Planning for the transfer of one’s estate is an essential step in ensuring its long-term preservation. In Switzerland, the tax rules governing the transfer of assets without consideration—whether during one’s lifetime or upon death—are governed by a complex system. Given the rules regarding the attribution of assets, the allocation of liabilities, and recent cantonal reforms, tailored tax planning is essential.
In this article, learn about the basic mechanics of estate and gift taxes, as well as the legal strategies for reducing them.
The Basis for Tax Liability: Residence and Economic Ties
To understand where and how a transfer of assets will be taxed, one must first analyze the connecting factors. The Swiss tax system is based on two main elements:
- Personal jurisdiction (unlimited liability): The basic principle is that the canton of residence of the donor or the decedent has jurisdiction to levy gift and estate taxes on transferred movable property (such as stocks, cash, works of art, etc.).
- Economic Affiliation (Limited Tax Liability): Ownership of real property establishes a specific place of taxation at the property’s location. Thus, the canton where a property (rental property, apartment, house, etc.) is located has jurisdiction to levy gift and inheritance taxes related to that property. For an in-depth analysis of these issues in the context of indirect ownership, read our article “SIAL or PPE: Which Structure Is Optimal from a Tax Perspective?”
Two methods of transfer with different tax implications
As noted, assets can be transferred during the owner’s lifetime (gifts) or upon death (inheritance). It is essential to understand that the tax consequences of these two methods of transfer may differ:
- Gift: One or more assets are transferred inter vivos. Each gift is analyzed separately. For each gift, it must be determined which canton has jurisdiction to levy gift tax—namely, the location of the property for real estate or the donor’s place of residence for personal property (cash, securities, etc.). The amount of any tax due must then be determined, based in particular on the degree of kinship.
For example, a gift of securities made by parents residing in Lausanne (VD) to their daughter residing in Geneva (GE) would be taxable in Lausanne (VD). The tax rate would be 7% (the maximum rate), with an exemption of CHF 300,000 per parent per year.
Note that this is a “fake” exemption: if a gift of CHF 301,000 is made, tax is due on the full amount of CHF 301,000 and not just on CHF 1. This exemption applies to gifts made on or after January 1, 2025; prior to that, the exemption amounted to CHF 50,000 per person per year for direct descendants.
Conversely, a gift of an apartment located in Verbier (VS), valued at CHF 5,000,000, from parents residing in Lausanne (VD) to their daughter residing in Geneva (GE), will not be subject to any gift tax, as the Canton of Valais has jurisdiction to tax the gift of the property, and it exempts gifts to direct descendants (parents to children).
- Probate: Probate proceedings are initiated simultaneously in all relevant jurisdictions, namely at the decedent’s place of residence and at all locations where real property is situated. Thus, probate proceedings will be initiated simultaneously at the place of residence (for example, Lucerne) and at the location of the real property (for example, Schwyz). Since Schwyz levies neither gift tax nor inheritance tax, one might be tempted to believe that all inheritance tax could be avoided by bequeathing the real property in Schwyz by will (e.g., as a specific bequest) to siblings, cousins, etc. who do not benefit from a 0% tax rate, provided they receive taxable personal property at the decedent’s place of residence. This is (unfortunately) not the case and constitutes one of the main pitfalls of estate planning. In the event of an estate, all beneficiaries are subject to inheritance tax on their share of the estate in all relevant jurisdictions. In other words, if the property in Schwyz bequeathed by the decedent to his cousin via will represents 50% of the estate, then that cousin will also be subject to inheritance tax in Lucerne on 50% of the estate. The Federal Supreme Court’s decision of June 2, 2017 (2C_415/2017) perfectly illustrates this mechanism.
Debt: An Underestimated Tax Planning Tool
A transfer of assets between living persons or upon death is subject to different tax rules whenever debts exist. Depending on the amount of the debts and the cantons involved, the difference in tax liability between a gift and an estate can be significant.
| Feature | Donation | Inheritance |
|---|---|---|
| Calculation Method | So-called “objective” allocation. | Proportional allocation (based on the location of the assets). |
| Debt Resolution | The mortgage debt assumed by the donee is deducted from the value of the transferred property. | Debt (including mortgages) is allocated among the various tax jurisdictions in proportion to the gross assets located in each jurisdiction. |
| Tax Implications | Gift tax is levied on the net gain resulting from the transfer of real property at the tax rate of the canton where the property is located. | Inheritance tax is levied on the net gain resulting from the transfer of property by inheritance in each jurisdiction, at the rates applicable in those jurisdictions. |
For example, if a taxpayer domiciled in Geneva (GE) gifts a property located in the Canton of Vaud to his daughter, any mortgage assumed by his daughter at the time of the gift is deducted from the property’s value. Thus, if the tax assessment of the chalet in Vaud is CHF 1,000,000 and the mortgage is CHF 800,000, then the tax base for the gift tax on the chalet in Vaud will be CHF 0 ((CHF 1,000,000 × 0.8) – CHF 800,000). This is because the tax base for gift tax corresponds to 80% of the tax assessment pursuant to Article 23 of the LMSD. Debts assumed by the donee are allocated objectively, so that they are deducted from the value of the donated property. This is logical insofar as the donee is only enriched if the value of the property exceeds the amount of the assumed debts. In the case of cash, the gift would be exempt from any gift tax. It should be noted that the tax authorities may revise the tax assessment at the time of the gift. It is worth pointing out that in such a case, the donee would not be enriched, and therefore the question would arise as to whether the transaction constitutes (for tax purposes) a gift or a sale. This goes beyond the scope of this publication; readers are referred to Federal Supreme Court Decision 9C_22/2024 of March 21, 2025, specifically section 5.2.2.2.
