2.] Do I have to pay income taxes on inheritance?

Based on the inheritance tax, the government takes money again from the taxpayer. The same money was already taxed as income when the funds were earned.

Governments should keep in mind that with the inheritance tax they are taxing the same money twice. That’s the main reason for keeping inheritance taxation moderate. Therefore, assets subject to inheritance tax should never be taxed again with income tax.

That would be triple taxation: income tax when earned, inheritance tax when inherited and now, again income tax? Such triple taxation would be an anti-constitutional confiscation.

Only countries without inheritance tax, for example, Mexico, are treating inheritance and gifts as income. Inheritance and gifts in such countries are subject to income tax.

[2.3.] What countries have no inheritance tax?

Slovakia, Estonia, Mexico, Macau, Portugal, Singapore, Australia, New Zealand, Canada and Hong Kong are countries with no inheritance tax.

Watch out. It does not mean that you will pay no tax on inheritance or gifts.

Many countries are treating inheritance and gifts as income or capital gain. Instead of inheritance tax, you pay income or capital gain tax. But there are very few countries being excellent places for estate planning purposes, for example, Hong Kong.

Foreigners who prefer to retire in Switzerland should be aware of the very attractive opportunities they have in connection with inheritance and estate planning. We at Caputo & Partners can guide you through the jungle of Swiss codifications based on the 26 cantons.

We will show you the unique tax-efficient opportunities you have as a foreigner to pay less tax and how to avoid forced heirship rules in Switzerland by exercising your right of choice on the applicable jurisdiction with the “Professio Iuris”.

Swiss inheritance law imposed forced heirship rules. They are imperative.

The spouse or a registered living partner and the children or grandchildren cannot be disinherited, even not by a testament or last will. It’s imperative that at least half of the estate goes to the spouse and 75% of the other half goes to the children or grandchildren.

Let me give you an example.

Foreigners living in Switzerland have the privilege to exercise the so-called “Professio Iuris”.

[3.1.] What does Professio Iuris means?

The “Professio Iuris” is the party autonomy in international private law. Foreigners have the right of choice on the applicable law. They can submit the execution of their testament or last will to their home jurisdiction, or, they can opt for Swiss inheritance law.

The right of choosing the applicable inheritance law has to be exercised with the last will or inheritance contract.

It offers many benefits in patrimonial, family and succession matters, especially for foreigners coming from common-law jurisdictions.

The discrepancies between Anglo-Saxon common-law and continental European law are significant. The Professio Iuris is a legal tool to circumvent the imperative law (in Latin Roman law language called “Ius Cogens”) imposed by the continental European codes.

Common law allows disposing the transfer of assets to the heirs (“Ius Dispositivum”) in a much more flexible way. There are no forced heirship rules in common law jurisdictions.

The discrepancies between the Anglo-Saxon common-law jurisdictions in the countries of the British Commonwealth and the Continental-European Swiss laws are substantial. They can be used as smart estate planning instruments.

If a foreigner did not exercise his right of choice with the “Professio Iuris” in his last will, Swiss law will apply automatically, including the forced heirship rules Switzerland. That means that his partner and children will automatically inherit the estate.

Let’s assume that he intentionally excluded his children (or one of his children) in the testament because they became greedy, disrespectful or became Hare Krishna followers, the majority of the assets will be inherited by the children by virtue of forced heirship rules in Switzerland against the expressed intentions of the foreigner based on his last will.

Statutory inheritance law will not apply if the deceased left a last will or a testament or an inheritance contract. Inheritance contracts are made simultaneously (lat. uni actu) in combination with matrimonial contracts with the support of a notary public.

According to the Swiss Civil Code, there are three forms of wills:

• the public will with a notary public
• hand-written will
• oral will for emergency situations (risk of death)

Switzerland inheritance law is based on the old Roman Law Principle of the Universal Succession. The transfer of assets to the heirs includes the assets and liabilities. That means that if a Switzerland estate is indebted you will inherit the debts. You have to do something against it if the financial situation is not transparent.

[4.1.] How do I legally disclaim an inheritance?

• Are you unsure about the financial situation of a deceased relative?
• Are you afraid of inheriting debts?

Within the first three months following the death of your relative, you can legally disclaim your inheritance.

During this critical period, you should not do the mistake of taking possession of an item belonging to the estate. A small item, for example, a fishing rod, taken at home from the estate can be sufficient to be used as evidence against you for having accepted the entire estate, including the debts. You lost your right to disclaim the inheritance.

If the liabilities are likely to exceed the assets, you should disclaim the inheritance. As an heir, you have the right of inspecting all documents of the deceased relative, including Swiss bank account information and statements. Check the last tax return, bank statements and ask for an extract from the debt enforcement register for 20 CHF.

If the financial situation remains unclear, you can ask for a public inventory within one month after the notification of the decease. The competent authorities will make a list of assets and liabilities. They will make a publication in the Official Gazette calling potential creditors to claim their assets.

When the public inventory is finished, you are liable only for debts listed in the public inventory. Now, you have a clear picture of the financial situation because you know all assets and liabilities.

Now, you can send a registered letter to the competent authority and disclaim the inheritance. In most cantons, the competent authority is the District Court for Inheritance Matters at the deceased’s last residence. If nobody accepts the inheritance, the estate will be liquidated by the bankruptcy office.

[4.2.] What is a Certificate of Inheritance in Switzerland? Why do you need one?

