<h3>Juso Estate Tax Initiative</h3>
<p>On December 13, 2024, the Federal Council adopted the statement on the popular initiative submitted by the JUSO “For a social climate policy &#8211; fairly financed through taxation (Initiative for a future)”. The initiative calls for the introduction of an estate and gift tax at the federal level. The tax rate would be 50% and levied for estates exceeding a one-time de-minimis threshold of CHF 50 million. The tax is designed as an estate tax and does not provide for any exceptions. The tax revenue is to be used for the “socially just fight against the climate crisis” and the “necessary transformation of the economy as a whole”.</p>
<p>A transitional provision stipulates that the Federal Council should implement the initiative by means of an ordinance within three years of its acceptance. The ordinance is to be applied retroactively to the day the initiative was accepted.</p>
<h3>Validity of the Initiative</h3>
<p>In its statement, the Federal Council first concludes that there is no reason to declare the initiative invalid. In light of previous practice, there is no violation of the principle of unity of matter, since the introduction of special-purpose taxes by means of a popular initiative has always been approved by Parliament.</p>
<p>The Federal Council does note, though, that it views the retroactive taxation of inheritances and gifts, as called for by the initiative, as questionable from a national policy perspective. However, the retroactive effect is explicitly desired by the initiative and would have to be observed as new constitutional law if it were to be accepted. The initiative also has a certain anticipatory effect due to the associated uncertainty, since potentially affected persons leave Switzerland before the vote or are prevented from moving here. Under current law, however, this is not sufficient to declare the initiative (partially) invalid.</p>
<h3>Measures Against Tax Avoidance</h3>
<p>The initiative calls for the enactment of provisions for the prevention of tax avoidance, in particular with regard to emigration from Switzerland. These must be enacted by the Federal Council within three years of the initiative&#8217;s acceptance.</p>
<p>The text of the initiative merely sets out the objective in this regard. The means by which this objective is to be achieved is thus left to the federal legislator and the federal government. They must adhere to the existing constitutional requirements (especially the principle of proportionality) when designing specific measures against tax avoidance.</p>
<p>The statement clarifies that a person&#8217;s emigration abroad cannot be readily classified as tax avoidance and sanctioned with tax consequences. Rather, in addition to the emigration, there must also be an action aimed at tax avoidance. The statement mentions a timely gift as an example in this regard.</p>
<p>The Federal Council also rejects an exit tax for the same reason. Besides, this would be disproportionate infringement of the freedom of establishment.</p>
<p>One possible measure against tax avoidance could be a post-emigration taxation right. This would mean that for a certain period after leaving Switzerland, the individual would be deemed to still be resident in Switzerland. However, the Federal Council makes it clear that this must be limited in time. It is suggesting a period of five years. In addition, the Federal Council points out that in such a case, Switzerland&#8217;s right of taxation may be restricted by double taxation agreements and that Switzerland has not concluded any agreement with any state that would allow it to enforce the tax claim abroad.</p>
<h3>No Retroactive Effect of Measures Against Tax Avoidance</h3>
<p>The initiative states that the ordinance to be issued by the Federal Council will apply retroactively to inheritances and gifts made after the initiative&#8217;s acceptance. However, this retroactivity only applies to the collection of estate and gift taxes for persons who have their residence in Switzerland at the time of death or the gift. The statement also clarifies that the measures required by the initiative to prevent tax avoidance <u>cannot</u> be retroactively enforced. These will only apply once the corresponding implementing provisions are in force, which the Federal Council must issue no later than three years after a possible acceptance of the initiative.</p>
<h3>No Need for a Pre-emptive Emigration Before the Voting Day</h3>
<p>It is highly commendable that the Federal Council clarifies in its statement that any measures against tax avoidance will not be implemented retroactively to the date of the vote. Should the initiative be accepted, taxpayers concerned can still leave Switzerland after the voting day without adverse tax consequences.</p>
<h3>Further Political Process</h3>
<p>The initiative will be discussed by the Economic Affairs and Taxation Committee (<em>WAK</em>) of the National Council on January 20, 2025, by the National Council as the first chamber in March and by the Council of States as the second chamber in the summer session. Parliament can therefore make its voting recommendation in June. The earliest possible voting date would therefore be November 30, 2025. If this timing is not feasible, the initiative would probably be put to the vote on March 8, 2026.</p>
<h3>Only Modest Revenue Would Be Expected From the Estate and Gift Tax at Stake</h3>
<p>In the statement, the Federal Council concludes, citing economic studies and an expert opinion it has obtained, that the revenue from the estate and gift tax demanded by the initiative is likely to be modest. Considering the tax losses in income and wealth taxes resulting from the potential emigration of the persons affected by the initiative, acceptance of the initiative would even lead to a significant net loss of revenue for the Federal government and the cantons.</p>


