Inheritance and Gift Tax Issues with Joint Bank Accounts

Inheritance and Gift Tax Issues with Joint Bank Accounts

Joint bank accounts – Inheritance tax and gift tax issues

Based on law 4916/2022, the exemption from Greek inheritance tax that applied for deposits maintained in joint bank accounts held in Greece was extended also to joint bank accounts held abroad, with the exclusion of non-cooperative tax jurisdictions. The exemption covers accounts in cash deposits and all kinds of securities.

In order for the exemption to apply, the contract with the foreign bank should include a clause providing that after the death of any of the co-beneficiaries of the joint account the deposits are automatically transferred to the other living co-beneficiaries, i.e. without the operation of inheritance rules. It is reminded that the same clause needs to be included in the contract with a Greek bank.

The law provision refers explicitly only to the exemption from inheritance tax and not from gift tax. Therefore, Greek inheritance tax will not be triggered if the co-beneficiary of the joint-bank account withdraws money after the death of the other co-beneficiary, regardless of the subsequent use of that money e.g. for the purchase of real estate or other assets in Greece or abroad.

However, there is a potential risk that the Greek tax authorities may consider, upon a tax audit, that Greek gift tax may potentially be triggered upon either of the following occasions:

  • a) Upon the withdrawal of money from the joint bank account during the other co-beneficiary’s lifetime, in excess of any amounts deposited in the joint bank account by the co-beneficiary withdrawing the money.
  • b) After the death of the other co-beneficiary, upon the future use of said money (again in excess of any amounts deposited in the joint bank account by the co-beneficiary withdrawing the money) e.g. for the purchase of real estate or other assets either in Greece or abroad.

The above risk does not derive explicitly from the law but from tax audit practice or case law.

Greek gift tax may be relevant for foreigners, as it is imposed, among other cases, to any movable property located abroad of a foreign national that is donated to a Greek or foreign national who has his residence in Greece.

It should be highlighted that as of late 2021, a tax-exempt threshold (one-off) of Euros 800,000 applies to the parental gift or the gift to specific categories of close relatives of any asset, as well as the parental gift or the gift of cash to the above persons which is carried out by money transfer through financial institutions. Any excess amount is subject to 10% gift tax. https://www.taxlaw.gr

Natalia Skoulidou specializes in Tax Law and has signification professional experience of 15 years in a broad range of tax areas, with a particular expertise on Greek and EU VAT issues, indirect tax issues, international tax issues and corporate tax and restructuring. She and her team at Iason Skouzos Tax Law are happy to help you with assist you with any legal matters regarding tax or otherwise in Greece and around the world.

Natalia Skoulidou

Natalia Skoulidou

Iason Skouzos Taxlaw

taxlaw.gr

joint bank account

Theodoros I. Skouzos

Iason Skouzos Taxlaw

taxlaw.gr

Gift tax in Denmark – when and how much?

Gift tax in Denmark – when and how much?

Gift tax in Denmark

If a parent/grandparent donates an asset (cash, shares etc.) to his/her child/grandchild, the Danish rules on gift tax apply if either the donor or donee has jurisdiction in Denmark at the time of the donation. A person has jurisdiction in Denmark if he/she is a resident in Denmark at the time of the gift being given.

Parents/grandparents are entitled to donate tax-free gifts to their children/grandchildren, provided that the total value within any one calendar year does not exceed a basic amount of DKK 69,500 per parent/grandparent (2022).

A 15 % gift tax is payable on gifts exceeding the basic amount. Tax is consequently paid on the value of the gift which exceeds the tax-free basic amount.

A donation exceeding the basic amount must be reported and is subject to control by the Danish Tax Authorities. While it is easy to determine the value of a cash donation or shares in a listed company, the valuation of shares in an unlisted company, which is the case for most family businesses, can be trickier. Therefore, in such cases families must pay careful attention and consideration to the valuation of the gift when reporting to the Danish Tax Authorities.

