Inheritance Tax in Switzerland: Rates, Cantonal Rules and UK IHT

This decentralised system creates significant differences in tax rates, exemptions, and thresholds. The tax payable can vary considerably depending on the canton, the beneficiary’s relationship to the deceased, and the location of the assets.

For UK expats living in Switzerland or planning to relocate, Swiss inheritance tax must also be considered alongside potential UK inheritance tax (IHT) liabilities. This is especially relevant if you hold property, investments, pensions, or business interests across both countries. Understanding how the two systems interact can help you assess your estate’s exposure and identify where coordinated planning may be required.

Does Switzerland Have Inheritance Tax?

Switzerland does not impose a federal inheritance tax; rather, inheritance tax is applied at a cantonal level. Each canton establishes its own rules and exemptions, and some include communal surcharges.

Out of 26 cantons, only two do not impose inheritance tax:

1. Schwyz
2. Obwalden

The canton responsible for levying inheritance tax on movable assets is primarily determined by the deceased’s last tax domicile. Under Swiss law, this generally refers to the canton where the individual had their principal residence and centre of personal interests.

However, the deceased’s canton of residence does not necessarily determine the treatment of every asset. Swiss real estate is generally subject to inheritance tax in the canton where the property is located, while business establishments may be subject to separate allocation rules.

How Does Inheritance Tax in Switzerland Work?

Swiss inheritance tax also differs from the UK system in how it is levied. In the UK, inheritance tax is generally calculated on the estate as a whole, whereas in Switzerland, tax is generally assessed on each beneficiary’s inheritance, with liability determined under the applicable cantonal rules.

Cantonal rates generally depend on two factors:

1. The beneficiary’s relationship with the deceased
2. The amount inherited

Most cantons exempt spouses and children from inheritance tax. The cantons that levy IHT on direct descendants provide exemptions or relatively low tax rates:

• Appenzell Innerrhoden: CHF 300,000 exemption per child, with the excess taxed at a flat tax rate of 1%.
• Vaud: CHF 1,000,000 inheritance tax threshold per descendant branch and CHF 300,000 annual gift tax threshold per child, with amounts above the relevant thresholds subject to the applicable tax rules.
• Neuchâtel: Flat inheritance tax rate of 3% for direct descendants.

Stepchildren and foster children may also be exempt if their cantons grant them the same status as biological children. Other heirs are subject to a tax rate of up to around 40% or more in certain cantons, with unrelated beneficiaries generally paying the highest rates.

Swiss Inheritance Tax by Canton: Rates and Exemptions

Given that inheritance tax depends on the canton, the inherited amount and the beneficiary’s relationship to the deceased, the table below provides an indicative comparison of rates for unrelated beneficiaries. The figures should not be treated as definitive maximum liabilities, as cantonal calculations and additional charges can differ.

These figures provide a general comparison. The actual tax payable depends on the applicable cantonal calculation, including any allowances, progressive rates or municipal charges.

Siblings, nieces, nephews and other relatives may benefit from lower rates than unrelated beneficiaries, although the applicable rates vary considerably between cantons.

Some cantons also provide tax-free allowances, allowing beneficiaries who are not direct descendants to receive a specific amount before inheritance tax liability arises. For instance, in the Canton of Bern, heirs may benefit from a tax-free allowance of CHF 12,000.

For UK expats with beneficiaries outside their immediate family, these cantonal differences can materially affect the amount ultimately inherited. This is especially relevant where an estate includes assets intended for siblings, more distant relatives, or unrelated beneficiaries.

Reviewing the applicable cantonal rules alongside the intended distribution of your estate can help identify potential inheritance tax exposure before succession arrangements are finalised.

Which Assets Are Subject to Swiss Inheritance Tax?

Swiss inheritance tax can apply to a broad range of assets transferred at death, including real estate, bank accounts, securities, and business interests. However, the assets within the taxable estate depend on the deceased’s tax domicile and the applicable cantonal rules.

Certain cantons provide exemptions for:

• Personal effects
• Household goods
• Other assets qualifying for specific statutory exemptions

Assets located outside Switzerland are not automatically exempt. Where the deceased was domiciled in Switzerland, foreign movable assets may fall within the relevant cantonal inheritance tax base, while foreign real estate is generally subject to separate territorial allocation rules.

