According to a study by Roy Williams and Vic Preisser, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values (2003), nearly 70% of families fail to sustain their wealth or business beyond the second generation. The reason? In 60% of cases, it is not taxation or poor financial management — it is the absence of communication and governance within the family.
In Switzerland, there was a time when families often had to sell part of their assets to pay inheritance taxes. That era is over. Today, the tax environment has become significantly more favourable for spouses and direct descendants, driven by an economic rationale centred on wealth continuity and the preservation of family businesses. In most cantons, spouses and direct descendants are either fully exempt from inheritance tax or pay none at all. Yet that very advantage can become a trap: when taxation ceases to be a concern, estate planning often does too.
This guide is written for high-net-worth families and entrepreneurs established in Switzerland who wish to organise their estate transfer with a clear methodology — not solely to optimise taxes, but to preserve family unity and protect wealth across multiple generations.
Wealth Transfer in Switzerland: A Tax Framework That Supports Family Continuity
The first thing any Swiss resident should understand is that Switzerland levies no federal inheritance tax and no federal gift tax. Estate taxation is a cantonal prerogative: each canton sets its own rules. Cantons may either collect the tax in full themselves, or delegate taxing authority to municipalities — whether as an exclusive right or as a supplementary levy. Comparing cantons is therefore not always sufficient: in some, the municipality of domicile may also have a significant impact on the overall tax burden.
As a general rule, taxation is determined by the canton of residence of the deceased at the time of death, not by the canton where the assets are located — subject to specific rules applicable to real estate.
In general, the closer the family tie, the lower the tax; the more distant the relationship, the higher the burden — particularly when the inherited share is substantial (up to 54.6% in the canton of Geneva — maximum cantonal and municipal rate — when there is no family relationship).
The following table summarises the position in the main French-speaking cantons, compared with Zug and Schwyz, as at 20 July 2026:
| Canton | Spouse / registered partner | Direct descendants | Siblings | Third parties |
|---|---|---|---|---|
| VAUD | Exempt Art. 20 para. 1 lit. e LMSD | No tax up to CHF 1,000,000 per hereditary branch, then progressive taxation → 3.5% (marginal rate) Art. 31 para. 1–3 LMSD – LMSD scales (special & ordinary) | Taxable LMSD scale (ordinary) | Taxable LMSD scale (ordinary) |
| GENEVA | Exempt Art. 6A para. 1 lit. a LDS | Exempt Art. 6A para. 1 lit. b LDS | Taxable Art. 19 LDS | Taxable Art. 21 LDS |
| VALAIS | Exempt Art. 112 para. 1 lit. a LF | Exempt Art. 112 para. 1 lit. a LF | Taxable Art. 116 para. 1 lit. a LF (Allowance CHF 10,000) | Taxable Art. 116 para. 1 lit. d LF (Allowance CHF 10,000) |
| FRIBOURG | Exempt Art. 8 para. 1 lit. e LISD | Exempt Art. 8 para. 1 lit. f LISD | Taxable Art. 25 para. 1 lit. a ch. 1 LISD | Taxable Art. 25 para. 1 lit. c ch. 3 LISD |
| NEUCHÂTEL | Exempt Art. 9 para. 1 lit. a LSucc | Allowance of CHF 50,000 per hereditary branch, then 3% tax Art. 23 para. 1 lit. a LSucc | Taxable Art. 23 para. 1 lit. b LSucc | Taxable Art. 23 para. 3 LSucc |
| ZUG | Exempt Art. 175 para. 1 StG-ZG | Exempt Art. 175 para. 1 StG-ZG | Taxable Art. 180 para. 2 ch. 2 StG-ZG | Taxable Art. 180 para. 2 ch. 5 StG-ZG |
| SCHWYZ | No inheritance tax or gift tax Art. 2 para. 3 StG-SZ | No inheritance tax or gift tax Art. 2 para. 3 StG-SZ | No inheritance tax or gift tax Art. 2 para. 3 StG-SZ | No inheritance tax or gift tax Art. 2 para. 3 StG-SZ |
What this means in practice: in the canton of Geneva, inheritances passed to children are fully exempt from tax — your children will pay no inheritance tax whatsoever, regardless of the size of the estate. In the canton of Vaud, each child’s share of the inheritance is also exempt up to CHF 1,000,000. Above that threshold, the exemption is gradually reduced according to a special scale, until it disappears entirely. Once the exemption is exhausted, the taxable portion is subject to the ordinary rate (marginal rate of 3.5%, which is low). In municipalities that levy a supplementary cantonal inheritance tax, a municipal tax is added to the cantonal tax. In Lausanne, this supplement is set at 100% of the cantonal tax, effectively doubling the cantonal tax burden.
