• news-banner

    Expert Insights

Wealth Structuring Developments In Switzerland

Switzerland is one of the world’s leading and most competitive financial centres, as well as a leading jurisdiction for the custody and management of private wealth. Commonly used vehicles for wealth and estate structuring are international trusts, foundations, testamentary dispositions, marriage agreements, lifetime gifts and personal holding structures. However, careful considerations need to be given when setting up these structures and vesting funds in them, both in terms of tax consequences and in understanding their strengths and weaknesses.

Succession Planning

Forced heirship

Swiss law provides forced heirship rules that protect the statutory heirs. The testator is therefore not entitled to dispose of all his/her assets freely by drafting testamentary dispositions as wills or inheritance contracts. The legal heirs are currently the descendants, spouse or registered partner and parents. They are entitled to a part of the heir statutory succession right, which is three-quarters for the descendants, half for the spouse or the registered partner and half for the parents[i].

A revision of the Swiss inheritance law will however enter into force on 1 January 2023. The central idea is to increase the testator's freedom of disposal by reducing the forced heirship of the descendants to half and abolishing the statutory entitlement of the parents. This will allow the testator to dispose of his/her property more freely and to a greater extent, favouring more people of his/her choice, which is expected to have a significant impact on estate planning.

Where the testator has exceeded his/her testamentary freedom, the heirs who do not receive the full value of their statutory entitlement may take legal action to have the disposition abated to the permitted amount[ii], hence the importance of settling one's estate correctly and in advance either through a will or an inheritance agreement.

Under the current law, spouses cease to be each other’s legal and statutory heir once they are officially divorced[iii]. The new inheritance law will also amend this. In the event of death during the divorce proceedings, the surviving spouse or registered partner will under certain conditions lose his/her status of statutory heir.  However, the surviving spouse or registered partner will remain a legal heir until the divorce or dissolution order becomes effective. This means that in the absence of a will excluding the surviving spouse or registered partner, he/she will retain the right to his/her share of the estate in the event of death before the divorce or dissolution order comes into force. It will therefore be essential to make new testamentary provisions when initiating divorce or dissolution of registered partnership proceedings.

Transfer of businesses by succession

In addition to the above-mentioned revision of Swiss inheritance law, the Federal Council opened a consultation in April 2019 for the amendment of the Swiss Civil Code to further facilitate the transfer of businesses by succession. This will allow an heir to obtain the full allocation of a business in the division if the deceased did not make provision for this and he/she will have the possibility to obtain a deferral of payment from the other heirs to avoid liquidity problems. The consultation was rather positive, and the revision should enter into force by 2026 at the latest. It is undoubtedly an essential tool in planning the succession of a family business to avoid its fragmentation or closure.

Marital property

Swiss marital property law deals in particular with the effects of marriage on the spouse’s rights to his/her assets in the event of divorce or death. The choice of regime, as well as the drafting of a marriage agreement, is of great importance in the context of estate planning, as the matrimonial regime is always liquidated before the distribution of the estate and thus determines the assets of the deceased and those of the surviving spouse or registered partner. The marital assets are divided between the spouses according to the chosen regime or the marriage contract if any.

Swiss law provides for three matrimonial property regimes, namely the participation in acquired property, which applies unless the spouses have agreed otherwise, community of property and separation of property. By contrast, for those in a registered partnership (same-sex couples), the default regime is separation of property. To date, same-sex marriages concluded abroad are recognised in Switzerland as a registered partnership. However, as of July 2022, same-sex marriages will be authorised under Swiss law and thus same-sex marriages concluded abroad will be recognised as such.

Lifetime gifts

During his lifetime, the deceased has the freedom to make donations and reduce his future estate as he sees fit, but always within the limits of the statutory rights of his/her heirs. The compulsory division is calculated considering certain donations made by the deceased. He can thus pass on his property to his/her heirs and/or third parties within these limits or provide for certain property to go to a certain person at the time of his/her death. Donations exceeding his/her testamentary freedom may be contested by the heirs if they do not receive their statutory entitlement to their share.

Trusts, Foundations and Similar Entities


To date, there is no Swiss domestic trust law, which means that it is not possible to establish a trust in Switzerland. They are however recognised in Switzerland since the entry into force of the Hague Trust Convention in 2007. Foreign law trusts are used for estate planning purposes in Switzerland, although the benefits that they bring in purely domestic situations are limited.

The Swiss Parliament is reviewing the possible introduction of a Swiss trust law. The Federal Council initiated a public consultation on a draft bill in January 2022 which aims to change this and strengthen the Swiss financial centre. The trust will be a specific legal instrument.

So far, there are no specific Swiss tax provisions on the taxation of foreign trusts. The taxation of a trust depends on its qualification based on a circular[iv] published by the Swiss tax conference constating of the heads of the cantonal tax authorities, which distinguishes revocable and irrevocable trusts.

As such, trusts are not taxable under Swiss tax law. In principle, only the beneficiaries and the settlor are subject to Swiss taxation if they are Swiss residents. The draft bill also introduces provisions on the taxation of trusts, and this is what has created the most uproar. In short, the draft bill as it stands would lead to a triple taxation:

  • inheritance/gift tax upon constitution of the Swiss trust;
  • corporate tax at the level of the trust provided that a beneficiary is Swiss resident or the settlor was at the time of settlement; and
  • income tax upon distribution to the beneficiaries.

