Inheritance Tax and Switzerland: How the Treaty Prevents Double Taxation and Where Gaps Remain

Published on 05.10.2026

Inheritance Tax: Germany and Switzerland

Anyone who leaves or inherits assets with a connection to Switzerland needs to know one special feature of inheritance tax in the relationship between Germany and Switzerland: unlike with most countries, there is a separate treaty for the avoidance of double taxation in the field of estate and inheritance taxes. In principle, it prevents the same estate from being taxed in full in both countries. At several points, however, it deliberately leaves Germany a right to tax, for example in the case of people who have recently moved away or heirs who live in Germany, and it does not cover gifts made during the donor’s lifetime. The widespread assumption that there is no inheritance tax treaty with Switzerland is incorrect.

Important for understanding: a double taxation treaty does not create any tax liability. It only allocates and limits taxing rights between the states. Whether German inheritance tax is payable always follows first from the German Inheritance and Gift Tax Act (Erbschaftsteuer- und Schenkungsteuergesetz, ErbStG); the treaty then determines whether Germany may exercise this right and how a double burden is avoided. The legal position is as at September 2026.

Inheritance Tax and Switzerland: Why the Country Is a Special Case

With most countries to which German nationals emigrate or in which they hold assets, Germany has no inheritance tax treaty. There, the only corrective against a double burden is the unilateral credit for foreign inheritance tax under Section 21 ErbStG, a mechanism with narrow limits that is described in more detail in our article on German inheritance tax and double taxation treaties.

Switzerland is one of the exceptions. Germany maintains inheritance tax treaties with only six countries: the USA, France, Sweden, Greece, Denmark and Switzerland. The “Agreement between the Federal Republic of Germany and the Swiss Confederation for the Avoidance of Double Taxation in the Field of Estate and Inheritance Taxes” was signed on 30 November 1978 and has been in force since 28 September 1980; it has not been terminated. It must be distinguished from the German-Swiss double taxation treaty on taxes on income and capital, which is a separate agreement.

Under Articles 1 and 2, the inheritance tax treaty applies only to estates, that is, to acquisitions upon death including gifts in contemplation of death (Schenkungen auf den Todesfall). It does not cover gifts made during the donor’s lifetime.

Who May Tax? The Domicile Principle with Exceptions

The basic rule is set out in Article 8 (1) of the treaty: assets that do not fall under the special rules for real estate and permanent establishments may only be taxed by the state in which the deceased was domiciled at the time of death. If someone dies with their last domicile in Switzerland, the right to tax these assets therefore lies in principle with Switzerland, and Germany must refrain from taxing unless one of the exceptions described below applies.

For certain types of assets, the situs principle applies:

• Immovable property may be taxed by the state in which it is situated (Article 5 of the treaty). Swiss real estate may therefore be taxed by Switzerland and German real estate by Germany, regardless of the deceased’s last domicile. This does not mean, however, that the state of domicile goes away empty-handed: if the deceased was domiciled in Germany, Germany also taxes the Swiss real estate and credits the Swiss tax. Swiss real estate is exempted in Germany only if the deceased was a Swiss national, and then subject to progression (Article 10 (1) (a) of the treaty).
• Assets of a permanent establishment may be taxed by the state in which the permanent establishment is situated (Article 6 of the treaty); Article 7 of the treaty contains a separate rule for ships and aircraft.

If the deceased had a domicile in both Germany and Switzerland at the time of death, a sequence of allocation criteria decides (Article 4 (2) of the treaty): first the permanent home, then the centre of vital interests, then the habitual abode, then nationality and finally a mutual agreement procedure between the tax authorities of the two states. How such an allocation test generally works is explained in our article on the basics of double taxation agreements for emigrants.

The Rule for People Who Have Moved Away: Germany’s Extended Reach

The most delicate part concerns people who have moved from Germany to Switzerland. Here, two levels interact, and they must be clearly distinguished.

First, German law. Under Section 2 (1) no. 1 sentence 2 (b) ErbStG, German nationals remain subject to unlimited inheritance tax liability as long as they have not stayed abroad continuously for more than five years without having a residence in Germany. In addition, any acquisition in which the recipient is himself or herself a German resident is subject to unlimited tax liability. If neither applies, there is only limited tax liability for certain domestic assets (Section 2 (1) no. 3 ErbStG). This can be extended by Section 4 of the German Foreign Tax Act (Außensteuergesetz, AStG), but only in the case of a move to a low-tax territory.