A Certificate of Inheritance is an official document that confirms the identity of all the heirs being entitled to inherit the estate. Swiss banks always ask for a Certificate of Inheritance in combination with a Swiss Death Certificate, before they transfer the assets from a deceased person’s bank account to the personal accounts of the heirs.

Based on the Certificate of Inheritance, banks can be sure to transfer the assets to the legitimate statutory (or appointed) heirs instead of false pretenders. Before transferring real estate properties to the heirs, the officer of the land registry asks for a Certificate of Inheritance and a Swiss Death Certificate.

Banks are very strict. Even a genuine Certificate of Inheritance is not always a guarantee for withdrawing money from a bank account after death. The slightest doubt that the succession case could result in a lawsuit is sufficient for leaving the account frozen until all pretenders are on the same page. This can take years.

If a Swiss bank is reluctant to help you transfer the assets in favour of your personal bank account call us for help. We helped thousands of clients with Swiss bank account inheritance.

Let us negotiate with the Swiss bank. To obtain the cooperation of the Swiss bank, we inform the bank that our clients have the intention to invest the assets inherited with the same bank.

Here is the reality. If you tell the Swiss bank that you need the money urgently to buy a new house at home you can be sure that the Swiss bank will not be cooperative with you.

Contrary to popular opinion, Swiss banks will not actively distribute the assets. When the banks learn that an account holder has died, they block the account. They have no interest in speeding up the distribution.

The assets are stocked in the bank while making money for the bank. The heirs must take the initiative and claim the assets at the Swiss bank account after death.

According to our professional experience, we have seen many non-resident heirs considering the Swiss bank as a sort of inheritance judge in charge of the distribution of assets. That’s a tremendous mistake. You are in the driver’s seat. You have to take action.

We at Caputo & Partners, specialise in international probate matters involving Swiss bank accounts in the name of non-resident Swiss bank account holders. It’s quite frequent that we help victims of online inheritance scams with a Swiss bank account.

If you are not sure if a Swiss death certificate or certificate of inheritance is genuine, call us for help. Do not send money to them. We will find out immediately if your documentation is genuine.

The scammers are using a fake Swiss Certificate of Inheritance and Swiss Death Certificate to convince their victims to make advance payments.

[5.1.] Double Taxation Treaties (DTT)

Foreigners, non-resident in Switzerland, expats living in Switzerland and Swiss residents abroad can benefit from Switzerland’s double tax treaties. Switzerland currently has more than 100 Double Taxation Treaties preventing the double taxation of private individuals and entities.

Switzerland estate and inheritance tax treaties with 8 countries are avoiding the double taxation of estates and inheritance.

The UK Switzerland inheritance tax treaty and the estate tax treaty Switzerland USA are two of the most important Double Taxation Agreements in place.

If you are a UK or US resident with connections to Switzerland, for example, based on a Swiss bank account or real estate properties, you should take the advantages offered by the inheritance tax US Switzerland treaty or the UK Switzerland inheritance tax treaty.

For the treatment of inheritance tax Switzerland Vaud with the UK, there is a still valid treaty with the UK signed on the 18 of August 1872. This old agreement is still valid for certain cases involving assets located in the canton Vaud.

[5.2.] Paying tax in arrears

If a Swiss bank account holder has passed away and had evaded taxes with his Swiss bank account, the heirs now benefit from a privileged regime for paying tax in arrears. Instead of paying tax on arrears for 10 years, the taxable periods have been reduced to 3 years only.

[5.3.] The liabilities of inheritance and gift tax in Switzerland

Inheritance and gift tax in Switzerland is collected by the cantons. Inheritance tax is due on the deceased worldwide assets. The federal government does not levy any inheritance or gift tax.

The beneficiaries of a gift (or donation) and the donor are jointly liable for the gift tax. The heirs of the estate in Switzerland are jointly liable for the inheritance tax. Jointly liable means that the canton can choose the one heir with the deepest pockets for collecting the tax.

The cantons are addressing the invoice for the inheritance tax to the appointed representative of the heirs as a total amount.

The canton in which the deceased has the effective residence is assessing the liability for inheritance tax. The canton in which real estate properties are owned is entitled to levy taxes on the properties.

When the properties are located in multiple cantons the total tax amount is split between the cantons. When there are properties distributed in different countries, inheritance tax is levied by the country where the property is located according to the Roman legal doctrine “lex rei sitae”.
In the case of multiple jurisdictions, you should verify if there are Double Taxation Treaties applicable.

Gifts are subject to the same tax principles as inheritance tax. If the donor passed away lifetime gifts must be considered in calculating the tax rate and the tax-free allowance (tax-free limit).

[6.] Inheritance tax rates Switzerland

The inheritance tax rates in Switzerland are imposed by the Swiss cantons. Besides the chart listing inheritance tax rates in Switzerland, we will show you the most important cantons chosen by foreigners relocating and/or retiring in Switzerland.

The spouse or the registered partner, children and grandchildren are not taxed in all the cantons in Switzerland. They pay zero tax because of their close relationship with the deceased. The same inheritance tax rates apply for the gift tax.

Other heirs are split among the following 4 groups of heirs:

1. Parents
2. Siblings
3. Partners
4. Other persons

Partners:
Partners are persons that have shared a home with the deceased for at least 5 years (example, non-married and non-registered partnership).

Other persons:
Other persons includes third parties and/or family members not listed: uncles, aunts, nephew and nieces