How does inheritance work in Switzerland? There’s no easy way to answer that question as it can prove challenging to understand all inheritance tax’s working parts. We’ll cover many of the essential points in the sections below to give you a hand. That way, you’ll have a strong understanding of inheritance tax in Switzerland on a fundamental level.
Switzerland’s Inheritance Law and Succession Rules
What is the inheritance tax in Switzerland? In simple terms, the law makes it impossible for some relatives to become disinherited by any means, including a last will and testament. Now, while that is a straightforward explanation, there is considerably more to the law than that.
Switzerland’s inheritance tax
The application of inheritance tax and gift tax in Switzerland dramatically differs depending on the canton you are a resident in. Both the amount inherited and the nature of the relationship between the deceased and heir also determine the tax burden. So, there are a fair bit of factors to consider if you want to figure out what kind of tax burden will apply.
The estate tax in Switzerland
The amount taken out of an individual’s estate upon their passing is dependent on the Swiss inheritance law. The law determines how exactly the deceased’s estate gets divided between the respective heirs. Additional allocations can alter the division of the assets, and in some cases, you can opt to include a non-family member in the inheritance.
Who has to pay inheritance tax?
Anyone who receives money or property directly from the estate of someone who has passed must pay an inheritance tax. And the beneficiary is the one who must pay the tax. Don’t confuse this with federal state tax, where the estate pays the tax.
How much inheritance tax will I pay?
How much is wealth tax in Switzerland? The amount you will have to pay for an inheritance tax is dependent on where you live because different Swiss cantons have different rates on inheritance tax. Furthermore, the amount inherited and the nature of the relationship between the deceased and heir also determine the tax burden.
Inheritance tax in Bern
In Bern, the inheritance tax rates are as follows:
- Tax Base (CHF) 0-100,000=1% tax rate
- Tax Base (CHF) 100,000-200,000=1.25% tax rate
- Tax Base (CHF) 200,000-300,000=1.5% tax rate
- Tax Base (CHF) 300,000-400,000=1.75% tax rate
- Tax Base (CHF) 400,000-500,000=2% tax rate
- Tax Base (CHF) 500,000-600,000=2.25% tax rate
- Tax Base (CHF) 600,000+=2.5% tax rate
Inheritance tax in Geneva
In Geneva, the tax rate percentages are categorized by first, second, and third degrees of ascendants and descendants:
- First degree: 0-6%
- Second degree: 0-7.2%
- Third degree: 0-7.8%
- No degree: 0-26%
Inheritance tax in Zurich
In Zurich, grandparents, parents, step-parents, uncles, aunts, nephews, nieces, siblings, stepchildren have to pay inheritance tax, whereas spouses and descendants do not.
Here are the tax rate percentages:
- Tax Base (CHF) 0-30,000=2% tax rate
- Tax Base (CHF) 30,000-90,000=3% tax rate
- Tax Base (CHF) 90,000-180,000=4% tax rate
- Tax Base (CHF) 180,000-360,000=5% tax rate
- Tax Base (CHF) 360,000-840,000=6% tax rate
- Tax Base (CHF) 840,000-1,500,000=7% tax rate
Inheritance tax in Ticino
The inheritance tax rates in Ticino differ from most other cantons because parents are fully exempt. Only siblings, partners, and other individuals pay a percentage rate:
- Siblings (CHF) 50,000=5,95%-15,50% tax rate
- Partners (CHF) 50,000=17,85%-41% tax rate
- Other Individuals (CHF) 50,000=41% tax rate
Inheritance tax in Vaud
Aside from Vaud, no other canton applies inheritance and gift taxes to the children of the deceased, which is a significant exception to the general rule that you’ll want to keep in mind:
- Parents (CHF) 10,000=2,65%-7,5% tax rate
- Siblings (CHF) 10,000=5,28%-12,5% tax rate
- Partners (CHF) 10,000=15,84-25% tax rate
- Other Individuals (CHF) 10,000=max. 25% tax rate
Inheritance tax in Valais
Similar to Ticino, Valais does not apply inheritance tax to parents:
- Siblings (CHF) 10,000=10% tax rate
- Partners (CHF) 10,000=25% tax rate
- Other Individuals (CHF) 10,000=25% tax rate
Thankfully, you can find the tax rates for any canton. The best way to get a hold of that information is by consulting the Swiss government website.
Forced heirship rules in Switzerland
As briefly discussed in an earlier section, inheritance laws in Switzerland include forced heirship rules. So, it is not possible to disinherit certain relatives through a last will and testament.
With this rule in place, at least 50% of the deceased’s estate will go to the spouse. If there is no spouse, then a registered partner can also receive the 50% of the estate. For the remaining half, 75% of it will go to children and grandchildren.
How do I legally disclaim an inheritance?
Suppose you want to disclaim an inheritance legally. In that case, you must contact the appropriate authorities that control the estate of the deceased individual. They will work with you to fill out the necessary paperwork to renounce an inheritance. The inheritance will then go to the next relative in line willing to take on the taxes.
Swiss Inheritance Tax for Foreigners
If you are a foreigner living in Switzerland, Swiss inheritance tax is something that you can avoid. You will have the option to either have Swiss inheritance and gift taxes apply or keep your home country’s inheritance laws. If you opt for the second option, no Swiss inheritance tax will come into play.
Paying Inheritance Tax in Switzerland
Typically, you have to pay inheritance taxes in Switzerland within the 20 days following the tax assessment. Also, note that you can benefit from the country’s double tax treaties. These have been set up with over 50 countries and ensure you won’t get taxed by two countries.
Double taxation treaties (DTT)
If you’re an expat living in Switzerland, there are double tax treaties in place with more than 50 countries that can prevent you from paying taxes for two separate countries. You should check these treaties to see if your country is on the list. If your country is not, you are vulnerable to paying both Swiss inheritance tax and inheritance tax in your home country.
Paying tax in arrears
Essentially, when you pay taxes in arrears, you are paying for the previous year’s tax liabilities in the current year. This is not an uncommon practice. Many places take this approach to paying taxes to determine tax rates on property in one year and send the tax bills to residents in the following year.
The liabilities of inheritance and gift in Switzerland
When it comes to liabilities of inheritance and gift, both benefactors of the gift and donors are responsible for the tax. The heirs are all jointly liable for an estate, which allows the governing canton to collect the tax from whichever heir it chooses.
Bottom Line
If you ever find yourself in a situation involving inheritance tax in Switzerland, seek out the aid of a professional or notary, and find the specific rules of the canton you have to work with. These two things will save you a lot of stress in the long run and ensure you understand all the working parts of any situation regarding inheritance tax.
