Gift tax in Switzerland: Amount and tax exemption

With a lifetime gift, you can benefit one or more people in the distribution of your estate. A gift only exists if it has been mutually agreed upon by both parties and legally accepted by the recipient. According to Article 239 of the Swiss Code of Obligations (CO), a gift occurs when a person enriches another person from their assets without expecting anything in return. However, in most cases, the recipient must pay gift tax.

In principle, every person who receives a gift is obligated to pay gift tax; otherwise, they are liable to prosecution under Article 65 of the Inheritance and Gift Tax Act (ESchG). Gift tax is due in the canton of residence of the donor (Article 2 ESchG). The domicile of the recipient is irrelevant for tax purposes.

Taxation of Repeated Gifts

Different tax rules apply to repeated gifts almost everywhere in Switzerland than to one-time gifts. These rules affect both the calculation of the tax rate and the requirements for tax exemption. The tax rate is calculated based on the total amount of all gifts made to the recipient within a certain period. In most cases, this results in a higher tax rate. This effect is known as the tax progression clause.

Tax allowances for gifts, if at all, only apply to the first gift to a person. For subsequent gifts, the full gift tax rate of the respective canton applies without deduction. However, in the cantons of Bern and Fribourg, for example, a new tax exemption can be applied for every five years, while in the canton of Geneva, it is only possible after ten years.

Both gift and inheritance taxes are levied by the cantons; the federal government has no authority to levy these taxes. In most cantons, gift and inheritance taxes are levied at a uniform rate. The difference between a gift and an inheritance lies in the type of transfer: With a gift, the property or assets are transferred during the donor’s lifetime, whereas with an inheritance, the inheritance must be awaited until the testator dies (i.e., the death of the testator).

It is possible for a donor to stipulate in a gift contract that a person is to receive a gift only after their death (Article 245 of the Swiss Code of Obligations). The object of the gift thus becomes the property of the recipient only after the donor’s death. In this case, the object of the gift is subject to inheritance tax and not gift tax. However, there is an exception in the canton of Lucerne: If an asset was gifted there five years before the testator’s death, inheritance tax applies. Otherwise, the gift is exempt from both gift and inheritance tax.

The tax rate for gifts in Switzerland depends on several factors. First, it depends on the relationship between the donor and the recipient. The value of the gift also influences the amount of the tax, as small gifts are taxed less than large ones (Articles 13 to 18 of the Gift Tax Act).

Finally, the amount of gift tax also depends on the canton in which the donor resides. In the canton of Lucerne, for example, gift tax is waived for spouses, descendants, siblings, cohabiting partners, and other persons. In the canton of Solothurn, however, only spouses, children, and parents are exempt from the tax, while siblings are required to pay the tax.

The deadlines for paying gift tax also vary from canton to canton. In the canton of Zurich, for example, every recipient of a gift is required to file a tax return within three months of receiving the gift. However, there are exceptions to this rule, and it is the responsibility of each recipient to inquire with the relevant authorities in their canton of residence.

How high are gift taxes in the cantons?

Below is a list of the current gift tax rates in the various cantons:

Aargau

• Tax-free: Spouses and registered partners, offspring, and parents
• 6-23%: Siblings
• 4-9%: Life partners
• 12-32%: Other persons

Appenzell Ausserrhoden

• Tax-free: Spouses and registered partners, offspring, and parents
• 22%: Siblings
• 12%: Life partners
• Max. 32%: Other persons

Appenzell Innerrhoden

• Tax-free: Spouses and registered partners
• 1%: Offspring
• 4%: Parents
• 6%: Siblings
• 20%: Life partners
• Max. 20%: Other persons

Basel-Land

• Tax-free: Spouses and registered partners, offspring, and parents
• 15%: Siblings
• 15%: Life partners
• 30%: Other persons