The forced heirship shares in Switzerland — a major reform in force since 2023
Since 1 January 2023, the revised Swiss Civil Code has substantially relaxed the rules on forced heirship (Art. 471 CC). Where the deceased leaves a spouse and direct descendants, their combined protected share is 50% — i.e. 25% each (compared with 62.5% under the former law, split as 25% for the spouse and 37.5% for the direct descendants). In addition, parents are no longer entitled to a forced heirship share. This modernisation provides greater testamentary freedom to organise the transfer of wealth in line with family and economic objectives. A testator may, for example, favour the surviving spouse who must cover running costs and service the mortgage to keep the family home. Alternatively, a business owner may allocate a larger share to the heir designated to take over the business, to ensure that heir holds a sufficient capital stake and the voting rights needed to exercise their responsibilities.
Estate Transfer Tools Available in Switzerland
Switzerland’s favourable inheritance tax regime is no substitute for proper estate planning. On the contrary, it shifts the focus to what truly matters: transferring wealth to the right people, at the right time, and under the right conditions. Swiss law offers a range of legal tools that can be tailored to each family’s personal, financial, and entrepreneurial circumstances.
The Will (Art. 498 et seq. CC)
The will is the foundational instrument of any estate planning. It allows the testator to organise the distribution of their estate within the limits set by succession law — in particular, allocating the freely disposable portion according to their wishes. Whether executed by notarial deed or in holographic form, it may be amended or revoked at any time as long as the testator retains their capacity for discernment. This flexibility makes it particularly suited to situations where the family or financial picture is likely to evolve. It does not, however, replace a broader strategic reflection: an effective will forms part of a coherent succession strategy, coordinated with the other available planning instruments.
The Gift / Donation (Art. 239 et seq. CO)
A gift is the most direct means of organising the transfer of wealth during the donor’s lifetime. In Switzerland, it may be made without any particular formality when it involves movable assets (cash, securities), while the transfer of real estate requires a notarial deed and registration at the land registry. The tax treatment varies from one canton to another. As a general rule, cantons that do not tax transfers between spouses and direct descendants in the context of an inheritance apply the same favourable treatment to lifetime gifts. The specific rules of each cantonal legislation should nevertheless be verified.
Two rules deserve particular attention:
Collation (Art. 626 CC). Under Swiss law, gifts made to statutory heirs must, as a rule, be brought back into the estate and taken into account on distribution, unless the donor has expressly stated otherwise. It is therefore essential to specify in the deed of gift whether the gift is to be brought into account against the beneficiary’s share of the estate. The accounting for lifetime gifts is a calculation mechanism designed to restore equality among the heirs; as a general rule, it does not require the physical restitution of the gifted asset.
Action for reduction (Art. 522 CC). If a gift or testamentary disposition infringes the forced heirship rights of a protected heir, that heir may bring a claim to restore his or her forced heirship share. This claim seeks to restore the forced heirship share by reducing the gift or testamentary disposition that infringe upon it. The claim may be brought by any forced heir whose forced heirship share has been infringed. Careful and well-documented planning remains the best way to prevent this type of dispute.
Life Insurance
Life insurance can complement a wealth transfer strategy, even though it is primarily a retirement planning instrument. In Switzerland, life insurance may be taken out under Pillar 3b. Although it does not offer the tax advantages associated with Pillar 3a, it provides greater contractual flexibility, particularly in the designation of beneficiaries. In the event of death, benefits are paid in accordance with the rules governing the insurance contract and those governing the Swiss three-pillar pension system. The tax treatment of benefits varies depending on the type of contract and cantonal legislation.
The Inheritance Agreement (Art. 494 et seq. CC) — A Distinctive Feature of Swiss Law
Unlike a will, which is a unilateral legal act, an inheritance agreement is a bilateral legal act that must be accepted by all the heirs concerned. Its defining feature is that, by signing it, a heir may renounce all or part of their forced heirship share (in exchange, for example, for a compensation payment from another heir) in the future distribution of the estate.
Unlike a will, an inheritance agreement cannot be revoked unilaterally by the party making the testamentary disposition: it may only be amended with the consent of all signatories. This is both a constraint and a strength — it creates certainty and prevents post-mortem disputes.
The inheritance agreement, which is only valid if executed in notarial form, is particularly well suited to complex situations: blended families, business succession, or inequality between heirs (one child received financial support for housing, another did not).
