How Must Inheritance Be Taxed?
Inheritance tax in Switzerland is levied by the cantons, which is why tax rates and exemption amounts can vary widely. Find out here where and how an inheritance must be taxed and how the tax burden can be reduced.
An Overview of Inheritance Tax in Switzerland
In Switzerland, inheritance tax is levied by the cantons and not by the federal government. Therefore, the regulations and tax rates differ from canton to canton. The tax regulations on inheritance of the canton where the testator (the one who inherits) had his last residence always apply.
The heirs are liable to tax, whereby in most cantons there is a gradation between different degrees of relationship. For example, spouses are exempt from inheritance tax in all cantons. The tax rate is based on the amount of the inheritance – i.e. it is progressive. The tax-free amount for an inheritance also varies from canton to canton.
Inheritance Tax Rates by Canton
The cantons are free to decide how high they set inheritance tax rates and the tax allowances. In addition, a distinction is made between the degrees of kinship of the heirs, so that different tax rates apply depending on the type of kinship. Inheritance tax in the individual cantons therefore differs significantly from one another in some cases, as you can see from the following table.
Canton | Spouse & Registered Partner | Descendants (Children, Grandchildren) | Parents | Siblings | Civil Partners | Other Heirs |
AG | tax free | tax free | tax free | 6 – 23% | 4 – 9% | 12 – 32% |
AR | tax free | tax free | tax free | 22% | 12% | up to 32% |
AI | tax free | 1% | 4% | 6% | 20% | up to 20% |
BL | tax free | tax free | tax free | 15% | 15% | 30% |
BS | tax free | tax free | 5 – 11% | 7,50 – 16,50% | 7,50 – 16,50% | 22,50 – 49,50% |
BE | tax free | tax free | 6 – 15% | 6 – 15% | 6 – 15% | up to 40% |
FR | tax free | tax free | tax free | 5,25% | 8,25% | up to 22% |
GE | tax free | tax free | tax free | 6 – 11% | 20 – 26% | up to 26% |
GL | tax free | tax free | 2,63 – 6,56% | 4,2 – 10,50% | 4,2 – 10,50% | up to 26,25% |
GR | tax free | tax free | tax free | 5% | tax free | 15% |
JU | tax free | tax free | 7% | 14% | 14% | up to 35% |
LU | tax free | 0 – 2% | 6 – 12% | 6 – 12% | tax free | up to 40% |
NE | tax free | 3% | 3% | 15% | 20% | up to 45% |
NW | tax free | tax free | tax free | 5% | tax free | up to 15% |
OW | tax free | tax free | tax free | tax free | tax free | tax free |
SG | tax free | tax free | 10% | 20% | 30% | up to 30% |
SH | tax free | tax free | 2 – 8% | 4 – 16% | 10 – 40% | up to 40% |
SO | tax free | tax free | tax free | 4 – 10% | 12 – 30% | 12 – 30% |
SZ | tax free | tax free | tax free | tax free | tax free | tax free |
TG | tax free | tax free | 2 – 7% | 4,10 – 14% | 8,20 – 28% | up to 28% |
TI | tax free | tax free | tax free | 5,95 – 15,50% | 17,85 – 41% | up to 41% |
UR | tax free | tax free | tax free | 8% | tax free | up to 24% |
VD | tax free | 0,01-3,5% | 2,64 – 7,50% | 5,28 – 12,50% | 15,84 – 25% | up to 25% |
VS | tax free | tax free | tax free | 10% | 25% | up to 25% |
ZG | tax free | tax free | tax free | 4 – 8% | tax free | up to 20% |
ZH | tax free | tax free | 2 – 6% | 6 – 18% | 12 – 36% | up to 36% |
Tax Allowances for Inheritances
In most cantons there are tax allowances that can be deducted from the amount of the inheritance or inheritance share. Only the remaining amount must then be taxed. Here, too, the tax allowances vary from canton to canton and according to the degree of relationship.
