Inheritance and gift tax

The Zurich statute

Inheritance and gift taxes are cantonal in Switzerland. The Confederation has no power to levy them. Each canton decides whether to tax transfers on death and by gift, whom to tax and at what rates. Zurich levies both under the Erbschafts- und Schenkungssteuergesetz (ESchG), LS 632.1. The tax is levied on the recipient and depends on the degree of kinship between the recipient and the deceased or donor. Legal entities with their seat in the canton that pursue public or charitable purposes are exempt.¹ The canton has jurisdiction when the deceased had his last domicile in Zurich or when the donor was domiciled there at the time of the gift. For real estate located in the canton, the canton of the location has jurisdiction regardless of the domicile of the deceased.²

The most important feature of the Zurich tax is the exemption of spouses and direct descendants. On 28 November 1999 the electorate of the canton approved an amendment that exempted children, grandchildren and further descendants from the inheritance and gift tax altogether, with effect from 1 January 2000. Until then descendants had paid tax at progressive rates of 2 to 6 per cent, with the top rate applying to inheritances of more than one million francs.³ The tariff that has applied since then distinguishes between groups of recipients according to their relationship to the deceased or donor, with tax-free allowances for each group and rates that rise with the size of the transfer and with the distance of the relationship. The Cantonal Tax Office publishes the tariff in its practice collection, where it is listed as valid since 1 January 2000.⁴ Parents, siblings, more distant relatives, cohabiting partners and unrelated persons remain taxable, and for unrelated heirs the burden can be substantial.

Zurich’s regime corresponds to the Swiss norm. According to the Federal Tax Administration, the cantons exempt spouses and, as a rule, direct descendants. Schwyz and Obwalden levy neither an inheritance tax nor a gift tax. Zug exempts parents and grandparents as well as descendants.⁵ A few cantons still tax descendants at low rates. The practical consequence is that for most Swiss families the inheritance tax plays no role in the transfer of wealth from one generation to the next. For wealthy clients the question arises mainly where assets are left to a partner who is not a spouse, to siblings or their children, or to unrelated persons. In these cases the choice of the last domicile can matter considerably.

The federal initiatives of 2015 and 2025

Two attempts have been made to introduce a federal inheritance tax. The first, a popular initiative for a federal tax of 20 per cent on estates above two million francs, the proceeds of which would have gone largely to the AHV, was rejected on 14 June 2015 by a large majority.⁶ The second came from the youth organisation of the Social Democratic Party, the JUSO, with the popular initiative “Für eine soziale Klimapolitik – steuerlich fair finanziert (Initiative für eine Zukunft)”. It would have levied a federal tax of 50 per cent on inheritances and gifts above a tax-free amount of 50 million francs, with two-thirds of the revenue for the Confederation and one-third for the cantons, reserved for measures against climate change.

The initiative dominated the debate among wealthy families in Switzerland in 2024 and 2025. Its supporters argued that the very rich should bear a share of the cost of climate protection proportional to their wealth. The Federal Council, Parliament, the parties of the centre and the right and the business associations warned of an exodus of wealthy families and of the threat to the succession of family businesses, whose owners would have had to sell parts of their companies to pay the tax. On 30 November 2025 the electorate rejected the initiative by 78.3 per cent, with a turnout of 43 per cent. No canton accepted it. Only two communes voted in favour, the city of Bern with 50.8 per cent and the small commune of Schelten in the Bernese Jura.⁷

For the Zurich financial centre the result removed a considerable uncertainty. In the months before the vote the question whether wealthy families should move abroad before a possible entry into force was widely discussed in the press and among advisers. The clear result has restored the previous situation. It confirms that inheritance taxation remains a cantonal matter and that the exemption of spouses and descendants enjoys broad support. The debate has nevertheless left a trace. It has shown that the combination of wealth tax and cantonal inheritance tax attracts recurring political attention. The stability of the Swiss framework must be earned anew at each vote.

