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Old 06.06.2015, 13:35
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Inheritance Tax Initiative

Largely a theoretical question, since the initiative to institute a federal inheritance tax looks to be defeated. But nonetheless:

I plan to leave Switzerland long before I shuffle off this mortal coil, and so have already moved most of my assets back to the US. But the best laid plans o' mice and men, etc.

So were the initiative to pass, and should I kick the bucket while still resident here, would the portion of my estate held outside Switzerland also be subject to the proposed tax?

Many thanks.
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Old 06.06.2015, 15:26
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Re: Inheritance Tax Initiative

Short answer, I don't know. The blurb that came with the voting papers obviously really only focused on CH, but since CH asks you to declare worldwide wealth on your ordinary tax return - and you have presumably been doing so - I imagine that yes, your US assets would fall into the net, especially because the tax authorities know about them.

Personally I do hope it fails. As has rightly been pointed out, your estate has already been taxed at least once, if not twice; three times is really taking the michael. Also going by experience in the UK, inheritance tax is one of the best ways to encourage tax avoidance if not worse. Switzerland has always been good at levying tax at low levels but universally so paying it hurts less and is not worth the hassle to find legal workarounds, hence maintaining a regular decent flow of tax revenues. Seems barmy to change a policy that works well.
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Old 06.06.2015, 16:19
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Re: Inheritance Tax Initiative

Where ever you die is the deciding factor. If you have a Swiss Will and you die in the USA, then they just might ignore the Swiss Will if your descendants object...

As I understand the situation, if you die here, usually all your worldly assets are considered together.

I think you need to make a US Testament, probably referring to the Swiss Testament. Any local public Notary will advise you.
---------------------------------------------------------------------

Interestingly, the initiative proposes a common tax on the received assets above CHF 2 million, which will be passed to the AHV government pension fund.

Unsurprisingly all the rich people have paid for adverts claiming this is a bad idea, it will destroy small family businesses etc.

The left wing Socialist Party claim only 2% of estates are worth more that CHF 2 million.

At present most Cantons do not tax deceased assets passed between close generations, (parents to children)

So why isn't this initiative moving forwards? It looks as if it will be turned down.

.

Last edited by Sbrinz; 06.06.2015 at 16:33.
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Old 06.06.2015, 19:43
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Re: Inheritance Tax Initiative

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Where ever you die is the deciding factor. If you have a Swiss Will and you die in the USA, then they just might ignore the Swiss Will if your descendants object...

As I understand the situation, if you die here, usually all your worldly assets are considered together.

I think you need to make a US Testament, probably referring to the Swiss Testament. Any local public Notary will advise you.
Done and dusted. I have claimed Heimatrecht, have my US will made, have established trusts to ensure as smooth a transition as possible.

It turned out that the local Swiss notary was completely wrong wrt the proper form for a Heimatrecht declaration, by the way. If one is going this route, a discussion with a lawyer who has experience in this area is probably a good idea.

----

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Interestingly, the initiative proposes a common tax on the received assets above CHF 2 million, which will be passed to the AHV government pension fund.
.
My estate, if there is anything left, goes to charity. I don't consider the Swiss government a reputable charity.

Being serious, my future lies in the US, not Switzerland. All plans are made with that in mind.


ETA:

FYI, the initiative does away with the tax-free inheritance for children. If it passes, only a spouse may inherit tax-free.

Last edited by meloncollie; 06.06.2015 at 20:08.
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Old 06.06.2015, 20:05
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Re: Inheritance Tax Initiative

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Where ever you die is the deciding factor. If you have a Swiss Will and you die in the USA, then they just might ignore the Swiss Will if your descendants object...

As I understand the situation, if you die here, usually all your worldly assets are considered together.

I think you need to make a US Testament, probably referring to the Swiss Testament. Any local public Notary will advise you.

---------------------------------------------------------------------

Interestingly, the initiative proposes a common tax on the received assets above CHF 2 million, which will be passed to the AHV government pension fund.

Unsurprisingly all the rich people have paid for adverts claiming this is a bad idea, it will destroy small family businesses etc.

The left wing Socialist Party claim only 2% of estates are worth more that CHF 2 million.