A way of mitigating the risk of a higher valuation by the Danish Tax Authorities, and thus an increased tax, is to add a revocation/correction clause to the donation. This allows for the parties to either revoke the gift completely or alter the conditions, and hereby eliminate/reduce the increased tax.

Such a revocation/correction clause must comply with certain conditions to be deemed valid and applicable by the Danish Tax Authorities.The time limit for reporting and paying the tax to the Danish Tax Authorities is 1 May in the year after the donation. If the gift tax is reported and/or paid too late, interest becomes payable.

As a general rule, gift tax that has been paid abroad will be credited and thus reduce the payable amount in Denmark. Both the donor and donee are liable for the tax to be paid. If the donor pays the tax, this payment does not constitute a further taxable gift.

In summary, it is highly recommendable with timely and appropriate planning before a donation is made from a parent (grandparent) to a child (grandchild) to avoid unpleasant surprises – especially if either one of them is resident in Denmark.

Björn Brügger is a Danish attorney at law and Senior Associate with Bech–Bruun Law Firm in Copenhagen and Aarhus. He specializes in estate planning advice regarding family-owned enterprises and assets as well as private client matters (e.g. marriage contracts, wills and enduring powers of attorney) and is part of Bech–Bruun‘s Family Business Succession Group and Private Client Group.

joint bank account

Björn Brügger

BechBruun
Tax residency in Germany – An Unpleasant Surprise!

Tax residency in Germany – An Unpleasant Surprise!

Tax residency in Germany

Germany is an attractive place to live in the center of Europe and the EU. It is safe, relaxed and highly developed. Its political system is stable and reliable, while its powerful economy is the largest in Europe. Known for its long and rich cultural history, Germany offers a very high standard of living. All these reasons make Germany a favorite destination for foreigners from inside and outside of the EU.

However, there is no free lunch! Moving to Germany triggers very often some unexpected tax consequences, which everyone should consider carefully before coming to Germany. It is very easy to become tax resident in Germany! However, German tax residency very often does not fit to the individual’s carefully planned tax setting.

Prerequisites for becoming tax resident in Germany pursuant to German domestic law

Pursuant to German domestic law, an individual becomes subject to German resident taxation, if the individual

  • either stays in Germany for more than 6 consecutive months in a year with only minor interruptions (habitual abode or “gewöhnlicher Aufenthalt“), or
  • holds a dwelling in Germany under circumstances indicating that the individual intends to keep and use it (residence or “Wohnsitz“).

Thus, a residence does not require necessarily the actual or regular use of the dwelling. It is sufficient that the individual can use such dwelling whenever the individual wishes to do so. An individual could have different residences in Germany and/or abroad. It is in particular not required that such residence is the individual’s center of vital interest. A tax residency in Germany in particular does not require that the individual is a German citizen.