In the opposite scenario—namely, for a taxpayer domiciled in Lausanne (VD) who wishes to transfer his chalet in Verbier (VS) to his daughter—it is more advantageous from a tax perspective to transfer it through inheritance rather than as a gift. This is because the Canton of Valais exempts gifts to direct descendants, whereas the Canton of Vaud taxes them at a maximum rate of 3.5% (plus an optional municipal tax of up to 100% of the cantonal tax). In Lausanne (VD), the maximum inheritance tax rate is 7% for direct descendants. If the chalet in Verbier is gifted to the daughter, the mortgage is, as noted above, attached to the gifted property. Conversely, if the chalet is transferred through inheritance, the mortgage debt is apportioned between the decedent’s domicile and the various tax jurisdictions based on the gross assets of the estate located in each jurisdiction. As a result, a portion of the mortgage debt is allocated to the decedent’s domicile, in this case Lausanne (VD). Depending on the composition of the deceased’s estate, this may reduce the estate tax! If the chalet accounts for half of the estate’s assets and the other half consists of movable or immovable property subject to taxation at the deceased’s domicile, then half of the mortgage debt will be allocated to the Canton of Vaud. In our example, the tax savings would be CHF 400,000 * 7%, or CHF 28,000. Note that this example has been simplified. In practice, an exemption of CHF 1 million applies per heir in the event of an estate, and rates are progressive for deaths occurring on or after January 1, 2025.
Cohabitation: How Can You Transfer Assets to Your Partner Without Getting Married?
All cantonal laws exempt spouses from inheritance and gift taxes. However, this is not the case for cohabiting partners. In some cantons (e.g., Vaud and Geneva), unmarried couples are treated as third parties under tax laws and are subject to prohibitive tax rates (54.6% on amounts over CHF 100,000 in Geneva). When marriage or moving to cantons with more favorable tax regimes are not viable options, two main strategies are available:
1. Acquiring real estate: Buying a property in a canton that exempts cohabiting partners can be a game-changer. Recently, the Canton of Valais amended its legislation to no longer tax gifts between cohabiting partners. Gifting a property located in Valais (for example, a chalet in Verbier) to your partner during your lifetime thus allows for a transfer of value exempt from gift tax, provided the conditions are met. Our team specializing in real estate taxation can assist you in structuring such a transaction.
2. Pension Plans (LPP and 3rd Pillar): Swiss occupational pension plans (2nd pillar, pillars 3A & 3B) are not included in the estate. Under Art. 20a of the LPP, a cohabiting partner may be entitled to a pension or lump-sum payment if the couple has children together or has lived together for at least five years, provided that the pension fund’s regulations so provide. It should be noted that some pension funds require the partner to be formally designated as a beneficiary for this purpose. Although this lump-sum payment is subject to income tax at the time of disbursement, the tax rates are significantly lower (approximately 9% in the cantons of Vaud and Geneva), offering an extremely effective alternative to a “traditional” estate plan—namely, transfer through inheritance or gift.
FAQ – Frequently Asked Questions About Estate Taxes
Is there an inheritance tax in all Swiss cantons? No. While most cantons levy an inheritance tax (with rates varying according to the degree of kinship, and Geneva taxing transfers between third parties at 54.6%), some cantons, such as Schwyz and Obwalden, do not levy any inheritance or gift tax, regardless of the degree of kinship.
Does a foreign national residing in the canton of Vaud pay the same inheritance taxes? The canton of Vaud provides a specific tax relief for foreign nationals if they have never engaged in gainful employment (work) on Swiss territory. In this case, they are eligible for a 50% reduction in inheritance tax under Article 36 of the LMSD.
Are pension fund assets (LPP) part of the estate? No. Occupational pension assets (LPP) are not subject to the rules of civil succession. They are allocated to designated beneficiaries (e.g., a cohabiting partner) outside the estate (see ATF 129 III 305, C. 2.1) and are subject to separate and generally significantly reduced taxation (income tax).
Cédric Panchaud is an attorney, holds a doctorate in law, is a licensed notary, and is a certified tax expert. He regularly speaks at continuing education seminars. This article is provided for informational purposes only and does not constitute legal or tax advice.
September 21, 2026
September 1, 2026
