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.

CantonSpouse & registered partnerDescendants (children, grandchildren)Parents Siblings  Civil partners Other heirs
AG tax freetax freetax free6 – 23% 4 – 9% 12 – 32% 
AR tax freetax freetax free 22% 12% up to 32% 
AI tax free 1% 4% 6% 20% up to 20% 
BL tax freetax free tax free15% 15% 30% 
BS tax free tax free5 – 11% 7,50 – 16,50% 7,50 – 16,50% 22,50 – 49,50% 
BE tax freetax free6 – 15% 6 – 15% 6 – 15% up to 40% 
FR tax free tax freetax free5,25% 8,25% up to 22% 
GE tax freetax freetax free6 – 11% 20 – 26% up to 26% 
GL tax freetax free2,63 – 6,56% 4,2 – 10,50% 4,2 – 10,50% up to 26,25% 
GR tax free tax free tax free 5% tax free15% 
JU tax free tax free7% 14% 14% up to 35% 
LU tax free0 – 2% 6 – 12% 6 – 12% tax freeup to 40% 
NE tax free 3% 3% 15% 20% up to 45% 
NW tax freetax freetax free5% tax freeup to 15% 
OW tax freetax freetax free tax freetax freetax free 
SG tax free tax free10% 20% 30% up to 30% 
SH tax freetax free2 – 8% 4 – 16% 10 – 40% up to 40% 
SO tax freetax freetax free 4 – 10% 12 – 30% 12 – 30% 
SZ tax freetax freetax freetax freetax freetax free
TG tax freetax free2 – 7% 4,10 – 14% 8,20 – 28% up to 28% 
TI tax freetax freetax free5,95 – 15,50% 17,85 – 41% up to 41% 
UR tax freetax freetax free8% tax freeup to 24% 
VD tax free0,01-3,5% 2,64 – 7,50% 5,28 – 12,50% 15,84 – 25% up to 25% 
VS tax freetax freetax free10% 25% up to 25% 
ZG tax freetax freetax free4 – 8% tax freeup to 20% 
ZH tax freetax free2 – 6% 6 – 18% 12 – 36% up to 36% 
Source erbrechtsinfo.ch, 2022

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 partnerDescendants (children, grandchildren)Parents Siblings Civil partners Other heirs
AG tax freetax freetax free
AR tax freetax freetax free5‘000 10‘000 5‘000 
AI tax free300‘000 20‘000 5‘000 5‘000 5‘000 
BL tax freetax freetax free30‘000 30‘000 10‘000 
BS tax freetax free2‘000 2‘000 2‘000 2‘000 
BE tax freetax free12‘000 12‘000 12‘000 12‘000 
FR tax freetax freetax free5‘000 5‘000% 5‘000 
GE tax free tax free tax free 
GL tax free tax free50‘000 10‘000 10‘000 10‘000 
GR tax free tax free tax free7‘000 tax free 7‘000 
JU tax freetax free
LU tax freetax free
NE tax free50‘000 50‘000 
NW tax free tax freetax free20‘000 tax free 20‘000 
OW tax freetax freetax freetax freetax free tax free
SG tax freetax free 25‘000 10‘000 10‘000 10‘000 
SH tax free tax free30‘000 10‘000 10‘000 10‘000 
SO tax freetax free tax free
SZ tax free tax free tax freetax freetax freetax free
TG tax freetax free20‘000 tax free 
TI tax freetax freetax free
UR tax freetax freetax free15‘000 tax free
VD tax free 15‘000 
VS tax freetax freetax free
ZG tax freetax freetax freetax free 
ZH tax free tax free20‘000 15.000 50‘000 
Source erbrechtsinfo.ch, 2022

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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