We explore this topic in greater depth in our article on family governance as the key to a successful transition.
The Family Foundation (Art. 335 CC)
For substantial assets intended to endure across multiple generations, the Swiss family foundation is a tool worth knowing. It allows certain assets to be permanently removed from the founder’s personal estate and transferred to a foundation, which becomes the owner and manages them in accordance with its deed of foundation and statutes.
Legal limitations: a family foundation may not be established for the sole purpose of enriching one or more heirs. Its purpose must be limited to covering education, establishment, or support costs for family members, or pursuing similar aims.
These restrictions distinguish the Swiss family foundation from family foundations available in certain other jurisdictions — most notably Liechtenstein — where they may serve as genuine vehicles for holding and transferring wealth.
Alongside the family foundation exists another, far lesser-known model: the shareholder foundation, analysed by Delphine Bottge in Les fondations actionnaires en Suisse (Slatkine, 2022). This is an ordinary foundation, governed by Art. 80 et seq. CC, which holds a significant interest in one or more commercial enterprises (ATF 127 III 337). In practice, when a family wishes to ensure the long-term continuity of a business across generations, they tend to prefer an ordinary foundation — known as a ‘shareholder foundation’ — over a family foundation. This model helps ensure stable ownership, preserve the company’s long-term independence, and dedicate the foundation’s income to purposes of public benefit.
The Family Holding Company
A family holding company (whether incorporated as a corporation or a limited liability company) – also referred to as a private wealth holding company when used for broader wealth management purposes – enables ownership interests and other assets to be held within a single legal entity. Profits may be retained and reinvested in the financing or acquisition of other investments, without being subject to income tax as long as they are not distributed to shareholders. The holding company’s shares may then be progressively transferred to children through gifts, inheritance agreements, or succession.
Before the corporate tax reform came into force on 1 January 2020, holding companies benefited from a preferential cantonal tax regime. Upon the sale of the holding company shares, any capital gain generally qualified as a private capital gain and was therefore exempt from Swiss income tax, subject to the application of anti-avoidance rules, in particular the indirect partial liquidation and transposition rules. As a result, the holding company was a particularly effective vehicle for tax planning.
Since 1 January 2020, holding companies have been subject to the same corporate income tax regime as any other corporation or limited liability company, with ordinary tax rates averaging approximately 14.43% in Switzerland in 2026 (KPMG, Swiss Tax Report 2026). However, the participation relief regime remains in place. Dividends received from subsidiaries and, subject to certain conditions, capital gains realised on their disposal continue to benefit from favourable tax treatment at the level of the holding company.
Today, the family holding company is no longer primarily a tax planning vehicle. It has become, above all, a governance and wealth transfer tool. When properly structured, it helps organise control of the corporate group, facilitate succession planning, preserve the unity of the family’s wealth, and support future investments. While tax considerations remain important, the primary reasons for establishing a family holding company today are governance, long-term continuity, and the efficient transfer of wealth.
Business Succession: Key Considerations for Entrepreneurs
The transfer of a business is one of the most complex aspects of wealth transfer planning. Unlike the transfer of a purely financial estate, it involves a living business whose value depends largely on its continued economic viability. Its success therefore depends on striking the right balance between wealth, legal, tax, financial, managerial, and family considerations.
Entrepreneurs are generally confronted with a number of fundamental questions: how can the long-term continuity of the business be ensured? Who should take over its leadership? Should heirs be treated equally, or according to their respective abilities? How can the unity of ownership be preserved while ensuring fairness among family members? Numerous books on economic elites, as well as television dramas, illustrate the challenges inherent in these decisions.
In Switzerland, most cantons now fully exempt transfers to direct descendants from inheritance tax. This has significantly reduced the risk that a family business might have to be sold solely to fund an inheritance tax liability. In the few situations where inheritance tax remains payable, the cantons generally provide payment facilities designed to preserve the continuity of the business.
The principal methods of transferring a business are as follows:
- Direct family transfer. The entrepreneur gradually transfers the company’s shares or ownership interests to the descendant who is expected to take over the business. This transfer is frequently coordinated with an inheritance agreement, which defines the rights of the other heirs and helps minimise the risk of disputes when the estate is settled.
- Transfer through a family holding company. As explained above, the family holding company becomes the vehicle through which the family business is held. This structure facilitates the organisation of governance, preserves family control, enables the possible admission of investors or key members of management, and supports succession planning for future generations. A shareholders’ agreement will typically complement this structure by establishing the governance framework, restrictions on the transfer of shares, exit arrangements, dispute resolution mechanisms, and decision-making procedures.