Consequences of being tax resident in Germany pursuant to German domestic law

An individual’s tax residency in Germany means in particular that such person

  • becomes subject to German income taxation with his/her worldwide income (subject to applicable double taxation treaties) at an income tax rate up to 47.475 % (including solidarity surcharge) depending on the amount of the taxable income;
  • is obligated to file annual income tax returns with the responsible German tax office regarding his/her worldwide income;
  • becomes subject to German exit taxation if he/she has been subject to German resident taxation for at least 10 years and ceases to be tax resident in Germany;
  • becomes subject to German gift taxation as a donor in case of a donation to anybody elsewhere in the world with respect to the donor’s worldwide estate at a gift tax rate between 7 % and 50 % depending on the value of the donation and the degree of relationship between the donor and the donee;
  • becomes subject to German gift taxation as a donee (subject to applicable double taxation treaties) at a gift tax rate between 7 % and 50 % depending on the value of the donation and the degree of relationship between the donor and the donee;
  • is obligated to file gift tax returns with the responsible German tax office in case of a donation to (i) anybody elsewhere in the world with respect to his worldwide estate and (ii) the individual tax resident in Germany irrespective from the fact whether the donated asset is located in Germany;
  • triggers the German inheritance tax liability of the deceased individual’s heir and/or legatee with respect to the deceased individual’s worldwide estate at an inheritance tax rate between 7 % and 50 % depending on the value of the estate and the degree of relationship between the decedent and the heir and/or legatee;
  • triggers the heir’s and/or legatee’s obligation to file inheritance tax returns with the responsible German tax office irrespective from the fact whether (i) the heir and/or the legatee is tax resident in Germany, too, or (ii) the estate is located in Germany;
  • becomes subject to taxation both in Germany and in other countries with respect to the same income or donation subject to applicable double taxation treaties or unilateral law granting tax exemptions or tax credits for mitigating the double taxation;
  • triggers the heir’s/legatee’s taxation with inheritance tax and the donor’s taxation with gift tax in Germany besides other countries with respect to the same estate or donation

Please note that this applies irrespective from the individual’s tax liability in another country according to this country’s domestic law applicable.

Please note that an applicable double taxation treaty might hinder Germany from taxing such individual person fully, but has no impact on this person’s obligation to file its tax returns fully and completely with the German tax authorities. While Germany has agreed upon a large number of double taxation treaties dealing with income taxes, Germany has agreed only on six double taxation treaties dealing with inheritance and gift taxes (United States of America, Switzerland, Denmark, France, Greece and Sweden). Thus, one should not rely on the protection by double taxation treaties only!

Finally, please note that an individual person’s residency in Germany could also result in a foreign company’s resident tax liability in Germany with its worldwide income. This happens if e.g. the individual person’s residence in Germany also qualifies as the company’s place of actual management. This is the case if the individual person acts as an organ representative of a foreign company also from his/her dwelling in Germany.

Worried about Tax Residency in Germany? Prepare in advance.

Before an individual person establishes his/her residency in Germany, the consequences resulting therefrom need to be analyzed in advance very thoroughly for avoiding disadvantageous legal and tax consequences.

An individual could establish such tax residency very easily by acquiring or renting a dwelling or by simply using a dwelling more or less exclusively without having acquired or rented it. For a tax residency in Germany, a German passport or a permit of residence is not required. Thus, a thorough analysis and adaptation of the respective individual’s current tax setting prior to establishing an individual’s tax residency in Germany helps to avoid unpleasant surprises. We are prepared to assist you! https://schmidt-taxlaw.de

We are prepared to assist you!

Michael Schmidt

Michael Schmidt

Schmidt Taxlaw
Why is Belgium tax residence appealing for HNWI?

Why is Belgium tax residence appealing for HNWI?

Given its excellent location and its favorable tax system, high net worth individuals find Belgium to be the perfect operating base. High net worth individuals will find Belgium so attractive, because of the absence of net wealth tax and capital gains tax, as well as the low flat rates on personal investment income. Furthermore, the low gift tax on movable assets offers great opportunities for estate planning.

Why is the Belgian tax system so attractive?

The Belgian tax system is highly attractive for high net worth individuals:

  • Income tax liability is linked to residency;
  • Personal investment income is taxed at low flat rates;
  • Conditionally, there is no tax on capital gains; and
  • Belgium does not levy a net wealth tax!

The flexible gift tax system for movable assets provides for excellent estate planning opportunities, in combination with foundations or trusts.

General introduction to Belgium

Belgium is strategically located at the heart of Europe, between The Netherlands, Germany, France and The United Kingdom. Its High Speed Rail network links Brussels to Amsterdam, Frankfurt, Paris and London (Brussels-Paris in 1h25; Brussels–London in 2h).

Belgium is multi-lingual in every sector, and has a rich culture and excellent cuisine.  It may be a small country, but it has a rich variety in its communities, an excellent, high quality housing stock and a secure and agreeable life-style.

