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Implications of Introducing a National Inheritance Tax


Recently, a committee started collecting signatures for a constitutional initiative entitled "Taxation of millionaire inheritances for our social security". The aim of this initiative is to introduce an inheritance and gift tax at federal level. If the initiative is successful, the Federal Government will levy an inheritance and gift tax of 20% from 1 January 2016 at the earliest. Taxand Switzerland discusses the new inheritance tax will affect the transfer of wealth to descendants and retroactively, gifts made from 1 January 2012.

Envisaged content of the initiative text

The new constitutional regulation envisages an inheritance tax of 20% to be imposed on the estate of individuals who had their last domicile in Switzerland or on estates which are opened in Switzerland. Lifetime gifts are subject to gift tax at the same rate. On the other hand, cantonal inheritance and gift taxes are to be abolished. The federal tax is levied uniformly at the rate of 20% on the entire estate, regardless of the amount of wealth transferred to the individual recipient and regardless of the relationship. The transfer of wealth to descendants will be subject to inheritance and gift tax at the full rate, which, however, appears moderate for gifts to non-relatives compared to the currently existing cantonal taxes.

The following are not taxed

  • a one time exemption of 2 million francs on the sum of the estate and all taxable gifts
  • the parts of the estate and gifts which are bequeathed to the wife, husband or registered partner
  • the parts of the estate and gifts which are bequeathed to a tax exempt institution
  • gifts worth a maximum of 20,000 francs per year and per recipient.

Furthermore, special reductions are envisaged in cases where businesses or farms belonging to the estate (or gift) are kept in operation by the heirs or recipients for at least 10 years. These reductions will take concrete shape in the law or ordinance.

Inclusion of gifts as of 2012
The text of the initiative contains a surprising regulation, according to which gifts made from 1 January 2012 onwards are added back to the estate. Consequently, in the case of death after the implementation of the new constitutional regulation, all gifts made from 2012 up to the time of death will be subject, together with the estate, to the inheritance tax of 20%, if the exemption amount of 2 million francs is exceeded. Thus gifts would also be affected which are exempt from gift tax liability according to the current cantonal regulations (as is the case today in most cantons regarding gifts to descendants: exceptions apply in Appenzell Innerrhoden, Vaud, Neuch?tel and some communities in the canton of Lucerne). Cantonal gift taxes on taxable gifts levied from 2012 up to the time of death will be credited to the owed inheritance tax to avoid double taxation.



Taxand's Take

The initiative affects all individuals with last domicile in Switzerland or estates which are opened in Switzerland, if the estate (including gifts made after 1 January 2012) exceeds the threshold of 2 million francs. In particular also the transfer of wealth to descendants will be taxed. The political fate of the initiative is unpredictable at the present time. If the necessary signatures are collected in time, Parliament has to decide on its validity and whether to accept or reject it (possibly with a counter proposal) before it is submitted to the popular vote.


In the case of wealth which exceeds the exemption amount of 2 million francs, it may be advisable, in view of the as yet uncertain outcome of the initiative, to take appropriate steps today already to dispose of wealth. This could entail making gifts this year which are tax exempt according to cantonal law, for example to descendants, in order to prevent them becoming liable to inheritance tax retroactively after the national inheritance tax comes into force. Furthermore, from a tax planning perspective it may also be opportune to transfer wealth before 2012, while setting up lifelong beneficial use at the same time. We are happy to be of assistance in discussing these and any other possible courses of action with you. At present it is impossible to predict the chances of the initiative taking place and being accepted.


Your Taxand contact for further queries is:

Roger Dall'O

T. +41 44 215 77 31


Taxand's Take Author