- Management Buyout (MBO). The business is acquired by members of its management team, whether or not they belong to the founder’s family. The acquisition is typically financed through a combination of equity, bank financing and, where appropriate, vendor financing provided by the seller. In larger transactions, the buyers frequently establish an acquisition holding company to optimise both the financing structure and the ownership of the business.
- Sale to a strategic buyer or financial investor. This option often achieves the highest valuation but generally results in the loss of family control. Transitional arrangements may be included either in the sale agreement or in a separate agreement to ensure an orderly transfer of know-how and facilitate the buyer’s integration. Ultimately, however, the parties must be able to part ways on good terms.
Whatever the chosen approach, business succession cannot be improvised. It should generally be planned five to ten years before the intended transfer. This preparation period makes it possible to optimise the company’s legal structure, prepare the successor, establish an appropriate governance framework, address the many tax and succession planning issues involved, and secure the financing of the transaction.
In this context, an outsourced family office acts as the central coordinator between the entrepreneur, legal counsel, tax advisers, banks, accountants, business valuation experts, the notary, and family members, ensuring the consistent implementation of the overall succession strategy.
The Human Factor: The Real Challenge of Wealth Transfer
Let us return to the statistic mentioned in the introduction: nearly 70% of families fail to preserve their wealth or family business beyond the second generation. According to the research of Roy Williams and Vic Preisser, based on an analysis of more than 3,250 affluent families, this outcome is explained far less by tax or financial considerations than by human factors: inadequate preparation of the next generation, poor communication, and ineffective family governance.
In a family business, succession involves far more than simply transferring ownership of the shares. It encompasses three distinct dimensions, which rarely pass from one generation to the next at the same time: ownership (holding the equity), control (decision-making authority), and leadership (the day-to-day management of the business).
When these three dimensions are not clearly organised, conflicts can arise with remarkable ease. The following examples illustrate this risk:
- A parent dies without leaving a will. The statutory heirs—who have never discussed their respective expectations—find themselves in disagreement over the family home, the valuation of the business, or the management of the family’s liquid assets.
- An entrepreneur transfers the family business to the eldest son without ever explaining the reasons for this decision to the other two children. Resentment gradually takes hold.
- In a blended family, the children from the first marriage and the current spouse each have legitimate but diverging interests, yet the rules governing their respective rights and expectations have never been formally established.
More often than not, family crises stem from expectations, decisions, or understandings that were never openly discussed or formally documented. This is where the true challenge of wealth transfer emerges: at its core, it is a question of authority and how it is organised. Tax considerations have not disappeared, but they have become an element of wealth planning rather than a systematic obstacle to family succession.
For this reason, successful wealth transfer depends above all on the quality of family governance: clearly defined roles and responsibilities, decision-making processes, the composition of the board of directors, the organisation of ownership, exit mechanisms, dispute resolution procedures, and the preparation of future generations. These key principles are typically set out in a family charter.
A neutral intermediary—such as an outsourced family office—can facilitate conversations that are often sensitive and help the family build a genuine long-term continuity plan. Beyond technical expertise, it provides a structured methodology and creates a framework for constructive dialogue among family members whose interests may not always align.
When and How Should Wealth Transfer Planning Begin?
There is no ideal age to begin planning, but three milestones commonly serve as natural starting points: the birth of children, the creation or sale of a business, and the approach of retirement. At each of these stages, a comprehensive review of the family’s wealth transfer strategy is advisable.
The Cost of Inaction. A poorly prepared wealth transfer is never without cost. Where the estate includes illiquid assets—such as real estate or interests in privately held companies—heirs may be forced to sell under unfavourable conditions in order to settle the estate. Unresolved family disputes can lead to lengthy and costly litigation. And time itself—sometimes measured in years—carries a very real economic cost.
The Five Steps of Estate Planning in Switzerland
1. Conduct a Comprehensive Wealth Review. Prepare a complete inventory of all assets and liabilities, including real estate (the family home and investment properties), financial assets (bank accounts, investment portfolios, Pillar 3a retirement assets and Pillar 3b life insurance policies), ownership interests (businesses and holding companies), valuable personal property (works of art, watches and jewellery), and digital assets (cryptocurrencies, digital wallets and online accounts). The review should also identify liabilities (mortgages, loans and private borrowings), personal guarantees (sureties and other security arrangements), as well as philanthropic commitments and any other financial obligations that may affect the estate or its future transfer.