Belgium also has a highly attractive tax regime for wealthy individuals. Belgium is one of the few remaining European countries that does not levy a net wealth tax:

  • Capital gains on shares (also applicable to a controlled company [Belgian tax law does not currently include CFC (controlled foreign company) rules]) can be free of tax;
  • Capital gains on real estate are generally not taxable, nor is rental revenue from private real estate;
  • Dividend and interest income is generally taxed at a flat rate of 25%.

The Belgian tax system provides excellent estate-planning opportunities. Gift tax rates for donations of movable assets are extremely low (basically 3% or 3,3%). Donations of movable assets can even be made without paying any gift tax at all!

Three Belgian regions

Belgium is divided into three regions. The region of Flanders in the North has Dutch as its official language. In the region of Wallonia, in the Southern part of the country, the official language is French. The third region, in the center, is the region of the Capital, Brussels, officially bi-lingual (Dutch-French), in fact multi-lingual by virtue of its strategic location.

The regions were granted autonomous power to introduce their own tax rates as far as gift taxes and inheritance taxes are concerned.

How to become a Belgian tax resident?

In the Belgian tax system, Belgian residents are subject to tax on their worldwide income. An individual is considered a resident of Belgium if his/her principle residence or his/her centre of personal and economic interests is in Belgium. An individual is presumed to be a resident of Belgium when he/ she is registered in the civil register.

The assumption of residence based on the registration is, however a rebuttable assumption. Married persons are deemed to be residents of Belgium if their household is located in Belgium. The assumption of residence based on establishment of household is an irrefutable assumption.

How is personal investment income taxed in Belgium?

  • Interest and dividend income is generally taxed at a flat rate of 25%.
  • Interest and dividend revenue received on a foreign bank account, must be declared in a Belgian resident’s annual income tax return.

No Belgian wealth tax

One of the main reasons why the Belgian tax system is so appealing to high worth individuals, is that personal wealth is not taxed. There is no obligation to declare one’s wealth. In the annual income tax return, only taxable income needs to be declared.

However, tax payers need to report whether (or not) accounts are held in their names at banks  outside Belgium. The names of the countries in which the foreign banks are located must also be reported in the annual tax return.

Additionally, tax payers must report whether (or not) insurance contracts have been subscribed with  insurance companies outside Belgium. The names of the countries in which the insurance companies are located need to be reported.

Finally, tax payers are obliged to report the existence of any trust of which they, their spouses, or underage children, are either settlors or (to their knowledge) beneficiaries, regardless of the manner or time at which the advantage is conferred. The reporting obligation also extends to potential beneficiaries.

No Belgian capital gain tax

Capital gains on shares sold by Belgian individual residents, as part of the normal management of their private assets, remain free from personal income tax in Belgium, e.g. capital gains from the sale of shares (including substantial shareholdings in controlled companies) to a third party.

Belgian inheritance tax

Belgian inheritance tax is levied on the worldwide net property of a deceased Belgian resident. The latter’s nationality is of no relevance. The fiscal residency and the nationality of the heirs have no bearing either. It is the place of residence of the deceased which triggers liability to inheritance tax.

  • If a Belgian resident inherits from a non-Belgian resident, no inheritance tax is due in Belgium.
  • Foreign inheritance taxes paid on real estate located abroad owned by a deceased Belgian resident can be deducted from Belgian tax payable if certain formalities are met.
  • Heirs and legatees, resident or non-resident, are taxable persons for the purpose of inheritance tax.

The taxable estate includes all gifts made within a period of 3 years prior to death and on which no Belgian gift tax has been paid. The risk of having to pay inheritance tax on a gift for which no gift tax has been paid can be covered by subscribing an insurance policy.

The amount payable depends on the inheritor’s relationship to the deceased, the deceased’s region of fiscal residence (Flanders, Wallonia or Brussels) and the market value of the part of the estate inherited.