Homburger Bulletin

 Estate Tax Initiative – Mitigation of Negative Impact

<h3>Important clarification regarding Juso inheritance tax initiative</h3>
<p>The Young Socialists party has submitted an initiative to introduce a Federal inheritance tax. The initiative will be put to the vote in 2026 at the earliest. The tax demanded by the initiators is an inheritance tax of 50%, with a tax-free amount of CHF 50 million being applied. The tax revenue would have to be used to combat the climate crisis.</p>
<p>Although polls show that the chances of the initiative being accepted are negligible, it has caused a certain amount of uncertainty among the taxpayers concerned. The reason for this is the measures demanded by the initiators to prevent tax avoidance through relocation.</p>
<p>In interpellation 24.3763 submitted on June 14, 2024, National Councillor Schneeberger called on the Federal Council to clarify which specific measures are being considered to prevent tax avoidance in order to quickly clarify the potential implementation of the initiative.</p>
<p>In its response published today, the Federal Council states that it considers the retroactive taxation of estates and gifts demanded by the initiators to be highly problematic in terms of Government policy. It also makes it clear that it will comment in detail on the interpretation of the popular initiative and its possible implementation in the event of its adoption in the dispatch by the beginning of February 2025 at the latest.</p>
<p>The Federal Council has now already announced that the implementation must in any case comply with international law and the Constitution. An exit tax is therefore out of the question. The relocation of a person abroad cannot simply be qualified as tax avoidance and sanctioned with tax consequences. At best, a retroactive right of taxation would be conceivable in the case of a gift made shortly after moving away. However, the Federal Council emphasizes that Switzerland would not be able to enforce such taxation abroad.</p>
<p>The Federal Council also states that the introduction of tax avoidance measures must always comply with constitutional and international law requirements and, in particular, the principle of proportionality.<br />
According to the Federal Council, it is also questionable whether a retroactive entry into force of the inheritance and gift tax would also apply to the required measures for tax avoidance if the initiative was accepted.</p>
<p>The Federal Council&#8217;s response makes it clear that a precautionary departure from Switzerland before the day of the vote is not necessary. Even in the unlikely event that the initiative was accepted, it would still be possible to leave Switzerland after the day of the vote without incurring the inheritance tax demanded by the Juso.</p>
<p>With its response to the Schneeberger interpellation, the Federal Council has provided clarity on this issue, which is extremely gratifying. It has thus sent an unmistakable signal that it is not necessary to leave Switzerland before the voting day.</p>
<p>In view of the Federal Council&#8217;s clear response, we do not consider it necessary for taxpayers to plan to leave Switzerland at this stage. According to current polls, the initiative has no chance. If, contrary to expectations, the initiative was accepted, it would still be possible to leave Switzerland after the day of the vote without any negative tax consequences. However, we recommend reviewing the situation again in February after publication of the message.</p>


RZ_Preview_VST_SB_02

Federal Council rejects exit tax

Strengthening Zurich's Favorable Tax Treatment of Charitable Foundations

Private Clients

Citywealth IFC Awards 2024

Homburger_SocialMedia_Template_001

<p>Yesterday, Claudia Suter was honored as «Lawyer of the Year &#8211; Switzerland» at the Citywealth IFC Awards in London.</p>
<p>The Citywealth IFC Awards aim to highlight excellent work of advisors in the private wealth sector based in major finance centers worldwide. A total of 36 awards were announced – the winners having been judged by an international panel of highly respected practitioners from all relevant sectors.</p>


