Swiss estates: would a 50% tax on the super-rich be appropriate?

Inheritance and tax gift situation in Switzerland

While there is no federal inheritance and gift tax, it is levied by all cantons - with the exception of Schwyz and Obwalden - in accordance with their cantonal legislation.

In most cantons, inheritance and gift tax rates vary according to the degree of kinship with the deceased or donor and the amount of the gift or inheritance (progressive tax rates).

Commonly, surviving spouses, children and certain associations and foundations are exempt from tax on gifts or transfers of inheritance. 

What is the inheritance tax initiative?

Earlier this year, a proposal arose in Switzerland to levy a federal inheritance and gift tax of 50% on inheritances and gifts exceeding CHF 50 million.

The inheritance tax initiative was launched by the young socialists party with the aim to finance the ecological transformation of the Swiss economy.

Although many aspects of the initiative still need to be clarified - not least the way in which the CHF 50 million deductible is calculated and applied according to the new legislation – here are some of the key points:

• the federal inheritance and gift tax is to be levied in addition to the cantonal and municipal inheritance and gift taxes already levied;
• it will affect all types of assets, whether bankable assets, cryptocurrencies or shares in a local or multinational company;
• it will be levied for all beneficiaries, including surviving spouses, children, associations, foundations and third parties; and
• the text of the initiative does not allow for any exceptions and prescribes additional measures to prevent tax avoidance in the event of people moving abroad (a national register should be created and managed specifically for this purpose).

The initiative would plausibly affect 2,000 people in Switzerland.

What are the criticisms of this inheritance tax initiative? 

The Swiss government considers that the proposals put forward by the authors of the initiative are not relevant to achieving Switzerland's climate objectives. It also believes that the retroactive taxation of inheritances and gifts called for by the authors of the initiative is extremely problematic from a political point of view.

The initiative is a source of uncertainty, not least because of its unclear transitional provisions.

At the same time, the new federal inheritance and gift tax would undermine Switzerland's attractiveness as a location for business and the tax revenues currently generated by the Confederation, cantons and municipalities. 

A similar initiative had already seen the light in 2015 aiming to introduce a federal inheritance and gift tax of 20% on inheritances and gifts in excess of CHF two million, and to allocate part of the proceeds to the pension system. The latter was rejected by 71% of voters.

Where do we stand with the political process?

The Swiss government has already rejected the initiative and refused to draw up a counter proposal to the inheritance tax initiative in May 2024. The Federal Council will set out its views on the initiative and the many outstanding issues in detail in its report to Parliament this winter. On this basis, Parliament will debate the initiative and decide on a recommendation for a vote. The referendum will probably take place in 2026.

See link below for the report to the government (only available in French, German and Italian).