Each canton’s right to levy inheritance tax depends on the type and location of the asset. Real estate is generally subject to taxation in the canton where the property is situated, and business establishments may be taxed in the canton where they operate.

The taxable amount is determined according to the value of the relevant assets, after accounting for deductible liabilities and applicable exemptions. The framework for assessing value may differ depending on the type of assets:

Trusts are subject to distinct tax treatment because Swiss law does not recognise them as domestic legal instruments. Although there is no domestic trust law, Switzerland recognises foreign trusts and may impose inheritance or gift tax consequences on their establishment, administration or distributions.

The tax treatment depends on the type and structure of the trust:

1. Revocable trust: The settlor is generally treated as retaining ownership of the trust assets for Swiss tax purposes. Inheritance tax consequences may arise on the settlor’s death, depending on the applicable cantonal rules and beneficiary arrangements.
2. Irrevocable discretionary trust: The tax treatment depends on the settlor’s retained rights, the beneficiaries’ entitlements, the residence of the relevant parties and the canton’s approach to foreign trusts. Such structures do not automatically avoid inheritance tax.

If you set up a UK trust before relocating to Switzerland, you should review its structure and potential Swiss tax treatment. This is best done with advice from cross-border wealth specialists, such as those at Titan Wealth International. Our experts can assess your financial arrangements and help structure your assets tax-efficiently across the UK and Switzerland.

Swiss Inheritance Tax for Non-Residents: Which Assets Are Taxable?

Swiss inheritance tax for non-residents depends on the type and location of the assets involved. Non-residents may be subject to Swiss inheritance tax on certain Swiss assets, particularly real estate.

The canton in which Swiss real estate is located generally has the right to levy inheritance tax on that property, even if the deceased was a non-resident. However, the tax payable will depend on the canton’s rules, including exemptions based on the beneficiary’s relationship with the deceased.

Swiss bank accounts, securities and business interests may be treated differently. Holding an asset in Switzerland does not automatically mean that Swiss inheritance tax applies, particularly where the deceased was domiciled abroad. The applicable cantonal allocation rules and any relevant double-taxation treaty must be considered.

Upon inheriting, transferring, or selling Swiss property, heirs may also be subject to additional taxes, including:

1. Property transfer tax: Handänderung is levied by some cantons on transfers of real estate, although transfers arising from inheritance may qualify for exemptions.
2. Property gains tax: Grundstückgewinnsteuer may arise if inherited property is subsequently sold at a gain. Inheritance itself generally results in a deferral of property gains tax rather than an immediate charge.

Non-residents may face double taxation where Swiss property is also subject to inheritance tax in another country.

For instance, a UK expat who remains a UK long-term resident for inheritance tax purposes may be liable for UK IHT on their worldwide estate, including Swiss property, even after relocating to Switzerland. That same property may also be subject to Swiss inheritance tax.

Coordinating the two tax systems and identifying available reliefs is therefore an important part of cross-border estate planning.

How Do Swiss Inheritance Tax and UK Inheritance Tax Interact?

Switzerland and the UK have coordinated their inheritance tax regimes through a bilateral inheritance tax treaty that entered into force in 1995. When both countries have taxing rights over the same asset, the treaty may provide relief from double taxation.

However, the treaty does not automatically eliminate inheritance tax in either country. Where an estate includes assets in both jurisdictions, it is necessary to establish the deceased’s domestic tax status and treaty domicile, alongside the nature and location of the assets.

These factors determine how taxing rights are allocated and whether relief is available for overlapping liabilities. The treaty also has limitations for certain trust arrangements, including settlements in Switzerland where there is no interest in possession.

Swiss immovable property may be taxed in Switzerland under the treaty. Where the same property is also within the scope of UK inheritance tax, relief may be available under the treaty’s double-taxation provisions, subject to the applicable conditions and limits.

Similarly, where the deceased was domiciled in Switzerland for treaty purposes and held assets taxable in the UK, the allocation of taxing rights depends on the nature of those assets. UK company shares may still be exposed to UK IHT, depending on their situs and the treaty’s allocation of taxing rights. Switzerland may be required to exempt certain property or provide relief, but this cannot be assumed for every UK asset.

