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Step 4: What Are the Tax Implications to Be Taken into Consideration?

Do you want estate planning arrangements that not only ensure legal protection, but also have tax advantages? Below you will find useful information on inheritance and gift tax.

Applicable Tax Regime

Inheritance and gift tax varies by canton and is applicable in the place where the testator had his/her last tax residence or where the donor has his/her residence. Real estate is not covered by these regulations: In this case, the inheritance or gift tax must be paid in the canton in which the real estate is located.

Payment of Inheritance and Gift Tax

Whether and how much inheritance and gift tax has to be paid, depends on the canton of the testator's last residence or the donor's residence. Most cantons have abolished taxation for direct heirs. As a rule, the more distant the relationship, the higher the tax rate.

Level of Inheritance and Gift Tax

The inheritance of spouses is exempt from tax in most cantons. The tax rates for relations are graded according to the closeness of the relationship: Inheritance and gift tax is lowest for direct relations, i.e. parents, grandparents, and children. Persons who are not related pay the highest rates of tax. Inheritance and gift tax is progressive in nature. This means that the percentage rate is higher for larger inheritances than for smaller ones. The percentage rate is based on the share of the estate allocated to the heir.

Here is an overview of cantonal inheritance and gift tax PDF(1.43MB).

Anticipatory Succession and Gifts

In most cantons, advancements made in the last five or ten years are added together by the tax authority for assessment purposes. The same applies to lifetime gifts.

What Are the Real Estate Considerations?

The location of real estate is what determines its taxation. If you own residential property, from a tax viewpoint it may be worthwhile for you to make a gift of it during your lifetime and to grant yourself usufructuary or residential rights. In that way, you transfer a part of your assets and pay less tax in future.

With careful planning and the correct measures, you can save yourself a few francs in tax. This leaves more money for you and your family. We would be happy to advise you .  

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