2. Define your Objectives. Who should receive what? When? Under what conditions? These questions may appear straightforward, yet they often reveal uncertainties, differing expectations or priorities that have never been openly expressed. The answers to these questions form the foundation of the entire wealth transfer strategy.
3. Select the Appropriate Legal Tools and Structures. There is no universal solution. The appropriate approach depends on the family’s circumstances, the applicable cantonal legislation and the nature of the assets involved. For example, the transfer of real estate in Geneva does not produce the same legal and tax consequences as the transfer of ownership interests in a company based in Zug.
4. Establish the Governance Framework. A will, an inheritance agreement, a shareholders’ agreement and a family charter are the key documents that record the family’s decisions, make the estate easier for future generations to understand and administer, and provide a clear framework for managing its evolution and making informed decisions when the time comes. To understand how governance structures work in detail, read our comprehensive guide on family governance.
5. Document and Review Regularly. Families evolve through births, marriages, divorces and new investments. The legal, tax and economic environment also changes continuously. Estate planning is therefore not a static document but a living strategy. It should be reviewed regularly to ensure that it continues to reflect the family’s circumstances, the evolution of its wealth and developments in the law.
Key Takeaways
Wealth transfer in Switzerland benefits from a favourable tax environment—but taxation is neither the only consideration nor, in most cases, the most important one. The real challenge lies in anticipating the future, structuring the transfer of wealth, and preparing the next generation.
A successful wealth transfer is one in which the rules have been carefully considered in advance, openly discussed within the family, and formalised through legal instruments tailored to the family’s specific circumstances.
At MB Projects, we support families and entrepreneurs throughout this process—from conducting a comprehensive wealth review and coordinating specialist advisers to establishing family governance and providing long-term strategic support. Learn more about how a family office can guide you through this process. If you would like to assess your current situation and identify the first steps to take, we would be pleased to discuss how we can assist you.
Bibliography
— Roy Williams & Vic Preisser, Preparing Heirs, Five Steps to a Successful Transition of Family Wealth and Values, Robert D. Reed Publishers, 2003
— Delphine Bottge, Les fondations actionnaires en Suisse, Slatkine, 2022
— Olivier Baudat and Werner A. Räber, La planification fiscale et patrimoniale, Jean Winkler & Partners, 2006
Other documents used :
— Federal Council message on the Federal Act on Tax Reform and AHV Financing (TRAF) of 21 March 2018, FF 2018 2565.
— Explanatory memorandum and draft legislation (EMPL no1, 2026 draft budget) on the Vaud corporate tax reform (RIE III vaudoise), State Council of the Canton of Vaud, 2015.
— KPMG, Swiss Tax Report 2026, comparing corporate and income tax rates across more than 50 countries and all 26 Swiss cantons.
— International Finance Corporation, World Bank Group, Manual of Corporate Governance for Family Businesses
Legal grounds used :
Federal law
— Swiss Civil Code of 10 December 1907, RS 210 (referred to as : CC)
— Federal Act of 30 March 1911 supplementing the Swiss Civil Code (Book Five: Law of Obligations), RS 220 (referred to as : CO)
— Federal Act on Direct Federal Tax of 14 December 1990, RS 642.11 (referred to as : LIFD)
Cantonal law
— Law of the Canton of Vaud of 27 February 1963 on transfer tax on property transactions and inheritance and gift tax (referred to as: LMSD), with the applicable scales set out in the annex, RSV 648.11
— Law of the Canton of Vaud of 4 July 2000 on cantonal direct taxes (LI), RSV 642.11
— Geneva Law of 26 November 1960 on Inheritance Tax (referred to as : LDS), RSG D/3/25
— Valais Tax Act of 10 March 1976 (referred to as : LF), RS/VS 642.1
— Fribourg Act of 14 September 2007 on Inheritance and Gift Tax (referred to as : LISD), RSF 635.2.1
— Law of Neuchâtel introducing a tax on inheritance and inter vivos gifts (referred to as : LSucc), RSN 631.0
— Tax Act of the Canton of Zug (referred to as : StG-ZG), BGS 632.1
— Tax Act of the Canton of Schwyz (referred to as : StG-SZ), SRSZ 172.200
Local law
— Law of Canton Vaud on Municipal Taxes (LICom), ROCF 650.11
— Municipality of Lausanne, Tax Assessment Notice issued by the Municipality of Lausanne for the years 2025–2029, ROCF 610.1
Case law
— Federal Supreme Court judgment, ATF 127 III 337 in Jdt 2002 I 359 : This leading case establishes the legality of an economic purpose for foundations (e.g. managing a business)
