On November 30, 2025, Switzerland decisively rejected the Juso’s inheritance tax initiative: 78.3 percent voted against a 50 percent tax on estates worth more than 50 million Swiss francs. At the same time, there are efforts to liberalize Swiss family foundation law, as wealthy families have often had to look abroad for their structures up to now.
Germany offers an interesting contrast in this regard: While asset transfers are taxed more heavily, family foundations provide extensive opportunities to pool assets across generations. A comparison reveals how differently the two countries approach long-term wealth succession.
Germany and Switzerland: Two Approaches to Succession
In Germany, there has been no wealth tax since 1997. However, transferring substantial assets through inheritance and gift taxes can be costly. Tax exemptions, however, can be used again every ten years. Those who start early can therefore gradually transfer significant assets to the next generation.
In Switzerland, the situation is almost the opposite. In most cantons, transfers to direct descendants are tax-free or subject to only a minimal tax. In return, the assets of natural persons are subject to an annual cantonal wealth tax. The key difference, therefore, lies less in whether the state taxes large fortunes and more in when it does so.
Why a direct gift is not always the best solution
However, taxes are only one part of estate planning. Anyone who transfers assets directly to their child is simultaneously relinquishing ownership—and thus a significant portion of their control. This can have consequences. For example, transferred assets may be affected by a divorce, bankruptcy, or other personal risks faced by the beneficiary. Furthermore, the new owner is generally free to decide for themselves what happens to the assets.
This is precisely why wealthy families often seek to separate financial support, ownership, and decision-making authority. In the case of real estate, for example, a usufruct—or, in Switzerland, a “Nutzniessung”—can ensure that ownership is transferred to the next generation while the income continues to accrue to the transferor.
Where Swiss Foundation Law Sets Limits
Another option is to transfer assets not directly to individual persons, but to a permanent structure. In Germany, a family foundation can be established for this purpose. The assets then belong to the foundation, while the articles of incorporation can specify who the beneficiaries are and according to which rules decisions are made.
In Switzerland, the options are significantly more limited. Article 335 of the Civil Code restricts family foundations to specific purposes, such as education, providing for, and supporting family members. A foundation whose sole purpose is to pool family assets over the long term and distribute them freely to descendants is not permitted. This has practical consequences: Wealthy Swiss families often turn to foundation structures abroad, such as in Germany or Liechtenstein.
The most important factor is time
As different as the legal systems of the two countries may be, the same principle applies to successful estate planning: it starts early. After all, lost time can hardly be made up. In Germany, the ten-year period plays a central role in this regard. Gift tax exemptions can be used again after ten years. This period is also significant when it comes to claims to a compulsory share. In Switzerland, too, certain gifts made within a ten-year period prior to death may be challenged.
Succession planning is a long-term project
The real difference between traditional inheritance and strategic wealth succession therefore does not lie in a single tax rule or legal form. It lies in the way the transfer is planned. Instead of passing on the entire estate all at once one day, transfers are prepared well in advance. Ownership and use can be separated, risks to the next generation can be taken into account, and decision-making rights can be clearly defined.
For larger estates, permanent structures can also ensure that the assets do not have to be redistributed with every generational transition. For Swiss asset holders, this means that the comparatively favorable conditions for inheritance do not resolve the actual issue of succession. What matters most is what should be preserved in the long term, who should benefit from it, and who has the authority to decide.
Sascha Drache
Sascha Drache is an expert on foundations. He has been active in the German foundation sector for many years and is widely regarded as the “guru” of German foundations. Through his consulting services on establishing foundations, he supports German small and medium-sized businesses. In doing so, the expert guides his clients through the entire establishment process and helps them build their foundation on a solid foundation to ensure the long-term growth and protection of their assets. More information is available here.
Read also: The national balance sheet: national wealth, Hartwick’s rule and the responsibility of nations
Search:
Sponsors:
