What are gifts inter vivos and why they matter fiscally
A gift inter vivos (donation entre vifs) is a legal act whereby a person gratuitously transfers part of their assets to another person during their lifetime. In Switzerland, this type of transfer can have significant tax consequences, as many cantons levy a gift tax analogous to inheritance tax.
Unlike other countries, Switzerland does not levy a federal gift tax: the competence lies exclusively with the cantons. This means that rates, exemptions and calculation methods vary enormously from canton to canton — with some not taxing gifts between parents and children at all, and others applying rates up to 7%.
Understanding the tax framework for gifts is essential for anyone planning a generational transfer of wealth, whether family or business. Careful planning can significantly reduce the overall tax burden.
Legal framework for gifts in Switzerland
Swiss law governs gifts in the Code of Obligations (CO, art. 239–252). Here are the essential points:
- Manual gifts (direct delivery of the asset) do not require written form for movable property, but documentation is recommended for the tax return
- A promise of gift (future gift) must be made in writing to be legally binding
- Gifts of real estate require a notarial deed and registration in the land register
- Gifts can be contested by forced heirs if they infringe on the reserved portions (art. 527 CC) — the limitation period is 5 years from death
- Gifts are subject to the so-called hotchpot rule: in case of succession, gifts received may be counted against the inheritance share
Important: a gift made within the last 5 years before death may be subject to reduction in favour of forced heirs. It is essential to verify that the gift does not infringe on the reserved portions.
Cantonal taxation of gifts
Gift tax is exclusively a cantonal competence. Rates and exemptions vary enormously. Here is an overview of the main cantons:
| Canton | Direct line (children) | Unrelated third parties | Notes |
|---|---|---|---|
| Zurich | 2–6% | 6–36% | CHF 200,000 exemption for children |
| Bern | Exempt | 6–40% | Spouse and descendants exempt |
| Lucerne | Exempt | 4–30% | Spouse and direct descendants exempt |
| Schwyz | Exempt | Exempt | No gift tax |
| Ticino | Exempt | 6–41% | Spouse and direct descendants exempt; progressive rates for others |
| Vaud | 0–7% | 7–25% | Progressive rates based on amount |
| Geneva | Exempt | 6–26% | Spouse, direct descendants and ascendants exempt since 2024 |
| Basel-Stadt | Exempt | 5–49% | Descendants exempt; high rates for unrelated parties |
The rates shown are indicative and may vary based on the amount gifted and any regulatory updates. Always check with the competent cantonal authority.
Exemptions and amount thresholds
Gift tax exemptions vary by canton. Here are the main beneficiary categories and most common exemptions:
Spouse / registered partner
In most cantons, gifts to a spouse or registered partner are completely tax-exempt. A few cantons (e.g. Vaud) apply reduced rates as an exception.
Children and direct descendants
Many cantons fully exempt gifts to children (Bern, Lucerne, Schwyz, Ticino, Geneva, Basel-Stadt). Some apply reduced rates (Zurich: 2–6%, with a CHF 200,000 allowance).
Gifts of modest value
Several cantons provide thresholds below which no tax applies. The amount varies: from CHF 5,000 (Vaud) to CHF 200,000 (Zurich for children). Occasional gifts of modest value are generally not taxed.
Gifts for public benefit purposes
Gifts to foundations, associations and recognised public-benefit entities are generally exempt in all cantons, provided the entity is tax-exempt under art. 56 let. g LIFD.
Family businesses and participations
Some cantons provide specific reliefs for the transfer of businesses or corporate participations to descendants, with tax reductions of up to 50–80% to encourage business continuity.
How gift tax is calculated
The calculation of gift tax generally follows these steps:
Determining the value of the gift
The value of the gift corresponds to the fair market value of the asset at the time of transfer. For real estate, the cantonal assessed value or an appraised market value is generally used. For listed securities, the stock exchange value applies.
Applying allowances
The applicable exempt amount is subtracted based on the degree of kinship between donor and donee. Allowances may apply per individual gift or be cumulated over a period (typically 5–10 years).
Determining the rate
The rate depends on the canton, degree of kinship and net gift amount. Most cantons apply progressive rates: the higher the amount, the higher the rate. The degree of kinship is the most relevant factor.
Cumulation of gifts
Many cantons cumulate gifts received from the same donor: gifts from the last 5–10 years (depending on the canton) are added together to determine the applicable rate. This prevents avoidance through splitting.
Practical example
A parent domiciled in Zurich gifts CHF 500,000 to their child. With the CHF 200,000 allowance, the taxable amount is CHF 300,000. At a rate of 2% on the first bracket, the tax due is approximately CHF 6,000–9,000 (depending on progression). If the same parent were domiciled in Bern, Lucerne or Ticino, the gift to the child would be completely exempt.
Generational transfer strategies
Careful gift planning can significantly reduce the overall tax burden. Here are the most commonly used strategies:
Temporal splitting
Spreading gifts over several years allows you to take advantage of annual allowances or remain in lower rate brackets. It is important to check the cumulation period in your canton (typically 5 or 10 years).
Choice of canton
When relocating, the choice of canton can have a decisive impact: the gift is taxed in the canton where the donor is domiciled at the time of the gift. A pre-emptive move to a tax-favourable canton (e.g. Schwyz, Bern, Lucerne) can eliminate the tax entirely.
Business gift with continuity clause
The transfer of a family business to children can benefit from specific reductions in many cantons. The condition is often that the business must be continued for a minimum period (5–10 years). Early transfer of the business on favourable terms is a key tool in succession planning.
Mixed gift (modal gift)
It is possible to structure the transfer as a mixed gift: partly gratuitous and partly for consideration. For example, selling a property to a child at 70% of market value: gift tax applies only to the gratuitous portion (30%), significantly reducing the tax burden.
Use of corporate structures
In some cases, a prior contribution of assets to a family holding company and subsequent transfer of shares may be more advantageous than a direct gift. This strategy requires professional planning and must be assessed case by case.
Gift vs inheritance: key differences
Gifts and inheritances often have the same tax rates, but they present important differences from a strategic and legal perspective:
| Aspect | Gift | Inheritance |
|---|---|---|
| Timing of transfer | During the donor's lifetime | Upon the deceased's death |
| Control over destination | The donor freely decides to whom and when to give | Bound by reserved portions and testamentary dispositions |
| Tax rates | Generally identical to inheritance tax in the same canton | Identical to gift tax in the same canton |
| Planning possibilities | High: can be split over time, timing chosen and transfer structured | Limited: timing is unpredictable, reserved portions are binding |
| Reduction risk | Gifts made in the last 5 years may be reduced in favour of forced heirs | Testamentary dispositions are immediately subject to challenge |
Practical tips
- Always consult a tax expert before making significant gifts: cantonal differences are enormous and the consequences can be significant
- Document every gift in writing, even manual gifts not subject to formal requirements: it will be needed for the tax return and any inheritance disputes
- Check the gift cumulation period in your canton before planning temporal splitting — you will avoid tax surprises
- If you own real estate, have the market value appraised before the gift: the cantonal tax value may differ significantly from the market value
- For family business gifts, check the specific reliefs in your canton: many provide significant reductions conditional on business continuity
- Consider that gifts to a spouse are exempt in almost all cantons: it may be strategic to route the gift through the spouse in certain cases
- Use AccountEX to keep track of all gifts made and received over time: at the time of the tax return or succession you will have a complete and documented overview
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