An individual’s domicile is a determining factor under the treaty. If the deceased is considered domiciled in both the UK and Switzerland for treaty purposes, the treaty contains tie-breaker rules to establish which country is treated as the country of domicile.

It is also important to distinguish treaty domicile from the UK’s domestic inheritance tax rules.

Since April 2025, the UK has used the long-term residence (LTR) regime to determine the general scope of IHT on overseas assets. Under the UK–Switzerland convention, an individual who is a UK long-term resident is treated as UK-domiciled for treaty purposes, although the convention’s provisions may affect how taxing rights are allocated.

Given these differences, establishing both domestic tax status and treaty domicile should be a key estate tax planning consideration. Treaty relief should be assessed alongside the applicable Swiss cantonal rules and UK IHT obligations, particularly where the estate includes property, investments or business interests in both countries.

Are UK Expats Liable for UK IHT After Relocating to Switzerland?

Since 6 April 2025, UK IHT has operated under a residence-based regime known as the long-term residence test to determine the scope of a person’s IHT liability.

Under this framework, an individual who has spent at least ten of the previous 20 tax years as a UK tax resident is generally considered a UK LTR. Special transitional provisions may apply to certain individuals who were already non-UK residents when the regime was introduced.

Your classification determines the scope of your inheritance tax exposure:

• UK LTRs are generally subject to IHT on their worldwide estate.
• Non-LTRs are generally subject to IHT on their UK-situs assets, including real estate, certain UK bank accounts, and relevant assets held through trusts (such as gift trusts, loan trusts, and discretionary trusts), subject to the applicable excluded-property rules.

Consequently, if you live in Switzerland but are still classified as a UK LTR under the IHT test, your worldwide estate may be subject to UK IHT, in addition to any Swiss inheritance tax or additional taxes imposed by other relevant jurisdictions.

Compared to many Swiss cantonal rates, the standard UK IHT rate is significantly higher, sitting at 40%. It generally applies to the chargeable value of the estate above the available allowances, although exemptions, reliefs and certain transfers can affect the amount payable:

1. Nil-rate band (NRB) of £325,000: The standard allowance, although previous chargeable lifetime transfers may reduce the amount available.
2. Residence nil-rate band (RNRB) of £175,000: Available where the qualifying conditions are met, including passing a qualifying residential interest to direct descendants. The RNRB is tapered for estates exceeding £2 million.

Unused NRB and RNRB allowances can also be transferable between spouses or civil partners if the relevant conditions are met.

How Long Does UK Inheritance Tax Apply After Leaving the UK?

UK IHT exposure can continue after departure through the “tail” period, during which worldwide assets may remain subject to UK IHT.

The duration of the tail depends on the length of the individual’s UK residence and their overall residence history:

These are the general post-departure periods. The actual position depends on the individual’s residence history, including any transitional rules that apply.

The residence test is generally reset after the individual has been a non-UK resident for ten consecutive tax years. If you are considering a permanent relocation to Switzerland, determining when the tail period ends is a crucial element of estate planning.

Inheritance Tax Planning for UK Expats in Switzerland

Your UK residence history is only one factor in determining inheritance tax exposure after relocation. If you hold substantial assets in both countries, your estate plan must also account for where those assets are located, how they are owned, and the succession arrangements you have in place.

To optimise inheritance tax exposure across both jurisdictions, pay particular attention to:

1. UK-situs assets
2. Ownership structures
3. Swiss forced heirship regime
4. Coordination of wills

UK-Situs Assets

Identify the treatment of UK-situs assets, as these may remain exposed to UK IHT even after you cease to be a UK LTR. Assets and arrangements to review include:

• UK pensions
• Trusts holding UK-situs assets
• UK-incorporated funds and company shares

When assessing pensions, consider whether the upcoming change in pension tax treatment will affect you. Historically, many discretionary pension arrangements fell outside the estate for IHT purposes, although some pension death benefits were already taxable.

The Finance Act 2026 will bring most unused pension funds and pension death benefits within the scope of UK IHT, starting from 6 April 2027. Certain benefits, including qualifying death-in-service benefits and specified dependant’s pensions, are excluded.

For instance, transferring a UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) in Switzerland has been a common consideration for UK expats.

