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  #21  
Old 07.06.2015, 11:02
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Re: Inheritance Tax Initiative

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Out of interest- do you know any country and which- were inheritance tax is not levied? At least with this proposal, it will be only on above 2 mio. I know 2 mio may seem little in Zurich, Zug or Geneva area- but for the rest of Switzerland- quite a lot.
Again, it's down to the cost of housing. For those that have bought in the three cantons you mention - and Schwyz etc. - there is already a UK-type situation if the proposal were to go through. People in their 70s and 80s who bought in their 30s, raised their families, still in the same home which suddenly, due to the expansion of the Zurich commuter belt, are suddenly worth figures approaching or over a figure starting with a 2. Add in a car and some modest savings & investments, and an awful lot of people round here will be deemed "rich"

And don't forget, since Switzerland has wealth tax, any significant inheritances will be taxed that way anyway - you've declared your wealth in your tax return and it's subject to wealth tax, then when you die and it goes to your heirs, they in turn declare it and pay wealth tax on it.
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  #22  
Old 07.06.2015, 11:19
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Re: Inheritance Tax Initiative

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FYI, the initiative does away with the tax-free inheritance for children. If it passes, only a spouse may inherit tax-free.
In some cantons ( Neuchatel for one) that's already the case. Only the spouse inherits tax free and everybody else is taxed on the inheritance. Children have a very low rate (3%) and the rate increases depending on the family relationship to the deceased.

The inheritance tax threshold in the UK is £325 000 and with the high property prices in some areas it's very easy to reach that level.
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Old 07.06.2015, 11:20
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Re: Inheritance Tax Initiative

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In general, I think that all inheritances should be taxed, regardless of volume - at the same level as income. I fail to see why any individual should receive something he or she hasn't earned tax free (and I say that as someone who came from a fairly well-off family as well as a general supporter of low taxes / small government).

That said, if I understand meloncollie's comment above correctly, those assets are getting taxed twice during the inheritance process, which doesn't make a lot of sense to me. Once is enough.
but in that case, why should they receive anything? why not confiscate it all to the benefit of the state?
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Old 07.06.2015, 11:22
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Re: Inheritance Tax Initiative

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In some cantons ( Neuchatel for one) that's already the case. Only the spouse inherits tax free and everybody else is taxed on the inheritance. Children have a very low rate (3%) and the rate increases depending on the family relationship to the deceased.

The inheritance tax threshold in the UK is £325 000 and with the high property prices in some areas it's very easy to reach that level.
...and 40%.

Problem is that the rich will simply avoid paying with assorted tax shelters and the families lucky enough (or foresighted enough) to have bought a house 40 years ago get hammered...
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  #25  
Old 07.06.2015, 11:25
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Re: Inheritance Tax Initiative

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...and 40%.

Problem is that the rich will simply avoid paying with assorted tax shelters and the families lucky enough (or foresighted enough) to have bought a house 40 years ago get hammered...
Exactly.
That assumes of course that they are lucky enough not to have to go into a care home for any length of time, in which case there won't be anything left anyway.
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  #26  
Old 07.06.2015, 12:49
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Re: Inheritance Tax Initiative

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Fatmansfilm, we are also Swiss, and have been full residents here for 6 years. So yes, we would be liable for our UK holiday home- but it is way beloe the threshold, so nothing to pay. And we won't be liable for our property and assets here in CH (even if the law passes- we own property in the Jura, not Zurich or Geneva, thank goodness).
With regards to IHT you do appear to be a 'loophole case', it's amazing you can acquire a UK passport & not acquire UK domicile at the same time. For a UK domiciled Person, getting a Swiss passport would not get the out of UK IHT even after 12 years of living in CH.
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  #27  
Old 07.06.2015, 13:26
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Re: Inheritance Tax Initiative

LOL I've always had a Swiss passport. and acquired my UK one in 1973, I think, and I certainly was domiciled there, and was until 2009! Anyhow, I will not pay any inheritance tax at all, and neither will OH- cause we will be dead - isn't that the whole point

Some of my relatives will inherit millions (many!) in property and assets they have never worked for, I see no reason why they shouldn't pay taxes on that- and they will still do very well out of it, very well indeed. Our kids will inherit enough even if we are below 2 million- and will be very grateful for what they get- and would expect to pay tax on it. They pay tax on everything else, and theiy earn very good salaries- fair enough I say, and so do they.

Last edited by Odile; 07.06.2015 at 17:42.
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  #28  
Old 07.06.2015, 13:50
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Re: Inheritance Tax Initiative

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The deceased doesnt' get taxed, the heir(s) do(es). Taxes are raised when stuff changes ownership, the initiative follows that principle very succinctly.
Under the proposed new law, the estate gets taxed, not the heirs.

Tom
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  #29  
Old 07.06.2015, 15:22
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Re: Inheritance Tax Initiative

Same thing, no. When my kids inherit from me, I shall be dead, so I won't pay anything. If there is a difference, in practical terms, do explain, please.