In Wallonia and Brussels the applicable rates vary from 3% up to 30% (above 500,000 EURO) for parents and (grand)children. In Flanders the maximum rate is 27% (above 250,000 EURO) for parents and (grand)children. The rates for spouses and partners are identical.

No/low Belgian inheritance tax for shares in E.U.-companies

The three regions have adopted specific regimes under which shares in companies, whose registered offices are in an E.U.-member state, can be inherited at an extremely low flat rate of 3% (Flanders, Brussels) or even at 0% (Wallonia), if certain conditions are met.

Low Belgian gift tax

In the Belgian tax system, gift tax is triggered by the registration of a written document (such as a notary public’s deed) giving effect to a gift made by a Belgian resident.

Real estate located in Belgium cannot be donated without payment of Belgian gift tax. For the transfer of property to be valid vis-à-vis third parties, the deed of transfer needs to be recorded with the Land Registry (i.e. the official and public list of owners of real estate). At the Land Registry, only registered deeds, certified by a Belgian notary public, are accepted for notification.

A Belgian notary public is legally obliged to register all his deeds at the relevant tax office. The registration of the deed triggers the levy of gift tax, which is one of the taxes in the Belgian code of registration taxes.The amount of the gift tax payable on donation of real estate depends on the relationship of the beneficiary to the donor, on the donor’s region of fiscal residence (Flanders, Wallonia or Brussels) and on the market value of the gifted property.

In all three regions (Flanders, Wallonia and Brussels) the applicable rates on the donation of real estate vary from 3% up to 30% (above 500,000 EURO) for parents and (grand)children. The rates for spouses and partners are identical.

  • Movable assets can be formally donated without payment of Belgian gift tax by a deed of transfer before a foreign notary public. There is no legal obligation to register the foreign deed in Belgium. Voluntary gift taxes are only due if the foreign deed is registered in Belgium.
  • Certain movable assets can be informally donated, “from hand to hand”, without payment of Belgian gift tax . Substantiating documents can be drawn up, but gift taxes would only be voluntarily due if those documents were to be registered in Belgium.
  • Gift taxes are due when movable assets are donated in a formal way before a Belgian notary public

Each region has adopted flat rates for gifts of movable assets, regardless of the value of the object of the gift.

Flanders and Brussels have established a flat rate of 3% for gifts between parents and (grand)children. In Wallonia, a flat rate of 3,3% is applicable for gifts between parents and (grand)children. In all three regions, the rates for gifts between spouses and partners are identical.

Residents opt for gifts of their movable assets with payment of the 3% (Flanders and Brussels) or the 3,3% (Wallonia) gift tax in order to avoid the risk of payment of Belgian inheritance tax. For inheritance purposes the taxable estate includes all gifts made by a Belgian resident within a period of 3 years prior to death without the payment of Belgian gift tax.

The fact that movable assets can be donated without payment of gift tax or with payment of the 3% (Flanders and Brussels) or the 3,3% (Wallonia) gift tax provides for excellent estate planning opportunities. Often donations are combined with the setting up of a foundation or trust.

No/low gift tax in Belgium for shares in E.U.-companies

The three regions have adopted specific regimes under which shares in companies, which have their registered offices in an E.U.-member state, can be donated at an extremely low flat rate of 3% (Brussels) or even 0% (Flanders, Wallonia), if certain conditions are met.

No Belgian exit tax

No special taxes are levied upon the emigration of a resident. Once an individual is no longer a Belgian resident, he/she is no longer liable to tax in Belgium. There is no tax liability based on deemed residency. https://www.loyensloeff.com/

Saskia Lust

Saskia Lust

Loyens & Loeff
Is immigration to Switzerland still attractive to persons with no gainful activity in Switzerland?

Is immigration to Switzerland still attractive to persons with no gainful activity in Switzerland?