This extended limited inheritance tax liability under Section 4 AStG must not be confused with the extended limited income tax liability under Section 2 AStG, but it is based on its requirements: Section 2 (1) sentence 1 AStG must have been applicable to the deceased or donor at the time the tax arose. This requires that, as a German national, they were subject to unlimited income tax liability for at least five years in the last ten years before the end of their unlimited tax liability, are resident in a foreign territory with low taxation within the meaning of Section 2 (2) AStG (or in no state) and have retained substantial economic interests in Germany. In terms of time, this is limited to the year of emigration and the following ten years. Switzerland is not a low-tax territory across the board. What is decisive is either the burden comparison under Section 2 (2) no. 1 AStG (income tax on an income of 77,000 euros more than one third lower than in Germany) or preferential taxation under Section 2 (2) no. 2 AStG, as may come into consideration, for example, with taxation based on expenditure (lump-sum taxation). If the requirements are met, tax liability extends beyond domestic assets to all parts of the acquisition whose income would not be foreign income within the meaning of Section 34d of the German Income Tax Act (EStG) under unlimited income tax liability, for example balances with German banks or claims against domestic debtors (Section 4 (1) AStG). It does not apply if it is proven that a tax corresponding to German inheritance tax amounting to at least 30 per cent of the German tax is payable abroad on these parts (Section 4 (2) AStG). In practice, the provision only becomes significant if neither the five-year rule nor a domestic recipient leads to unlimited tax liability; to the extent that the treaty allocates the assets to Switzerland, it also limits this extended tax liability. Whether a planned move involves low taxation within the meaning of Section 2 (2) AStG can be clarified in advance by a binding ruling from the tax office (verbindliche Auskunft, Section 89 (2) of the German Fiscal Code, AO).

Second, the treaty. It decides whether Germany may exercise a tax liability that exists under German law despite the deceased’s Swiss domicile. Under Article 4 (4) of the treaty, Germany may tax the entire estate under German law, notwithstanding the other allocation rules, if

• in the last ten years before giving up their last permanent home in Germany, the deceased had such a home for at least five years, and
• they die in the year in which they gave up this home or in the five following calendar years.

In this case, the Swiss tax is credited against the German tax (Article 4 (4) in conjunction with Article 10 (1) of the treaty). The rule applies regardless of nationality, that is, not only to Germans. It does not apply only if the deceased was already a Swiss national when giving up their last German home, or if they established their Swiss domicile to take up genuine employment (without an economic interest in the employer) or because of marriage to a Swiss national (Article 4 (4) sentence 2 of the treaty).

In addition, under Article 4 (3) of the treaty, Germany may tax if the deceased, although resident in Switzerland under the allocation rules, had had a permanent home in Germany for at least five years at the time of death, for example an apartment that was kept.

The decisive point is this: if the requirements of Article 4 (4) are met, this alone does not give rise to any German tax. There must be a tax liability under German law, for example under the five-year rule for German nationals or because the recipient lives in Germany. The treaty’s time window extends roughly as far as the domestic five-year period; it ends at the end of the fifth calendar year after the year in which the last German home was given up. The “ten years” only relate to the precondition of the earlier period of residence. The domestic period and the treaty time window must therefore be examined separately when planning a move (in German) to Switzerland.

The Heir’s Residence Also Counts

Even if the deceased was permanently resident in Switzerland at the time of death and there is no situation involving a recent move away, the examination is not over. Under Article 8 (2) of the treaty, Germany may tax the acquisition if the recipient had a permanent home in Germany or their habitual abode there at the time of the deceased’s death. This expressly also applies to assets that would otherwise be allocated to Switzerland under Articles 5 to 7, that is, also to Swiss real estate. Germany then credits the Swiss tax. The rule does not apply if the deceased and the recipient were both Swiss nationals.

The treaty is based on the permanent home, not on the concept of residence in German law. This can play a role in the case of second homes, because pure holiday or spa homes are not treated as a permanent home under Article 4 (5) of the treaty.

