Inheritance Tax in Switzerland: What You Need to Know

If you’re inheriting or planning to pass on assets in Switzerland, it’s essential to understand inheritance tax. In Switzerland, this tax is far from uniform—it varies by canton and depends on who inherits and how much is inherited. In this article, we’ll provide you with everything you need to know about the (sometimes tricky) topic of inheritance tax in Switzerland. We’ll also explain what German nationals residing in Switzerland need to keep in mind regarding inheritance laws.

Table of Contents

1. What Are the Exemptions for Inheritance Tax in Switzerland?

2. Do All Cantons Have Inheritance Tax?

3. How Can You Reduce Inheritance Tax in Switzerland?

4. Inheritance Tax in Switzerland: What Applies to Germans?

5. Conclusion

What are the exemptions for inheritance tax in Switzerland?

An exemption is the amount that is excluded from inheritance tax—you only pay taxes on the amount exceeding this threshold. As mentioned earlier, inheritance tax in Switzerland varies significantly by canton.

Here’s some good news upfront:

• Spouses and registered partners inherit tax-free.
• In cantons like Zug and Schwyz, cohabiting (non-registered) partners also inherit tax-free.

For all other heirs, the exemption depends on the degree of kinship and the canton. Heirs are categorized into five groups: descendants, parents, siblings, partners, and others. Close relatives generally enjoy higher exemptions than distant relatives.

For example:

• Direct descendants (children and grandchildren) often inherit tax-free in most cantons. However, exceptions exist: Canton Appenzell Innerrhoden offers an exemption of CHF 300'000.- while Neuchâtel allows CHF 50'000.-
• For siblings, exemptions range widely, from CHF 30'000.- in Basel-Land to only CHF 2'000.- in Basel-Stadt.

💡 Tip: Use the Swiss tax calculator to determine inheritance taxes for your case: Swiss Tax Calculator.
For a clearer understanding of inheritance shares and mandatory portions, visit: Red Cross Mandatory Portion Calculator.

Do all cantons have inheritance tax?

No, not all cantons impose inheritance tax. For example, Obwalden and Schwyz do not tax inheritances. In other cantons, the tax rate depends on the degree of kinship.

For instance:

• In Zurich, inheritance tax for siblings ranges from 6% to 18%.
• In Zug, it is lower, ranging from 4% to 8%.

How can you reduce inheritance tax in Switzerland?

The steps you can take depend on who the heir is. Here are some tips to minimize inheritance tax:

1. Get Informed: Start by familiarizing yourself with inheritance tax in Switzerland. Read articles (like this one), attend information sessions in your canton, and discuss the topic with family and friends. The more you know, the better decisions you can make.

2. For Couples: Register your partnership or get married. Spouses and registered partners are exempt from inheritance tax.

3. Real Estate: The location of real estate can impact taxes. In cantons like Schwyz, where no inheritance tax exists, properties located there are not taxed upon inheritance.

4. Set up an AG or GmbH: For inheriting foreign real estate, creating a legal entity like an AG or GmbH can be advantageous. For example, if a property in Spain is held by a GmbH, it will be subject to Swiss inheritance laws.

5. Write a Will: Drafting a will not only provides clarity, but can also save money. For example, appointing heirs in succession (e.g., spouse first, children later) can reduce taxes. This is particularly important for step-children, who are usually not tax-exempt.

6. Use Insurance: Risk life insurance can provide tax-free payouts to beneficiaries.

7. Seek Professional Advice: Don’t hesitate to invest in tax or financial advice. Experts can help you save significant amounts in inheritance matters.

Inheritance tax in Switzerland: What applies to Germans?

Inheritance laws can be confusing, especially for expats. Knowing your rights is critical.

Which Inheritance Law Applies to Germans in Switzerland?

Since August 17, 2015, changes to European inheritance regulations allow Germans living in Switzerland to choose between Swiss and German inheritance law. The default rule is that inheritance laws apply based on the deceased’s last place of residence. However, German nationals can specify in their will that they wish for German inheritance law to apply. In some cases, German laws may be more advantageous for heirs.

How Is Foreign Inheritance Treated if You Live in Switzerland?

Inheritance laws generally apply in the country where the deceased resided. For instance, if you live in Switzerland but your parents live in Germany, German inheritance laws apply. The location of inheritance (e.g., real estate) also determines taxation.

For real estate, taxes are due where the property is located. However, one way to avoid this tax is to have the heir added to the property deed with a lifelong right to use (so called Niessbrauch). Another option, as mentioned earlier, is to establish a GmbH.

Conclusion: Understanding inheritance tax in Switzerland

As always, the earlier you educate yourself about inheritance tax, the better prepared you’ll be. Understanding your rights is empowering and can save you—or your heirs—a substantial amount of money.