Basel-Stadt

• Tax-free: Spouses and registered partners, offspring
• 5-11%: Parents
• 7.5-16.5%: Siblings and life partners
• 22.5-49.5%: Other persons

Bern

• Tax-free: Spouses and registered partners, offspring
• 6-15%: Parents, siblings, and life partners
• Max. 40%: Other persons

Fribourg

• Tax-free: Spouses and registered partners, offspring, and parents
• 5.25%: Siblings
• 8.25%: Life partners
• Max. 22%: Other persons

Geneva

• Tax-free: Spouses and registered partners, offspring, and parents
• 9-12%: Siblings
• 24-26%: Life partners
• Max. 26%: Other persons

Glarus

• Tax-free: Spouses and registered partners, offspring
• 2.63-6.56%: Parents
• 4.2-10.5%: Siblings and life partners
• Max. 26.25%: Other persons

Graubünden

• Tax-free: Spouses and registered partners, offspring, parents, and life partners
• 5%: Siblings
• 15%: Other persons

Jura

• Tax-free: Spouses and registered partners, offspring
• 7%: Parents
• 14%: Siblings and life partners
• Max. 35%: Other persons

Lucerne

• Tax-free: Spouses and registered partners, offspring, parents, siblings, life partners, and other persons

Neuchâtel

• Tax-free: Spouses and registered partners
• 3%: Offspring and parents
• 15%: Siblings
• 20%: Life partners
• Max. 45%: Other persons

Nidwalden

• Tax-free: Spouses and registered partners, offspring, parents, and life partners
• 5%: Siblings
• Max. 15%: Other people

Obwalden

• Tax-free: Spouses and registered partners, offspring, parents, siblings, life partners, and other persons

Schaffhausen

• Tax-free: Spouses and registered partners, offspring
• 2-8%: Parents
• 4-16%: Siblings
• 10-40%: Life partners
• Max. 40%: Other persons

Schwyz

• Tax-free: Spouses and registered partners, offspring, parents, siblings, life partners, and other persons

Solothurn

• Tax-free: Spouses and registered partners, offspring and parents
• 4-10%: Siblings
• 12-30%: Life partners and other persons

St. Gallen

• Tax-free: Spouses and registered partners, offspring
• 10%: Parents
• 20%: Siblings
• 30%: Life partners
• Max. 30%: Other persons

Ticino

• Tax-free: Spouses and registered partners, offspring and parents
• 5.95-15.5%: Siblings
• 17.85-41%: Life partner
• Max. 41%: Other people

Thurgau

• Tax-free: Spouses and registered partners, offspring
• 2-7%: Parents
• 4.1-14%: Siblings
• 8.2-28%: Life partners
• Max. 28%: Other persons

Uri

• Tax-free: Spouses and registered partners, offspring, parents, and life partners
• 8%: Siblings
• Max. 24%: Other persons

Vaud

• Tax-free: Spouses and registered partners
• 1.2-3.5%: Offspring
• 2.64-7.5%: Parents
• 5.28-12.5%: Siblings
• 15.84-25%: Life partners
• Max. 25%: Other persons

Valais

• Tax-free: Spouses and registered partners, offspring, and parents
• 10%: Siblings
• 25%: Life partners
• Max. 25%: Other persons

Zug

• Tax-free: Spouses and registered partners, offspring, parents, and life partners
• 4-8%: Siblings
• Max. 20%: Other persons

Zurich

• Tax-free: Spouses and registered partners, offspring
• 2-6%: Parents
• 6-18%: Siblings
• 12-36%: Life partners
• Max. 36%: Other persons

In some cantons, gift tax can be very high. However, there are situations where tax exemption is possible. This is the case, for example, with a gift to a charitable organization or foundation. For a gift to remain tax-free, it is important that the foundation actually carries out charitable projects. If this is not the case, the application for tax exemption may be rejected. In some cases, it is also possible to save or avoid gift tax by relocating, as gift tax rates vary from canton to canton.