The following scenario is of practical importance:

Example: Klaus, a German national, lived in Stuttgart for 20 years and moved to Basel as a retiree in 2024 without keeping a home in Germany; no exception under Article 4 (4) of the treaty applies. He dies in 2027. His daughter Lena lives in Munich. Under German law, Lena’s acquisition is subject to unlimited tax liability simply because she is resident in Germany; in addition, the five-year rule applies to Klaus. Under the treaty, Article 8 (2) (the heir’s home) alone would already be sufficient for Germany to be allowed to tax the acquisition; equally, Article 4 (4) (death within the time window after giving up the German home) would be sufficient on its own. Here, both rules apply in addition, each independently of the other, with the same result. Any inheritance tax actually levied in Switzerland is credited, but does not replace the German tax.

Avoiding Double Taxation: Credit and Exemption

Where both states may tax, the treaty provides for different mechanisms:

• On the German side, the credit method generally applies: tax levied and paid in Switzerland is credited against German inheritance tax, up to a maximum of the part of the German tax attributable to the assets taxed in Switzerland (Article 10 (1) (b) of the treaty). For Swiss real estate of a Swiss deceased domiciled in Germany, exemption subject to progression applies instead (Article 10 (1) (a) of the treaty).
• On the Swiss side, immovable property situated in Germany and assets of a German permanent establishment (and the ships and aircraft governed by Article 7) are exempted, subject to progression (Article 10 (2) of the treaty). If, on the other hand, the rule for people who have moved away or the rule for heirs applies (Article 4 (3) and (4), Article 8 (2)), Swiss taxation remains; Germany then avoids the double burden by means of a credit.

The credit under the treaty takes precedence over the unilateral credit. Technically, it is carried out under Section 21 (4) ErbStG with corresponding application of Section 21 (1) to (3) ErbStG; it therefore requires an application and proof of the Swiss tax by means of assessment notices. Section 21 ErbStG remains directly relevant where the treaty contains no rule, in particular for gifts during lifetime and for assets in third countries.

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The Gap: Lifetime Gifts Are Not Covered

Central to planning practice is that the treaty only covers estates. Anyone who gives away assets with a Swiss connection during their lifetime cannot rely on treaty protection. For such gifts, the unilateral credit under Section 21 ErbStG remains, which according to its wording also covers gift tax, with all the restrictions that apply there. In addition, under Article 12 (3) of the treaty, the competent authorities can also consult in a mutual agreement procedure on avoiding double taxation of gifts; this does not give rise to any entitlement to relief.

A transfer during lifetime can therefore be treated quite differently for tax purposes and, in the end, less favourably than the same transfer upon death. Conversely, lifetime gifts can be used to take advantage of the German personal allowances, which become available again every ten years under Section 14 ErbStG. Which route is more favourable in the individual case can only be assessed by comparing both variants; general planning approaches are shown in our article Avoiding inheritance tax legally (in German). If an asset protection structure, such as a family foundation, is also being considered, the inheritance and gift tax consequences of both transfer routes should be calculated in advance; the basics are summarised in our article on the German family foundation as asset protection.

Swiss Inheritance Tax: From a German Perspective, a Question of Credit

In Switzerland, inheritance tax is not a federal tax; it is levied by the cantons, with widely differing rules. Spouses and, in most cantons, direct descendants are exempt, and some cantons do not levy any inheritance tax. How high the Swiss tax is in the individual case should be clarified by an adviser admitted in Switzerland.

For the German side, the following applies: a low or non-existent Swiss tax does not eliminate German inheritance tax to the extent that Germany retains a right to tax under the treaty. Only tax actually levied in Switzerland can be credited. The real risk of a tax burden therefore often lies in the scenarios involving people who have recently moved away and heirs, in which the German tax ultimately remains.

Notification Obligations and Succession Law Deadlines

Irrespective of the allocation under the treaty, Germany has its own procedural obligations. Under Section 30 ErbStG, recipients must notify the competent tax office of an acquisition subject to German inheritance tax within three months of becoming aware of it. The tax office then decides whether to request an inheritance tax return. If the notification is omitted and tax is thereby evaded, tax evasion by omission may come into consideration (Section 370 (1) no. 2 AO); in addition, the assessment period begins later (Section 170 (2) no. 1 AO).