Last edited by Odile; 07.06.2015 at 15:45.
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Old 07.06.2015, 15:38
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Re: Inheritance Tax Initiative

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Same thing, no.
No, it's not at all the same thing.

Tom
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  #31  
Old 07.06.2015, 17:18
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Re: Inheritance Tax Initiative

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but in that case, why should they receive anything? why not confiscate it all to the benefit of the state?
Why not confiscate your entire salary rather than taxing part of it?

Anyway, income is income is income. If your parents want to give you money, fine - but anytime you receive income (salary, gift, inheritance, capital gains, whatever) just treat it as income and tax it appropriately. Reducing the number of loopholes in the system is a worthy goal by itself, and the simplicity leads to fairness all around (though I have no idea where Odile gets her view that rich people paying for other people's retirement is somehow inherently fair).
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  #32  
Old 07.06.2015, 17:23
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Re: Inheritance Tax Initiative

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(though I have no idea where Odile gets her view that rich people paying for other people's retirement is somehow inherently fair).
It's fair if you're not one of the 'rich' people who has to pay it obviously.
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  #33  
Old 07.06.2015, 17:55
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Re: Inheritance Tax Initiative

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Under the proposed new law, the estate gets taxed, not the heirs.

Tom
You're right. Nonetheless it isn't double taxation as the tax is levied when change of ownership occurs.

Financing AHV, and old age in general, is getting ever more difficult. The model so far has been that the young finance the old, but that is getting increasinly difficult. There's a reason for why poverty risk is highest among young (single) parents - exactly among those that help keep the model working. At the same time, low income reduces the chance to get appropriate (as measured by the childs' intelligence) schooling/professional formation, which in turn and in the (very) long run reduces income earned by the individual, as well as wealth created for society. Simultaneously, wealth is concentrated among the old, more than half of total wealth is owned by those older than 65 years. So to put it strikingly(?), the poor young finance the rich old.

Add to that effects like reduced income taxation for the rich (e.g. Unternehmenssteuerreform 2 that provides 50% rebate on dividend and interest income in many cases, which is even further reduced by reducing the effect of progressive taxation), tax free capital gains both on real esteate (after 20 years ownership) and on securities, and you may realize that sooner or later the young will, at some point, simply refuse to play along.

Already 20% of AHV is financed by common taxes, this amount is rising by about 3% annually, faster than e.g. economic growth. The Erbschaftsinitiative corrects part of that by having the old help finance the old - it's nothing but fair.
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  #34  
Old 07.06.2015, 22:12
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Re: Inheritance Tax Initiative

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LOL I've always had a Swiss passport. and acquired my UK one in 1973, I think, and I certainly was domiciled there, and was until 2009! Anyhow, I will not pay any inheritance tax at all, and neither will OH- cause we will be dead - isn't that the whole point

Some of my relatives will inherit millions (many!) in property and assets they have never worked for, I see no reason why they shouldn't pay taxes on that- and they will still do very well out of it, very well indeed. Our kids will inherit enough even if we are below 2 million- and will be very grateful for what they get- and would expect to pay tax on it. They pay tax on everything else, and theiy earn very good salaries- fair enough I say, and so do they.
You need to understand the meaning of domicile in British law, you clearly don't. Just like Starbucks non domiciled UK residents can legally pay less tax than domiciled residents. In your case its just IHT your avoiding !
BTW your kids are almost certainly non domiciled in the UK as well.
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  #35  
Old 07.06.2015, 22:22
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Re: Inheritance Tax Initiative

My kids have always lived in the UK and were born there of a British father (and mother with dual nationality) - they are 40 and nearly 43, and have always lived in the UK- so I fail to see how they could not be domiciled in the UK! Their paternal ancestors are also British for many many generations. There is a small village in Devon where the Cemetary is full of them.

Last edited by Odile; 07.06.2015 at 23:17.
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Old 07.06.2015, 22:35
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Re: Inheritance Tax Initiative

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My kids have always lived in the UK and were born there of a British father (and mother with dual nationality) - they are 40 and nearly 43, and have always lived in the UK- so I fail to see how they could not be domiciled in the UK!

I think in the UK sense 'domicile' is a little like the germanic (and swiss) definition of Heimat; it's not where you actually live, but more where your paternal ancestors are from.

I, for example, haven't lived in England for thirty-five years (24 more than I did live there), but as far as HMR are concerned as soon as I inherited property there and acquired an income from said property I became liable for UK taxes as I am considered as UK Domiciled.

PS; my eldest lived in England for a whole eleven months, the youngest never has, so I've no idea if they're considered UK Domiciled or not!
I'm assuming not.....

Last edited by Anjela; 07.06.2015 at 22:39. Reason: PS
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Old 12.06.2015, 18:39
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Re: Inheritance Tax Initiative

https://www.gov.uk/government/upload..._3_7078500.pdf

The flow charts are quite fun.
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