Gift tax is a specific kind of taxation existing in Switzerland. This kind of taxes usually levy on gifts received by the swiss residents and can vary from each Cantone. Luckily, not all gifts are taxable in Switzerland. Gift taxes were imposed by the government in order for heirs to stop avoiding taxation, in case they receive an immovable property or great amount as an inheritance. The gift tax almost applies to every Canton except for Schwyz and Lucerne, these Cantons are tax exempted under the swiss legislation. But many locals believe that a gift tax is unfair and as for many countries such a definition is don’t even exist.
How to identify which gifts are taxable and which not?
● Under the swiss legislation, gift taxation is a tax on transfers of money or property to other people while the person who provides the gift gets nothing in return;
● The gift tax must be paid by the receiver. For instance, if someone gives a property free of charge, the receiver pays a tax according to the tax rate of the Canton in which the donor domicile;
● The gift tax can vary between Cantons and the minimum rate varies from 2% to 36% depending on the amount and property which was gifted. There are 26 Cantons in Switzerland, which means there are 26 tax laws that applies;
● In the Canton Graubunden gifts to parents are taxed at 10 %, while they are tax-free in many other cantons;
-Only amounts that exceed the value of the tax-free allowance are taxed.
Please note: not all subjects are taxable under the swiss legislation.
Below you can find cases where tax gift exemption may or may not apply:
》 Gifts of personal and household objects are not taxed;
》 Gifts from spouses to each other and presents to people in registered partnership, children, grandchildren, step-children and foster children are tax exempt;
》 There is no gift tax in the cantons of Lucerne and Obwalden;
》 In the canton of Aargau, inheritances and gifts from children to parents, step-parents and foster parents are exempt from gift tax;
》 Tuition or medical expenses you pay for someone (the educational and medical exclusions) are excluded from gift definition and therefore from taxes;
》 The gift of an immovable property located abroad is exempt from Swiss gift tax.
And other good news, that Gift tax is in general levied for Swiss residents, except for residents in the cantons Schwyz and Lucerne. As a foreigner, receiving a gift from the swiss side, you shouldn’t be worry regarding tax payment in Switzerland. But foreigners who reside in Switzerland can be subject to gift tax on worldwide assets in most cantons in Switzerland. Double taxation can be prevented if there is a tax treaty between the countries.
How can SigTax help you?
With the help of our tax specialists, we will provide a tax consultation and we will calculate the amount which needs to be paid on your gift. Especially, if you want to get a gift and want to be sure that the recipients of the gift won’t need to pay taxes on it.