Succession law deadlines, for example for disclaiming an inheritance, must be distinguished from this. They are governed by the applicable succession law, not by tax law. Under German law, the period for disclaiming is six weeks; it is extended to six months if the deceased’s last domicile was only abroad or if the heir is abroad when the period begins (Section 1944 of the German Civil Code, BGB). If Swiss succession law applies, the deadline should be clarified with an adviser in Switzerland.

Practical Advice for Testators and Heirs with a Swiss Connection

• Document your residence history: The domestic five-year rule and the treaty rule for people who have moved away are linked to the duration and timing of homes in Germany. Your own residence history should therefore be fully verifiable.
• Check any homes you keep: A home kept in Germany can preserve a German right to tax via Article 4 (3) of the treaty.
• Check the timing of transfers: Because gifts during lifetime are not covered by the treaty, the German tax (including the personal allowances that become available again every ten years, Section 14 ErbStG) should be compared with the burden upon death before any gift with a Swiss connection; the Swiss side must be coordinated with an adviser there.
• Take the heirs’ residence into account: Even if the testator lives permanently in Switzerland, an heir with a permanent home in Germany can trigger a German right to tax.
• Consider real estate separately: Real estate may always also be taxed by the state in which it is situated (Article 5 of the treaty). Whether Germany also taxes and credits depends on the domicile and nationality of the deceased and the heirs. Real estate held indirectly through companies must be examined separately, as must the succession law questions when inheriting property abroad.
• Keep notification and disclaimer deadlines in view: The three-month notification obligation under Section 30 ErbStG and the succession law deadlines for disclaiming run independently of each other.
• Have the Swiss side clarified: How high the Swiss inheritance tax will be and which procedural rules apply there should be assessed by a Swiss adviser; German and Swiss advice should be coordinated.

Conclusion

Since 1980, there has been a separate inheritance tax treaty with Switzerland that in principle prevents double taxation of the same estate. It does not itself create any German tax, but it leaves Germany access in important cases: for heirs with a permanent home in Germany, for a German home that has been kept, and via the rule for people who have moved away, which allows Germany access until the end of the fifth year after the move. The Swiss tax is then credited. Lifetime gifts are not covered by the treaty and must be planned separately.

Frequently Asked Questions

Is there an inheritance tax treaty between Germany and Switzerland?

Yes. The treaty was signed on 30 November 1978 and has been in force since 28 September 1980. It must be distinguished from the German-Swiss treaty on taxes on income and capital and applies only to estates.

Can Germany continue to levy inheritance tax after I move to Switzerland?

Yes, in some circumstances. Under Section 2 (1) no. 1 sentence 2 (b) ErbStG, German nationals remain subject to unlimited tax liability until they have stayed abroad continuously for more than five years without a residence in Germany. Under Article 4 (4), the treaty allows Germany to tax if you had a home in Germany for at least five of the last ten years before moving away and die in the year of the move or in the five following calendar years; the Swiss tax is credited.

Does my child living in Germany have to pay inheritance tax if I live in Switzerland?

In principle, yes. If the child has a permanent home or their habitual abode in Germany at the time of the inheritance, Germany may tax their acquisition under Article 8 (2) of the treaty, even to the extent that Swiss real estate is concerned. Any tax levied in Switzerland is credited; the rule does not apply if the deceased and the heir are both Swiss.

Does the treaty also apply to gifts during lifetime?

No. It covers only acquisitions upon death, including gifts in contemplation of death. For gifts during lifetime, only the unilateral credit under Section 21 ErbStG remains; a mutual agreement procedure under Article 12 (3) of the treaty is possible but does not give rise to any entitlement to relief.

What deadline applies to disclaiming an inheritance with a Swiss connection?

That depends on the applicable succession law. Under German law, the period is six weeks, or six months if the deceased’s last domicile was only abroad or the heir is abroad (Section 1944 BGB). If Swiss succession law applies, the deadline should be clarified with an adviser in Switzerland.

Attorney Dr. Johannes Fiala and the firm have published extensively on international inheritance tax and exit taxation and advise clients from a German perspective on planning estates and asset transfers with a Swiss connection, in coordination with advisers in Switzerland. Please get in touch with the firm without obligation to discuss your individual situation in an initial consultation.