Is immigration to Switzerland still attractive to persons with no gainful activity in Switzerland? Switzerland is an attractive country and is granting substantial tax benefits to immigrating foreigners. The advantages of Switzerland include: (1) Residence permit granted to EU-citizens without major problems, (2) Purchase of real property possible, (3) Low tax rates in certain cantons, (4) Lump-sum taxation, (5) No inheritance tax for spouses and children in most cantons.

Is immigration to Switzerland still attractive to persons with no gainful activity there?

If a person thinks about leaving his home country permanently and taking up residence in Switzerland, he will have to think about his desires for life in the future at first and then about the legal requirements to be met and the taxation ramifications. When I am asked by potential immigrants about the best place in Switzerland to live from a tax point of view, I always recommend them to take a car and to drive through Switzerland. Then they should come back to me and tell me which place they like best. It will normally be possible to find acceptable tax solutions in most of the places in Switzerland.

In a second step, the following main issues need to be addressed:

  • Residence permit;

  • Purchase of property;

  • Taxation.

Residence permit in Switzerland

 As a general rule, only persons aged 55 and above who have a close association with Switzerland and are not gainfully employed in Switzerland can obtain a residence permit with non-employed status. They must have the necessary financial means at their disposal. As an exception, foreigners without a close association with Switzerland can be granted a residence permit since 2008 if they are of particular financial interest to the canton.

This means, in practice, that a minimum tax, which may range from CHF 400’000.00 to CHF 1 mio., always depending upon the canton of residence, is agreed and annually paid. According to NZZ (24 May, 2014), 389 such permits have been granted until present.

Due to the bilateral Agreement on the free movement of persons between Switzerland and the EU and a similar agreement between Switzerland and the EFTA (“the Agreement”), EU/EFTA-citizens are entitled to obtain a residence permit in Switzerland provided that:

  • they have sufficient financial resources; and
  • health and accident insurance equivalent to Swiss health and accident insurance.

It is accordingly rather easy for an EU/EFTA-citizen to be granted a residence permit in Switzerland at present.

The situation may, however, change due to an amendment of the Swiss Federal Constitution caused by a federal vote of the Swiss people on the so-called Mass Immigration Initiative. 50.3% of the votes were in favour of this initiative, which provides that Switzerland shall control the immigration of foreigners itself in the future.

The result of this vote is in contradiction to the Agreement. Under the Agreement, the EU has the right to cancel essential parts of the bilateral agreements with Switzerland, unless a mutual understanding can be found within the next three years.

For the time being, nothing has changed in practice. Immigration of EU/EFTA-citizens is still covered by the Agreement until Switzerland has released a law introducing limits to the immigration of EU/EFTA-citizens. The Swiss government hopes to be able to find a solution for continuing the bilateral agreements with the EU in the future.

Purchase of property in Switzerland

Switzerland had traditionally heavy restrictions on the acquisition of real property by foreigners. Some years ago, the restrictions in respect of the purchase of commercial property were abolished. Foreigners with no residence in Switzerland do, however, still need a permit for the purchase of private property in Switzerland. A permit will only be granted in special cases, e.g., vacation apartments in certain parts of Switzerland (maximum 200 m2).

A citizen of the EU/EFTA is entitled to acquire commercial and private real property without limits, if he is a resident of Switzerland. For other foreigners resident in Switzerland, certain restrictions apply until they have been granted a C-permit.

Taxation – Income and Net Wealth Tax – Lump-Sum Taxation

A person resident in Switzerland is subject to unlimited tax liability in Switzerland. He will have to pay income taxes at rates ranging between 20% and more than 40% as well as net wealth taxes ranging from 0.1% to 1% on his worldwide income and net wealth. Real estate and permanent establishments abroad are exempt from Swiss taxation.

The tax rate heavily depends upon the canton and commune of residence. Whilst the overall income tax rate in Wollerau, Canton of Schwyz, is at present 18.5%, cities like Zurich, Geneva and Lugano have maximum income tax rates between 40% and 46%.