However, transferring a pension to a Swiss QROPS does not automatically remove UK IHT exposure. From April 2027, the legislation also covers qualifying non-UK pension schemes. The treatment of a particular Swiss arrangement will depend on its classification under UK legislation, the member’s IHT status and the relevant death benefits.

Holding UK-situs assets in trusts may also not provide complete protection. If a trust holds UK-situs assets, such as UK property or UK company shares, those assets may remain within the UK IHT regime, regardless of:

• The settlor’s current residence
• The location where the trust is established or administered

The actual liability depends on the type of trust, the relevant charging provisions and any applicable exemptions or reliefs. UK residential property held indirectly through certain overseas structures may also remain exposed to IHT.

Such UK-situs holdings should be reviewed independently, in addition to assessing the trust’s broader IHT position.

UK company shares are generally considered UK-situs assets and therefore potentially exposed to UK IHT, regardless of your residence. However, certain UK-authorised investment fund holdings may qualify for excluded-property treatment where the statutory conditions are met.

Strategies such as restructuring through a non-UK company or trust before a chargeable event may reduce exposure, but this is not guaranteed. The underlying assets, relevant anti-avoidance rules and potential tax costs of restructuring must be considered. The most favourable solution depends on your specific circumstances and should be assessed with the assistance of a cross-border adviser.

Ownership Structures

Tax exposure also depends on how assets are owned and structured, including assets such as:

• Property
• Investments
• Business interests

They may be held personally, jointly, through a company, or within a trust, with each structure carrying distinct UK IHT and Swiss tax implications.

Under the UK IHT regime, assets held personally generally form part of your estate, while assets held in trust may be subject to separate IHT rules. Their exposure is defined by the type of trust, the timing of asset transfer, the location and nature of the assets, and each individual’s circumstances.

For married expatriates, the matrimonial property regime may also affect which assets form part of the deceased’s estate before inheritance tax and succession rules are applied. This can be particularly relevant where a couple has property or investments in both Switzerland and the UK.

Reviewing the ownership structure of your assets can therefore be a critical step in estate planning. However, restructuring should be undertaken after considering the tax and succession consequences in both jurisdictions. It is advisable to seek advice from a cross-border specialist before making changes to estate ownership or structure.

Swiss Forced Heirship

In addition to inheritance tax, UK expatriates should consider how Swiss succession law may affect the distribution of their estate. The rules governing who is entitled to inherit are distinct from those determining how an inheritance is taxed.

Switzerland revised its forced heirship law in 2023, but did not eliminate it. The forced heirship regime still protects the inheritance rights of a surviving spouse or registered partner and direct descendants, where applicable. The size of those compulsory shares was changed in the 2023 reform:

• The compulsory portion for direct descendants decreased from 75% to 50% of their statutory inheritance.
• The compulsory portion for parents was abolished.

As a British national, you may be able to avoid the application of Swiss forced heirship provisions by electing the succession law of your nationality to govern your estate, subject to the applicable Swiss private international law rules.

For the choice-of-law election to apply, it must be validly made in a will or other testamentary document. The election governs succession matters but does not itself remove Swiss inheritance tax obligations.

However, if you are a dual UK–Swiss national, your options are more limited. Since 1 January 2025, under the revised Federal Act on Private International Law (PILA), dual nationals may choose the law of their other nationality to govern their estate, but such an election cannot displace the compulsory inheritance rights protected under Swiss law.

If you drafted a will before this reform or before becoming a Swiss national, it should be reviewed to confirm whether its provisions continue to apply under the current rules.

Coordination of Wills

When drafting a will, you should consider:

• The beneficiaries of the estate
• The applicable inheritance tax liabilities
• The distinctions between UK and Swiss rules

Drafting a will without accounting for both jurisdictions can result in conflicting provisions or missed exemptions. If you opt for separate UK and Swiss wills, coordinating them is central to ensuring that neither revokes the other and that each jurisdiction administers the correct assets under the corresponding rules.

Beneficiary designations on pension arrangements, insurance policies and trusts should also be reviewed alongside the wills. These arrangements may operate separately from the terms of a will, and their tax treatment can differ between the UK and Switzerland.

Beneficiary planning should also take account of the different inheritance tax treatment of spouses, direct descendants and other heirs under Swiss cantonal rules. The intended distribution of an estate may therefore have different tax consequences depending on who receives each asset and where the relevant taxing rights arise.