At present most Cantons do not tax deceased assets passed between close generations, (parents to children)

So why isn't this initiative moving forwards? It looks as if it will be turned down.

.
In UK the inheritance tax has destroyed the small farmers. For example, you inherit the family farm and where do you find the money to pay the tax? You have to sell the farm.

Same thing would happen here with wine making.

Wine makers here tell me it is impossible to start a new one; you will never recover the cost of the equipment.
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Old 06.06.2015, 20:10
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Re: Inheritance Tax Initiative

Few of us mere mortals will have over 2 million to pass on to our children- so I'd imagine the vast majority who does not will vote yes.

With such low interest rates, surely inheritors could take a mortage on a business or property they'd inherit? Our kids will still be far better off than if we lived in the UK where they would have to pay 40% over (approx can't remember exact fugure) £300.000.

Last edited by Odile; 06.06.2015 at 20:38.
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Old 06.06.2015, 20:14
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Re: Inheritance Tax Initiative

A clear no from eveyone we know.

Tom
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Old 06.06.2015, 20:40
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Re: Inheritance Tax Initiative

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Few of us mere mortals will have over 2 million to pass on to our children- so I'd imagine the vast majority who does not will vote yes.
ETA:

The article I linked below was from an eariler poll. The current poll is an even firmer No:

http://www.swissinfo.ch/eng/final-op...nding/41468980

61% No, 34% Yes, 5% undecided.


----


According to this SwissInfo article, polls are running 51% No, 38% Yes, 11% undecided.

http://www.swissinfo.ch/directdemocr...-poll/41417370

Last edited by meloncollie; 06.06.2015 at 21:11. Reason: Updated info
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Old 06.06.2015, 20:52
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Re: Inheritance Tax Initiative

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A clear no from eveyone we know.

Tom
What both of them !!
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Old 06.06.2015, 21:26
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Re: Inheritance Tax Initiative

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Few of us mere mortals will have over 2 million to pass on to our children- so I'd imagine the vast majority who does not will vote yes.
I'm all right jack? Today 2 million, 10 years' time 1 million, 20 years' time 500'000 - add a little inflation and it really doesn't take much to end up with a UK situation. Where, of course, it's not just farms that get broken up. A large proportion of the UK population get caught by IHT simply from the value of the family home that they might have lived in for 30-40 years.
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Old 06.06.2015, 21:50
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Re: Inheritance Tax Initiative

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Few of us mere mortals will have over 2 million to pass on to our children- so I'd imagine the vast majority who does not will vote yes.

With such low interest rates, surely inheritors could take a mortage on a business or property they'd inherit? Our kids will still be far better off than if we lived in the UK where they would have to pay 40% over (approx can't remember exact fugure) £300.000.
Its amazing if being a UK passport holder you won't be liable IHT, it normally takes 20 years minimum away from the UK to loose the liability.
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Old 06.06.2015, 23:08
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Re: Inheritance Tax Initiative

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I'm all right jack? Today 2 million, 10 years' time 1 million, 20 years' time 500'000 - add a little inflation and it really doesn't take much to end up with a UK situation. Where, of course, it's not just farms that get broken up. A large proportion of the UK population get caught by IHT simply from the value of the family home that they might have lived in for 30-40 years.
But there is an exception for farms in the UK- so I don't get your comment:

Agricultural property

You can pass on some agricultural property free of Inheritance Tax, either during your lifetime or as part of your will.
Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals intensively. It also includes:
  • growing crops
  • stud farms for breeding and rearing horses and grazing
  • trees that are planted and harvested at least every 10 years (short-rotation coppice)
  • land not currently being farmed under the Habitat Scheme
  • land not currently being farmed under a crop rotation scheme
  • the value of milk quota associated with the land
  • some agricultural shares and securities
  • farm buildings, farm cottages and farmhouses
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) and we have registered our Swiss will with out solicitor here some years back.