Canton | Spouse & Registered Partner | Descendants (Children, Grandchildren) | Parents | Siblings | Civil Partners | Other Heirs |
AG | tax free | tax free | tax free | 0 | 0 | 0 |
AR | tax free | tax free | tax free | 5‘000 | 10‘000 | 5‘000 |
AI | tax free | 300‘000 | 20‘000 | 5‘000 | 5‘000 | 5‘000 |
BL | tax free | tax free | tax free | 30‘000 | 30‘000 | 10‘000 |
BS | tax free | tax free | 2‘000 | 2‘000 | 2‘000 | 2‘000 |
BE | tax free | tax free | 12‘000 | 12‘000 | 12‘000 | 12‘000 |
FR | tax free | tax free | tax free | 5‘000 | 5‘000% | 5‘000 |
GE | tax free | tax free | tax free | 0 | 0 | 0 |
GL | tax free | tax free | 50‘000 | 10‘000 | 10‘000 | 10‘000 |
GR | tax free | tax free | tax free | 7‘000 | tax free | 7‘000 |
JU | tax free | tax free | 0 | 0 | 0 | 0 |
LU | tax free | 0 | 0 | 0 | tax free | 0 |
NE | tax free | 50‘000 | 50‘000 | 0 | 0 | 0 |
NW | tax free | tax free | tax free | 20‘000 | tax free | 20‘000 |
OW | tax free | tax free | tax free | tax free | tax free | tax free |
SG | tax free | tax free | 25‘000 | 10‘000 | 10‘000 | 10‘000 |
SH | tax free | tax free | 30‘000 | 10‘000 | 10‘000 | 10‘000 |
SO | tax free | tax free | tax free | 0 | 0 | 0 |
SZ | tax free | tax free | tax free | tax free | tax free | tax free |
TG | tax free | tax free | 20‘000 | 0 | 0 | tax free |
TI | tax free | tax free | tax free | 0 | 0 | 0 |
UR | tax free | tax free | tax free | 15‘000 | tax free | 0 |
VD | tax free | 0 | 0 | 0 | 0 | 15‘000 |
VS | tax free | tax free | tax free | 0 | 0 | 0 |
ZG | tax free | tax free | tax free | 0 | tax free | 0 |
ZH | tax free | tax free | 20‘000 | 15.000 | 50‘000 | 0 |
Where Do You Have to Pay Tax on the Inheritance?
The person who takes over the inheritance (or a share of it) must pay the inheritance tax. In the case of a community of heirs, each heir pays inheritance tax on his or her share. The respective tax rates and allowances in the canton of the deceased apply, not in the canton of the heirs. For example, if the decedent lived in Zurich and the heir lives in Geneva, the inheritance is taxed at the Zurich tax rate.
Real Estate
If a property is inherited that is located in any canton in Switzerland, its market value must be taxed. Therefore, if it is not sold, the sale value of the property must be determined. It is then taxed in the canton where it is located.
Securities
When securities and shares are inherited, a distinction is first made between exchange-traded and non-exchange-traded securities. The former are taxed according to the market value applicable at the time of inheritance. Non-exchange-traded securities do not have a market price. Their value must be estimated.
Are Debts Also Taxed?
If the decedent has debts, these are repaid from his net assets (if possible). What then remains of the inheritance assets is taxed by the heirs.
Inheritances From Abroad
If a testator lives abroad, the inheritance is taxed there, even if the heir lives in Switzerland. It does not then have to be taxed again in Switzerland. Note, however, that the inheritance then becomes part of your assets and you must pay tax on it as part of your assets.
If the decedent lives in Switzerland and has assets abroad, Swiss international inheritance law applies, which means that the Swiss authorities are responsible for the estate.
However, in the case of some international state treaties, the other state may also have jurisdiction. In this case, it is advisable to consult a tax expert, as these cases are sometimes very complex, depending on how the inheritance regulations of the individual states are structured.
Declare Inheritances in the Tax Return
Often there is not just one heir, but several. A lot of time can pass before an inheritance is divided up. If the tax return is then due from the heirs, the question therefore often arises as to how the inheritance must be declared there if it is not yet known which part one will receive.
In principle, the undivided assets must be taxed proportionately by the individual heirs. If the amount of the share is not yet known, it is advisable to indicate an estimated value in the tax return and to include a note explaining the circumstance. In this way, one avoids a fine procedure or additional payments in retrospect. The inheritance tax is calculated by the tax authority only when all the necessary data is available.
A tax return must also be filed for the deceased. At this point, the inheritance must already be taxed, even if the heirs have not yet received it.
Optimize Inheritance Tax
There are several legal ways to minimize the tax burden in the case of inheritance. Before the death of the testator, for example, he or she can already pay out part of his or her assets to his or her future heirs in cash.
So-called gifts are also frequently used. In this case, the testator gives away part of his assets to his future heirs before his death. A gift tax is incurred, but this is usually lower than the inheritance tax. If one proceeds in this way for several years in succession, one speaks of an advance inheritance. The progressive tax burden can be avoided in this way.
If the testator changes his residence to a canton with lower inheritance tax, taxes can also be saved. However, this does not apply if real estate is inherited: Its value is always taxed in the canton where it is located.
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