As the draft bill stands, the latter rules would apply to Swiss and foreign trusts with a Swiss nexus. It remains to be seen whether this heavy taxation will be maintained in the final draft at the risk of failing the introduction of the trust in Switzerland.

The consultation process will end on 30 April 2022. Depending on its outcome, the draft bill could be amended and/or finalised for discussion at the Swiss parliament.

Swiss charitable foundations

In Switzerland, foundations and associations are commonly used for wealth charitable planning and long-term projects. Swiss law provides for specific legal provisions regarding foundations. A foundation is an autonomous and separate legal entity, which can have any kind of clearly defined purpose(s) provided that it is lawful, and not impossible nor immoral. As such, foundations are not required to pursue charitable purposes.

The purpose of a foundation as intended by the founder can only be amended under extraordinary circumstances or if the founder has retained the right to do so.

The Swiss charity sector is highly regarded internationally in particular due to its sound regulation and supervision. It is a very interesting tool for individuals willing to engage in charitable activities, both in Switzerland and abroad.

Charitable giving is mainly encouraged in Switzerland through a very favourable tax system. They are separate legal entities and therefore in principle subject to corporate tax. However, under specific conditions, legal entities that are pursuing public service or public interest purposes are exempt from the federal income and wealth tax provided that the capital and income are exclusively directed to such purposes. Gifts made by an individual to Swiss non-profit organisations are also generally exempted from taxes. Furthermore, those gifts are deductible from taxable income up to 20 per cent of the taxpayer’s net income. Donations to foreign-based charities may be partially or fully exempt in some cantons.

Family foundations

Swiss law also provides for a specific legal provision regarding private foundations known as family foundations. A family foundation is characterised as a foundation established for the benefit of beneficiaries who are members of the founder’s family. There is an exhaustive list of purposes for which a family foundation may be set up, including education, welfare and health[v]. Foundations granting a beneficial interest (e.g. to allow a beneficiary a higher standard of living) are considered null and void.

Private foundations governed by the laws of another jurisdiction are frequently used in Switzerland and recognised provided that they meet the Swiss requirements.


Switzerland offers significant advantages and possibilities for wealth structuring and planning. The liberalisation of its succession law, the potential introduction of Swiss domestic trust law and new rules to facilitate the transfer of businesses, not to mention its political stability and reputation, are reasons to believe that Switzerland will remain a jurisdiction of choice for private clients.


[i]Article 471 Swiss Civil Code.

[ii]Article 522 Swiss Civil Code.

[iii]Article 120 Swiss Civil Code.

[iv]Circular 30 of the Swiss tax conference, dated 22 August 2007.

[v]Article 335 Swiss Civil Code.

An original version of this article was first published on IFC Review.

Our thinking

  • IBA Annual Conference 2024

    Charlotte Ford


  • Understanding the Impact of Bankruptcy on Contractual Relationships

    Remo Wagner

    Quick Reads

  • London Property Market Prediction: Where and why are Chinese buyers buying residential properties in London in the next 12 months?

    Simon Green


  • Sarah Jane Boon quoted on the front page of The Times in relation to ONS marriage figures for England and Wales

    Sarah Jane Boon

    In the Press

  • "Has anyone seen my cat?" - Pet-Nups and Pet Disputes between Unmarried Couples

    Jessie Davies

    Quick Reads

  • The Africa Debate: Africa’s role in a changing global order

    Matthew Hobbs

    Quick Reads

  • Divorce called off: McIlroy reconciles on the eve of the US open

    Sophia Leeder

    Quick Reads

  • Bloomberg quotes Dominic Lawrance on pledges to scrap preferential tax treatment for non-doms

    Dominic Lawrance

    In the Press

  • Are Yorkshire pudding toppings a reason for divorce? Fortunately not anymore: no fault divorce – over 2 years on

    Hannah Owen

    Quick Reads

  • The Use of Experts in International Arbitration

    Peter Smith


  • The Telegraph quotes Sarah Jane Boon on potential issues around Labour’s pledge to levy VAT on private school fees

    Sarah Jane Boon

    In the Press

  • Spear's quotes Sarah Jane Boon on issues around VAT on private school fees

    Sarah Jane Boon

    In the Press

  • Hubbis interviews Ivan Lu on multi-jurisdictional family wealth and succession

    Ivan Lu

    In the Press

  • Switzerland: Revision Of The International Succession Law

    Grégoire Uldry


  • The Telegraph quotes Dominic Lawrance on Labour’s proposed expansion of rules governing trusts

    Dominic Lawrance

    In the Press

  • How is trust reporting under the Register of Overseas Entities changing after 4 June 2024?

    Jack Carter


  • Relocation to Italy: Italian Lump Sum Tax Regime

    Nicola Saccardo


  • Amendments to the Swiss Civil Procedure Code: Enhancing International Litigation and Streamlining Processes

    Remo Wagner

    Quick Reads

  • Wills for Brits in Switzerland (or with assets here)

    Michael Wells-Greco


  • A Guide to Arbitrability in International Arbitration

    Peter Smith


Back to top