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The following article is written by Graeme Perry, Solicitor at Sykes Anderson Perry Limited Solicitors and Chartered Tax Advisers in London, England.

This information has been prepared by Sykes Anderson Perry Limited as a general guide only and does not constitute advice on any specific matter. We strongly recommend that you seek professional advice before taking action. No liability can be accepted by us for any action taken or not taken as a result of any information or advice given or omitted. The information herein does not constitute investment advice. Always consult an IFA if before taking any investment decision.

Switzerland has long been thought of as a country where individuals may pay little or no income tax. The position, in reality, may not be as favourable as the impression people have, although there are certain benefits available. One angle that is not so often considered is that of inheritance tax. This should be an important factor for those moving to Switzerland, particularly later in life. The position may make Switzerland an even more attractive location for people but in some scenarios, it can result in a difficult tax position to analyse.

Swiss Inheritance Tax

The tax system in Switzerland is layered. There are certain taxes and rates, which apply on a federal basis (i.e. throughout the country) and then other taxes and rates that apply locally in the Cantons and Communes. As things stand there is no federal inheritance tax – this position was affirmed in a national referendum in 2015.

The Cantons apply inheritance tax in a varied way although there tend to be exemptions for spouses and for direct line descendants.

UK Inheritance Tax

If you were originally domiciled in the UK, your worldwide assets would have been within the scope of UK inheritance tax, which applies at 40% on the value of assets over a fairly modest nil rate band (tax threshold) of £325,000. There are particular rules which are coming into force under which this tax-free level may increase.

The issue for people leaving the UK is that domicile is not a straightforward concept. If you are from the UK, then it will be difficult to convince the authorities that you have lost your domicile here. As such, even people who left the UK sometime before their death might still have their whole estate caught by UK inheritance tax.

Changing Domicile

If you can demonstrate that you have left the UK permanently and have no intention to return it may be possible to be treated as non-domiciled for inheritance tax purposes. In practice, this will usually require a fairly lengthy period as a non-resident first and will require a material severance of attachments to the UK. There are many factors to be considered when assessing whether there has been a change of domicile.

If you are residing in Switzerland with the intention of remaining there the Swiss authorities are likely to view you as Swiss domiciled for tax purposes.

These domicile scenarios present three potential results. Either:

  1. The individual remains domiciled in the UK only;
  2. The individual has ceased to have a UK domicile and is domiciled in Switzerland only; or
  3. The individual is treated as domiciled in both the UK and Switzerland.

Swiss Domiciled

If the individual is only domiciled in Switzerland their inheritance tax position in the UK is likely to be favourable and straightforward.

They will be subject to UK inheritance tax only in respect of UK real estate and shares in UK companies, which they own at the date of death. Even if they are non-domiciled, they may be entitled to claim business property relief depending on the type of UK shares they own.

Their remaining assets would only be subject to Swiss inheritance tax which as set out above may be low or nil.

Domiciled in both countries

The position can become extremely complicated in the scenario where both countries consider the individual to be domiciled there.

Firstly, there is a tie-breaker test to determine in which state the individual will be treated as domiciled for the purpose of the treaty. The result of this test will be that the individual is domiciled where they were effectively residing at the time of death.

There are further provisions that set out the country in which assets are taxable. As you might expect, all UK assets will remain subject to UK inheritance tax in this scenario, including UK bank accounts etc. However, depending on the circumstances, Swiss assets and assets in third party countries may remain taxable in the UK. Nationality will have an impact here and it is necessary to look back at the individual’s domicile position for the previous five years.

This is an unusual arrangement as, generally, such treaties will only give taxing rights to a country if the individual was domiciled there under the treaty test or had assets there. The UK retains more taxing rights than usual under this arrangement.


The position on death will be significantly more straightforward if you manage to change your domicile from the UK to Switzerland. In order for this to be achieved, there are a number of steps to be followed and advice should be sought on this.

It is harder to plan if you might be domiciled in both countries because the treaty retains taxing rights for the UK in these circumstances.

Lifetime Gifts

It is important to note that the treaty applies only to assets passing on death. For lifetime gifts, only the rules of the two countries will apply.

The same applies to transfers to trusts.

Succession law

The treaty provisions also only apply to the tax position. Which law governs the succession (i.e. do assets pass under an English Will or a Swiss Testament) will need to be considered separately. This can be further confused if there are assets in other jurisdictions.

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