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Swiss inheritance tax referendum

This information has been prepared by Sykes Anderson Perry Limited as a general guide only and does not constitute advice on any specific matter. We strongly recommend that you seek professional advice before taking action. No liability can be accepted by us for any action taken or not taken as a result of any information or advice given or omitted.

Next month, on 14 June 2015, Switzerland is holding a referendum which will decide whether or not a federal inheritance and gift tax should be introduced. The proposal to be voted on is that inheritance tax at 20% should be levied on all estates above 2 million CHF. At the present time the cantons levy inheritance and gift tax and there is no federal tax. The proposal also provides that a spouse or registered partner will be exempt and there is a provision that there will be special provisions for businesses. However this last point is causing some concern.

The proposal is retroactive so that any gifts made after 1 January 2012 or indeed estates where somebody died after that date will be subject to the new rules if the referendum is successful. This combined with the uncertainty of the “special provisions” that might apply to businesses means that a lot of business owners are extremely concerned as to how their company might continue after their death. At the moment many businesses are generally able to carry on from generation to generation as in most cantons there is no taxation on inheritances passing down the direct line.  Now however, such family businesses do not know how they will be taxed and are unable to make any planning arrangements given the retroactive nature of the referendum proposal.

In the short term this may raise a substantial figure for the taxman; estimated at 3 billion CHF per year, and the intention is for two thirds of the revenues to be applied to old age pension funds. However, it is likely that in the longer term, Switzerland will be a less productive environment and the revenue will fall as more family businesses close on the death of the current owner.

It is very much a matter of ‘watch this space’ and we will need to see whether or not this referendum does in fact pass into law after 14 June 2015.

May 2015

Nicole Gallop Mildon Solicitor and diplômée notaire