New developments in international inheritance law

Update with Anthony Braham.

What law applies to Wills in Switzerland?

How can the heirs transfer assets if they are abroad?

What if the Will is subject to foreign law, but the deceased was a Swiss resident ?

These questions, and others, are solved by the Federal Act on Private International Law (LDIP). Its chapter five on successions was amended and approved by Parliament on 22 December 2023.

The amendment has two aims:

  • to modernise Swiss law on international successions, in particular by codifying certain case law practices ;
  • bring it into line with changes in foreign law, in particular following the adoption of EU Regulation 650/2012, applicable since 2015, which introduced the European Certificate of Inheritance.

The amendment is also intended to increase the autonomy of the parties and reduce the risk of conflicts of jurisdiction between the Swiss and foreign authorities, whether during the probate process, or at the time of partition and during legal actions contesting the will or its provisions.

One of the subjects debated in Parliament was the choice of applicable law (professio juris).

Choice of law

Currently, a person living in Switzerland with dual Swiss and foreign nationality cannot make his or her Will subject to foreign law. Swiss law necessarily applies.

However, expatriates who have been living in Switzerland for many years frequently acquire Swiss nationality. One of the consequences of the current rule is that, if their Will is subject to foreign law or contains references to concepts of foreign law, it could be partially or totally invalidated.

Choice of law is now permitted, but within certain limits

Originally, the bill drafted by the Government had removed all restrictions to choice of law.

However, when Parliament examined the draft law in autumn 2023, it considered that the concept of the reserved heirs was a core concept of Swiss inheritance law.

Therefore, the final version approved on 22 December 2023 although retaining the right for foreign nationals who are also Swiss nationals to subject their Will to a foreign law, added a limitation: a Will subject to foreign law may not contain any exceptions to the rules on reserved heirs.

Reserved heirs under Swiss law are currently a person’s issue (their children) and their surviving spouse. The reserved portion depends on the composition of the family, but can be as high as 50% of the entire estate.

The new law however allows  foreign law concepts that are currently impossible, such as the testamentary trust,  and other concepts of Anglo-Saxon law.

Scheduled to come into force in 2025

At the time of writing, the Federal Council had not yet decided on the entry into force of the new articles 51, 58 and 86 to 96 of the LDIP.

According to the information available, it is probably scheduled for 2025. This article will be updated as soon as the date is known.


The Concept of Domicile in tax law


Current events frequently remind us that tax law has its own definition of domicile.
This is a summary of the current situation – by Christian Chillà.

According to Article 3 of the LIFD, natural persons are subject to tax on the basis of personal attachment if, under tax law, they are domiciled or reside in Switzerland.

A person is domiciled in Switzerland under tax law if he or she resides there with the intention of settling there permanently or if he or she has a special legal domicile there under federal law.

A person resides in Switzerland for tax purposes if, without any significant interruption, he or she resides there for at least 30 days and carries out a gainful activity there; he or she resides there for at least 90 days without exercising any gainful activity.

A person who, having retained his or her residence abroad, resides in Switzerland solely to attend an educational institution or to receive treatment in an institution is neither domiciled nor resident there for the purposes of tax law.

The concept of tax domicile is therefore of particular importance. If the person is domiciled in Switzerland, then the person is in principle taxed unlimited on all income and, at cantonal level, on his or her assets, regardless of the source of income or the location of the assets.
It is a worldwide and global taxation.

However, this taxation is limited, at the international level, by double taxation agreements and, at the cantonal level, by the rules of intercantonal partition, and in particular by Art. 6 LIFD and the constitutional principle of the prohibition of intercantonal double taxation enshrined in Art. 127 (3) Federal Constitution.

Initially, the tax law referred to the concept of civil domicile to determine domicile in the tax sense. Since the introduction of the LIFD, this is no longer the case. However, in principle, the tax domicile corresponds to the civil domicile.

Tax domicile is an independent concept independent from that of civil law. It is therefore possible to have a civil domicile in one place while having a tax domicile in another place

Tax domicile is based on two elements :

–            One of them is objective (presence): i.e. the physical presence of a person in a specific place

–            the other is subjective (the desire to make this place the centre of the person’s life interests).

Residence is a de facto element. The intention to settle is the subjective element of the home. While it is not essential that the person intends to settle in a place permanently, he or she must nevertheless have the will to stay there. However, what matters is not the person’s inner will, but the circumstances recognizable by third parties, which allow it to be inferred that he or she has this intention. In other words, the place where the taxable person has the centre of his or her personal interests is determined by reference to all the objective circumstances, and not by reference to that person’s declarations.

According to the case law of the Federal Supreme Court on double taxation (cf. Art. 127 para. 3 Cst.), the (main) tax domicile of a natural person engaged in a dependent gainful activity is located in the place where he or she resides with the intention of settling there permanently (see also for cantonal tax residence, Art. 3 para. 2 LHID), i.e. the place where the person has the centre of his or her personal interests. In such a case, the tax domicile is in principle at his place of work, i.e. at the place from which he carries out his gainful activity on a daily basis, for a long period or for an indefinite time, in order to meet his needs.
If a person resides alternately in two places, which is particularly the case when the place of work does not coincide with the place of habitual residence, his or her tax domicile is in the place with which he or she has the closest relationship.

In the case of commuters, who work in a canton but return to their canton of residence every day, the latter is the canton of tax residence.
The determination of tax domicile involves assessing factual elements relating to the private sphere of taxpayers, i.e. their desire to establish the centre of their personal interests in a place. This assessment can hardly be based on strict evidence, but is generally the result of a body of evidence; it requires a detailed assessment of all professional, family and social relationships. In this context, the political domicile does not play a decisive role: the deposit of papers and the exercise of political rights constitute, in the same way as the other relations of the person subject to tax, only indicators capable of determining the tax domicile.
For the married taxpayer, the bonds created by personal and family relationships are considered to be stronger than those forged at the place of work; for this reason, these persons are taxed in principle at the place of residence of the family. The same applies to married taxpayers who are self-employed (without having a managerial function) and only return to their family on weekends and in their free time (in this case they are referred to as “Wochenaufenthalter”, i.e. weekly resident). In principle, the spouses have a common tax domicile. However, from a tax point of view, each spouse may have a separate main residence.

This is particularly the case when the taxpayer carries out a dependent gainful activity in a managerial position. In this situation, it must be assumed that the centre of his interests is at his place of work. This presumption can be rebutted by proving the existence of a particularly intense relationship with the family’s place of residence or the absence of a managerial function. Case law has laid down criteria for determining the circumstances in which a managerial function is present. If the managerial function is recognised, the spouses’ joint taxation remains and the family’s taxable factors will then have to be allocated intercantonally and/or internationally.

These principles also apply to single, separated or widowed taxpayers, as case law considers that the parents and siblings of the taxpayer are part of the family. However, the criteria that lead the Federal Supreme Court to designate as tax domicile not the place where the taxpayer works, but the place where his family resides, must be applied particularly strictly, insofar as the ties with the parents are generally more distant than those between spouses. In such circumstances, the duration of the employment relationship and the age of the taxpayer are of particular importance. These rules apply only mutatis mutandis when the single, separated or widowed taxpayer gradually ends his or her gainful activity because he or she intends to retire. In such a case, it is necessary to return to the general rule that it is by means of all the objective circumstances that it is necessary to determine the place where the taxable person has the centre of his personal interests and therefore his tax residence.

Whether the taxpayer is single or married, there is a risk that several tax authorities (cantonal or international) will compete for their power to subject a person to the tax of their tax jurisdiction – each situation therefore deserves a detailed analysis by a specialist.