Swiss Inheritance Tax 2025: Erbschaftsteuer by Canton

Switzerland's inheritance tax (Erbschaftsteuer) is a cantonal matter, not federal. This means rates, exemptions, and rules vary dramatically by canton. Some cantons (Zurich, Geneva) have eliminated inheritance tax entirely, while others levy steep rates. Understanding your canton's rules is essential for estate planning.

Federal vs. Cantonal Inheritance Tax

Switzerland has no federal inheritance tax. Instead, each canton sets its own rules:

• Zurich, Geneva, Schwyz, Obwalden, Glarus, Zug: ZERO inheritance tax (eliminated in recent years)
• Remaining 18 cantons: Levy inheritance tax at rates from 1% to 20% depending on relationship and estate size

This creates significant planning opportunities: wealthy individuals often relocate to Zurich or Geneva 5 years before expected inheritance to avoid millions in tax.

Exemptions by Relationship

All taxing cantons differentiate inheritance tax based on the heir's relationship to the deceased. Spouses and direct descendants (children, grandchildren) receive substantial exemptions. Siblings and unrelated heirs face much higher rates or no exemption at all.

Typical cantonal structure:

• Spouses: €50,000–500,000 exemption (depending on canton)
• Direct descendants (Class I): €10,000–250,000 exemption per child
• Siblings (Class II): €10,000–50,000 exemption (rare)
• Others/non-relatives (Class III): NO exemption, taxed at top rate

Example (Bern):

• Spouse inherits CHF 1M: Exemption CHF 500K, taxable CHF 500K at ~1–3% = CHF 5,000–15,000 tax
• Adult child inherits CHF 1M: Exemption CHF 250K, taxable CHF 750K at ~2–5% = CHF 15,000–37,500 tax
• Unrelated heir: NO exemption, taxed on full CHF 1M at max rate (10%+) = CHF 100,000+ tax

Tax Rates by Canton (2025)

Zero-tax cantons:

• Zurich, Geneva, Schwyz, Obwalden, Glarus, Zug (eliminated 2021–2023)

Low-tax cantons (max 1–3%):

• Appenzell Ausserrhoden, Basel-City, Glarus, Grisons, Lucerne, Nidwalden, St. Gallen, Thurgau, Uri, Valais

Moderate-tax cantons (max 5–10%):

• Aargau, Bern, Fribourg, Jura, Neuchâtel, Solothurn, Vaud

High-tax cantons (max 15–20%):

• Basel-Land, Appenzell Innerrhoden, Ticino (Ticino reached 20% for Class III heirs)

Spousal and Civil Partnership Treatment

Spouses benefit from near-zero tax in most cantons. In high-tax cantons, spousal exemptions are typically CHF 100,000–500,000, placing inherited wealth in lower brackets.

Same-sex civil partnerships now receive equivalent treatment to married couples (post-2007 reform). Unmarried cohabitants, regardless of relationship length, receive NO exemption and face full inheritance tax.

Direct Descendants and Generational Wealth

Each child receives an individual exemption. If you leave CHF 1M equally to two children:

• Each child inherits CHF 500K
• In Bern: Each child's exemption is CHF 250K, so each pays tax on CHF 250K
• Not on the full CHF 500K per child

This fractional approach incentivizes equal inheritance splits rather than concentrating wealth in one heir.

Cantonal Relocation Strategy

Relocating to a zero-tax canton 5 years before expected death can eliminate inheritance tax entirely. Common scenarios:

Scenario 1: Wealthy Zurich property owner plans to pass estate

• Move primary residence to Zurich or Geneva
• Maintain canton domicile for 5 years
• Upon death, heirs pay zero inheritance tax
• Savings: €100,000–1,000,000+ depending on estate size

Scenario 2: Genevan relocates with adult children

• Entire family establishes domicile in Geneva
• Estate now taxed under Geneva law (zero)
• No waiting period if domicile established before death

This is completely legal; Switzerland encourages internal migration and recognizes cantonal autonomy.

Corporate vs. Personal Inheritance

Switzerland also taxes inheritance of business assets. If you own a sole proprietorship or partnership interest:

• Inheritors must value the business fairly
• That valuation determines tax basis
• Some cantons offer preferential rates for ongoing business if heirs continue operations
• Corporate shares (GmbH, AG) escape inheritance tax in Zurich/Geneva but face normal rates elsewhere

Gifting During Lifetime

Some cantons allow lifetime gifts to be excluded from the estate. Others tax gifts made within a certain window (e.g., 5–10 years before death) as if they were inherited.

Planning tactic:

• In cantons with gift-tax exemptions, systematize annual gifts to heirs before death
• Each gift can be CHF 10,000–50,000 depending on canton rules
• Reduces taxable estate at death

Always consult your canton's Steueramt (tax office) before gifting significant assets.

International Considerations

If the deceased or heir is a non-Swiss resident, complications arise:

• Swiss estate assets are always taxed under Swiss/cantonal law
• Foreign estate assets of Swiss heirs are generally NOT taxed in Switzerland (though some cantons assert rights)
• Bilateral treaties between countries determine ultimate tax allocation
• US citizens and UK expatriates face additional US/UK estate taxes (40% or more)

A non-Swiss heir inheriting a Swiss property typically pays Swiss cantonal inheritance tax PLUS their home country's estate tax. Proper planning (trusts, holding companies) can mitigate this double-taxing, but requires specialist advice.

Common Planning Strategies

1. Relocate to Zurich/Geneva 5+ years before expected death: Zero inheritance tax savings
2. Equalize inheritance between children: Spreads taxable amounts across multiple Class I exemptions
3. Gift during lifetime: Reduces estate size; some cantons exclude gifts from tax
4. Use life insurance: Proceeds often bypass inheritance tax (verify canton rules)
5. Form a holding company for business assets: May reduce inheritance tax on succession
6. Establish trust in zero-tax canton: Complex, but can defer/avoid inheritance tax entirely

Timeline and Probate Process

After death:

1. Estate registered with cantonal Steuerverwaltung (typically 1–3 months)
2. Estate valuation conducted
3. Inheritance tax assessed (usually 2–6 months after death)
4. Heirs must pay tax before estate distribution (in most cantons)
5. Probate finalized

No inheritance tax bill = no probate delays. Plan ahead.

Summary

Swiss inheritance tax is cantonal, not federal. Rates range from 0% (Zurich, Geneva) to 20% (Ticino, Class III). Spouses and children receive exemptions; others don't. Strategic cantonal relocation can eliminate tax entirely. Consult a Steuerberater or inheritance specialist in your canton to optimize your estate plan.

This is educational information, not financial advice.