A special tax system, the so-called lump sum taxation, can be elected by foreigners who, for the first time or after an absence of at least ten years, take up tax residence in Switzerland and do not engage in any gainful activity in Switzerland. Under this system, Swiss income tax is levied on the basis of the living expenses rather than on actual income. Under federal regulations, the living expenses must amount to at least five times the annual rent or rental value of the owned property at present.

Due to new legislation, this amount will be increased to seven times of the annual rent and must not be lower than CHF 400’000.00 for federal tax purposes. Whilst the new rules will come into force as of 1 January, 2016, persons who are already subject to lump sum taxation will be granted a grandfathering until 1 January, 2021.

Some cantons have, abolished the lump sum taxation for cantonal tax purposes (most importantly Zurich), whilst other cantons have introduced similar provisions as the Federation. In addition, a net wealth tax is levied by the canton, the basis of which is normally determined by a capitalisation of the taxable income at a rate of 5%.

For each year, a comparative calculation between the agreed lump sum tax and the tax on Swiss source income, foreign source income for which treaty benefits have been claimed and Swiss net wealth has to be made. The higher amount will be the basis for the annual tax.

Several double taxation treaties concluded by Switzerland (Belgium, Germany, Italy, Canada, Norway, Austria and the US) only grant treaty benefits to a person resident in Switzerland, if such person is subject to the generally imposed income taxes in Switzerland with respect to all income from the respective state. As a consequence, Switzerland introduced the so-called modified lump sum taxation.

Under this system, which can be elected for each state separately, the income from sources of the respective state needs to be included in the aforementioned comparative computation with the result that such income is deemed taxed in Switzerland under the respective treaty. According to my experience, this method seems, however, not to work with the US. In case of US source income, it is, therefore, recommended to agree with the cantonal tax administration to have such income subject to ordinary Swiss taxes.

On 19 October, 2012 a federal initiative regarding the abolition of the lump sum taxation on the federal and cantonal level has been filed. It is expected that the vote on this initiative will take place in 2015.

Should the majority of the voting people and cantons accept this initiative and thereby cause an amendment of the Swiss Federal Constitution, a law concerning the abolition of the lump sum tax will have to be released within three years. The acceptance of this initiative would, therefore, mean that the lump sum tax system would be abolished in Switzerland in 2018. It is not yet known, whether there will be any grandfathering rules.

Social security contributions

Persons who are resident in Switzerland and do not exercise any gainful activity in Switzerland are subject to Swiss social security contributions until age 64 for women and age 65 for men. The annual contribution per person depends upon the living expenses and the net wealth of the individual and amounts for the time being to a maximum CHF 24’800.00.

Inheritance and gift tax

For the time being, inheritance and gift taxes are only levied by the cantons. In most of the cantons, spouses and descendants are exempt from inheritance and gift tax, whilst the tax rates can be higher than 50% for third persons.

The canton of the last residence of the testator is entitled to levy the inheritance tax from the heirs. The residence of the heirs is not relevant for Swiss inheritance tax purposes. If the testator lives, e.g., in Monaco and gives a large portfolio to his heir resident in Switzerland, Switzerland is not entitled to levy any inheritance tax. Should the testator, however, be a Swiss resident and the heir a Monaco resident, the heir in Monaco would be subject to Swiss inheritance tax.

In 2011, an initiative for an amendment of the Federal Constitution was launched according to which inheritances exceeding CHF 2 mio. and gifts exceeding CHF 20’000.00 per year and person shall be taxed on  the federal level at a rate of 20%. The competence of levying inheritance taxes would thereby be transferred from the cantons to the federation. This initiative is not family friendly at all due to the fact that descendants and third parties will pay inheritance taxes at the same rates. Only spouses shall be exempt from inheritance tax.

It is very difficult to foresee, whether this initiative will be accepted in the federal vote which will most likely only take place in 2019 due to several complex issues. https://allemann-recht.ch/