Planning considerations

In a canton that exempts spouses and descendants, estate planning focuses on the other components of the tax system. For the wealth tax, the valuation of the family company and the treatment of assets held in trusts or foundations are of central importance. The chapter on family offices, trusts and foundations has described the Swiss treatment of foreign trusts, which in principle follows the circular letter of the Swiss Tax Conference on trusts. For transfers to persons outside the exempt circle, the allowances and rates of the canton of domicile at death decide the burden. A person whose estate will pass to a life partner, to siblings or to charitable purposes outside the canton may therefore reduce the burden by taking up domicile in Schwyz, where no inheritance tax is levied, or in a canton whose tariff treats the relevant recipients more favourably. Such planning must respect the requirements of a genuine change of domicile, which the tax authorities examine closely, above all when a change takes place late in life.

Foreign aspects add further complexity. A deceased with his last domicile in Zurich may leave assets in other countries to heirs who live abroad. Switzerland has concluded only a small number of double taxation agreements in the field of inheritance taxes.⁸ Conflicts with foreign inheritance taxes, such as the German tax, which applies when the heir is resident in Germany, are therefore frequent. The German aspects are discussed in Part K.

Notes

1. Kanton Zürich, Kantonales Steueramt, “Erbschafts- und Schenkungssteuer”, https://www.zh.ch/de/steuern-finanzen/steuern/steuern-natuerliche-personen/erbschafts-und-schenkungssteuer.html. ↩
2. Art. 127 para. 3 BV prohibits intercantonal double taxation, https://www.droit-bilingue.ch/de-fr/1/10/101-127-158.html. Kanton Zürich, “Erbschafts- und Schenkungssteuer”, https://www.zh.ch/de/steuern-finanzen/steuern/steuern-natuerliche-personen/erbschafts-und-schenkungssteuer.html, states that liability arises where the deceased had the last domicile in the canton or where real estate or rights in real estate located in the canton pass, with corresponding rules for gifts. ↩
3. NWB Datenbank, “Abschaffung der Erbschaft- und Schenkungsteuern für direkte Nachkommen im Kanton Zürich”, https://datenbank.nwb.de/Dokument/42593/. ↩
4. Kanton Zürich, Zürcher Steuerbuch no. 500.1, “Tarif der Erbschafts- und Schenkungssteuer”, https://www.zh.ch/de/steuern-finanzen/steuern/treuhaender/steuerbuch/steuerbuch-definition/zstb-500-1.html. ↩
5. ESTV, Steuerinformationen, “Erbschafts- und Schenkungssteuern (Stand der Gesetzgebung: 1. Januar 2025)”, https://www.estv2.admin.ch/stp/ds/d-erbschaft-schenkung-de.pdf. ↩
6. Wikipedia, “2015 Swiss referendums”, https://en.wikipedia.org/wiki/2015_Swiss_referendums, recording that the initiative “Millionen-Erbschaften besteuern für unsere AHV (Erbschaftssteuerreform)” was rejected on 14 June 2015 by 71.0 per cent of voters and by all cantons. ↩
7. SRF, “Erbschaftssteuer-Initiative scheitert klar”, 30 November 2025, https://www.srf.ch/news/abstimmungen-vom-30-november-erbschaftssteuer-scheitert-klar. SRF observes that the initiative was read early on as a threat to established Swiss family businesses. ↩
8. ESTV country pages listing the estate and inheritance tax agreements with Germany of 30 November 1978, https://www.estv.admin.ch/de/deutschland, with the United Kingdom of 17 December 1993, https://www.estv.admin.ch/de/vereinigtes-koenigreich, and with the United States of 9 July 1951, https://www.estv.admin.ch/de/usa. Austrian Federal Ministry of Finance, “DBA Erbschaftssteuer”, listing the agreement with Switzerland as in force, https://www.bmf.gv.at/themen/steuern/internationales-steuerrecht/doppelbesteuerungsabkommen/dba-erbschaftssteuer.html. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.