Last edited by Odile; 07.06.2015 at 17:33.
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Old 06.06.2015, 23:49
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Re: Inheritance Tax Initiative

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But there is an exception for farms in the UK- so I don't get your comment:

Agricultural property

You can pass on some agricultural property free of Inheritance Tax, either during your lifetime or as part of your will.
Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals intensively. It also includes:
  • growing crops
  • stud farms for breeding and rearing horses and grazing
  • trees that are planted and harvested at least every 10 years (short-rotation coppice)
  • land not currently being farmed under the Habitat Scheme
  • land not currently being farmed under a crop rotation scheme
  • the value of milk quota associated with the land
  • some agricultural shares and securities
  • farm buildings, farm cottages and farmhouses
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).
Not so simple, for example look here
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Old 06.06.2015, 23:57
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Re: Inheritance Tax Initiative

The issue is fairly simple:

"Would you like us to take more money in tax, or not?"
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Old 07.06.2015, 00:03
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Re: Inheritance Tax Initiative

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Where ever you die is the deciding factor.
Not really. The US will raise inheritance tax on any and all US securities held (directly, probably). Not sure if that applies to all wealth located in the US, but I'd say it does.

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As has rightly been pointed out, your estate has already been taxed at least once, if not twice; three times is really taking the michael.
A picture perfect red herring. The deceased doesnt' get taxed, the heir(s) do(es). Taxes are raised when stuff changes ownership, the initiative follows that principle very succinctly.
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Old 07.06.2015, 00:51
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Re: Inheritance Tax Initiative

Everyone agrees the AVS / AHV needs a lot more money. The recent proposal to raise MWSt (sales tax, VAT, TVA) by 1% was thrown out. Now this initiative might also be thrown out.

The result will inevitably be higher local taxes to pay for more social security, because the AVS / AHV pensions will not be enough to live on. The immediate future looks bad as the interest rates are now very low, and pension funds are struggling to achieve the minimum legal growth.

The present pension is about CHF 2'300 per month (per single person; less than 4'600 for married couples) so it isn't exactly generous at present, and many people already claim supplementary benefits as their total pensions are too small (Less than CHF 3'000 per month)

It is really up to everyone to understand: the proposed initiative will be active when the inherited sum is over CHF 2 million.

We either tax the rich, or we tax everyone. But someone will have to pay.
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Old 07.06.2015, 01:14
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Re: Inheritance Tax Initiative

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A picture perfect red herring. The deceased doesnt' get taxed, the heir(s) do(es). Taxes are raised when stuff changes ownership, the initiative follows that principle very succinctly.
But if I've understood correctly, isn't taxing the estate one of the changes the initiative makes?

https://www.admin.ch/ch/d/pore/vi/vis414t.html

Die Erbschaftssteuer wird auf dem Nachlass von natürlichen Personen erhoben, die ihren Wohnsitz im Zeitpunkt des Todes in der Schweiz hatten oder bei denen der Erbgang in der Schweiz eröffnet worden ist. Die Schenkungssteuer wird beim Schenker oder bei der Schenkerin erhoben.

Roughly:

Inheritance tax is levied on the estate of natural persons who have been residents in Switzerland at the time of death. The gift tax is levied on the donor.


The NZZ says in this article that it actually isn't an inheritance tax, but rather an estate tax:
http://www.nzz.ch/schweiz/ein-neues-...kus-1.18513513

Eigentlich handelt es sich bei der geplanten Steuer gar nicht um eine Erbschaftssteuer, sondern um eine Nachlasssteuer. Denn sie würde nicht abgestimmt auf die Erbschaften der einzelnen Begünstigten erhoben, sondern eben gesamthaft auf den Nachlass des Verstorbenen.


---

Out of curiosity, if currently (in cantons levying an inheritance tax) heirs are taxed rather than the estate, how does that work if an heir is not subject to Swiss taxation - for instance, someone not resident in Switzerland?
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Old 07.06.2015, 08:18
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Re: Inheritance Tax Initiative

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.
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Old 07.06.2015, 10:51
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Re: Inheritance Tax Initiative

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.

Me, I don't get and will never get a nice fat Swiss pension (as compared to UK) - but I do understand that AVS needs to find money from somewhere to pay YOU guys... and as Sbrinz says, I'd rather it came from the 'rich'. Seems somewhat fairer. Enjoy your Swiss pensions- I do wish I had one. People are living longer and longer, and the cost of pensions is rising all the time.
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Old 07.06.2015, 10:57
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Re: Inheritance Tax Initiative

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But there is an exception for farms in the UK- so I don't get your comment:
I was just continuining Marton's analogy in post #5
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