Homburger partner Claudia Suter honored as Lawyer of the Year – Switzerland by Citywealth

Corporate / M&A

Corporate Governance

Homburger News

<p>Today, Lexology announced the winners of this year’s Client Choice Awards.</p>
<p>For the second year in a row, Claudia Suter and Andreas Müller were honored with Lexology Client Choice Awards. Claudia Suter received the «Private Client in Switzerland Zurich» Award and Andreas Müller the «M&amp;A and Governance in Switzerland Zurich» Award.</p>
<p>Established in 2005, Lexology Client Choice recognizes those individuals around the world that stand apart for the excellent client care they provide and the quality of their service. The criteria for this recognition focus on an ability to add real value to clients’ business above and beyond the other players in the market.</p>


Homburger partners Claudia Suter and Andreas Müller honored with Lexology Client Choice Awards

Newsmeldung Tobias Kaufmann_640x140_web

<p>On October 4, 2023, Homburger associate Tobias Kaufmann was selected as one of Citywealth&#8217;s Next Gen Top 40 under 40 IFC 2023. Tobias Kaufmann is a member of Homburger&#8217;s Private Clients and Tax teams.</p>
<p>Citywealth&#8217;s Next Gen Top 40 under 40 reveals a curated list of talented individuals across the private wealth industry who have been recognized for excellence. They not only perform at the highest level in their work and with clients but they give back to society through charity work and team endeavors. The list was compiled over several months of research by the Citywealth team and by applications to Citywealth.</p>


Homburger associate Tobias Kaufmann has been listed in Citywealth's Next Gen Top 40 under 40 IFC 2023

<p>We use our expert knowledge and vast experience to provide comprehensive advice to families, private individuals, entrepreneurs and companies on all legal and tax aspects related to:</p>
<ul>
<li>Cross-border structuring of wealth</li>
<li>Estate planning and asset protection</li>
<li>Testamentary wills and inheritance agreements</li>
<li>Pre-nuptial and post-nuptial agreements</li>
<li>Family constitutions and family governance</li>
<li>Execution of wills and estate management</li>
<li>Contentious estates</li>
<li>National and international tax advice, including inheritance tax and gift tax</li>
</ul>


Succession Planning / Wealth Protection

<p>We provide advice and support with international relocations to high net worth individuals and management employees. Our core competences include:</p>
<ul>
<li>Residence planning</li>
<li>Lump-sum taxation</li>
<li>Residence and work permits</li>
<li>Naturalization</li>
</ul>


Relocations / Change of Residence

<p>We advise all types of foundations, including those with an entrepreneurial, charitable or mixed purpose, family foundations and trusts. We provide advice on all legal and tax issues that may arise. Our core competencies include:</p>
<ul>
<li>Establishment, dissolution and reorganization of foundations and trusts, including underlying assets</li>
<li>Charity and venture philanthropy</li>
<li>Tax planning</li>
</ul>


Foundations / Trusts

<p>We have comprehensive know-how in other legal fields, especially in connection with real estate, art, luxury goods, and sports. Our core competencies include:</p>
<ul>
<li>Real estate transactions (Lex Koller / Trusts)</li>
<li>Art collections and investments, cultural assets</li>
<li>Protection of children and adults</li>
</ul>


Private Clients

Succession Planning / Wealth Protection

Relocations / Change of Residence

Foundations / Trusts

Other Core Areas

Main Contacts

Estate Tax Initiative – Mitigation of Negative Impact

Federal Council rejects exit tax

Strengthening Zurich's Favorable Tax Treatment of Charitable Foundations

Homburger partner Claudia Suter honored as Lawyer of the Year – Switzerland by Citywealth

Homburger partners Claudia Suter and Andreas Müller honored with Lexology Client Choice Awards

Homburger associate Tobias Kaufmann has been listed in Citywealth's Next Gen Top 40 under 40 IFC 2023

Utilising trusts in Swiss divorces?

Regulation of state and supplementary pension schemes in Switzerland: overview 2018

Die Anmerkung des Trustverhältnisses im Grundbuch aus praktischer Sicht