Inheritances and Gifts Within the Family: Tax Rules in Switzerland

Whether it is an inheritance or a lifetime gift, transferring wealth within the family is a sensitive but important matter. Beyond emotional and legal considerations, tax consequences are significant. In Switzerland, inheritance and gift taxes are regulated at the cantonal level, resulting in major differences between regions.

This article explains how inheritances and gifts within the family are treated for tax purposes in Switzerland, which exceptions exist, and what to pay attention to.

Principles of Inheritance and Gift Tax

Tax Object

Taxable is the transfer of assets, either:

• Upon the death of a person (inheritance), or
• Through a lifetime transfer (gift).

Taxpayer

Generally, the beneficiary (heir or recipient) is liable for the tax.

Differences Between Cantons

No Federal Tax

There is no inheritance or gift tax at the federal level.

Cantonal Regulations

Each canton sets its own rates, exemptions, and reliefs, so the tax burden can vary significantly.

• Some cantons (e.g., Schwyz, Obwalden, Nidwalden) fully exempt direct descendants.
• Other cantons impose minor taxes even on children or spouses, usually with high exemptions.
• For distant relatives or non-relatives, tax rates are considerably higher (sometimes over 30%).

Inheritances Within the Family

Spouses and Children

Most cantons fully exempt spouses and direct descendants (children, grandchildren) from inheritance tax.

Siblings and Other Relatives

Siblings, nieces, and nephews usually face reduced rates, but not full exemption.

Non-Relatives

Non-related beneficiaries pay high inheritance taxes in almost all cantons.

Gifts Within the Family

Tax Treatment

Gifts are generally treated the same as inheritances and are subject to cantonal gift taxes.

Exemptions

Many cantons provide exemptions for gifts to children or spouses, so smaller amounts remain tax-free.

Reporting Obligation

Gifts must generally be reported to tax authorities, even if tax-free.

Special Cases and Exceptions

Life Insurance

Payouts from life insurance may be considered inheritance or gift depending on the beneficiary and may be taxable.

Real Estate Transfers

Gifts or inheritances of real estate may incur additional costs such as property transfer fees or property gains tax.

Business Succession

In some cantons, transferring businesses within the family can benefit from tax relief to facilitate succession.

Practical Examples

Example 1: Inheritance to Children in Zurich

A father leaves CHF 500,000 to his son. In Zurich, direct descendants are exempt from inheritance tax – no tax is due.

Example 2: Gift to Siblings in Bern

A woman gives her sister CHF 100,000. In Bern, this is subject to gift tax but with a reduced rate for siblings.

Example 3: Inheritance to Non-Relatives in Geneva

A person bequeaths CHF 200,000 to a close friend. In Geneva, high inheritance tax applies, as there is no direct family relationship.

Common Mistakes and Tips

Common Mistakes

• Assuming inheritances and gifts are tax-free everywhere
• Failing to report gifts despite reporting obligations
• Transferring real estate without considering property gains tax

Tips

• Check cantonal regulations carefully
• Always declare gifts, even if tax-free
• Plan early: staggered gifts can maximize exemptions
• Seek professional advice for large assets or real estate

Conclusion

Tax treatment of inheritances and gifts in Switzerland varies greatly by canton. While spouses and children are exempt in most cantons, distant relatives or non-relatives may face high taxes.

Early planning, fulfilling reporting obligations, and accounting for cantonal differences can reduce the tax burden and prevent disputes with authorities.