SWITZERLAND Law and Practice Contributed by: Natalie Dini and Peter Vogt, Tax Partner AG
Shareholders’ agreement and family charter These private contracts set entry criteria for employ - ment, exit pricing mechanisms, mandatory mediation/ arbitration and periodic “family council” meetings. Clear governance plus an agreed dispute route is often achieved. 4.3 Transfer of Partial Interest For Swiss transfer tax purposes (cantonal gift/inherit - ance taxes) the value of a minority stake in an unlisted company is normally reduced for lack of control and marketability. The cantons follow the Swiss Tax Con - ference Valuation Circular 28, which sets the “prac - titioners’ value” per share (a blend of earnings and net-asset value) and then allows a flat 30% minority discount on holdings up to 50% of the voting rights, provided the shareholder does not exercise a control - ling influence and the company is not already pay - ing an “adequate” dividend. However, such discount applies for wealth tax purposes, but it is debatable whether it is also applicable for transfer tax purposes. Listed shares are taken at their market price, so no extra discount applies, and real estate or partnership interests are valued under separate cantonal rules without a standard minority rebate. 5. Wealth Disputes 5.1 Trends Driving Disputes The most common Swiss-specific drivers for succes - sion and wealth disputes are: • greater freedom in forced heirship rules – the 1 Jan 2023 inheritance-law reform cut forced shares for descendants and abolished parents’ forced share, giving testators greater “free portions”; • cross-border families and assets – the Private International Law Act lets Swiss residents choose a foreign succession law, but that election collides with Swiss forced-heirship and foreign probate rules; • valuation discussions – privately held companies, crypto-holdings and start-up shares now form a bigger slice of estates and heirs dispute various valuation methods for such assets;
• blended and late-life families – smaller child cohorts, second marriages and partners who never married sharpen disputes between biologi - cal children, step-children and surviving partners over usufructs, pension benefits and life-insurance proceeds; and • longer lifespans and related capacity doubts – wills made in advanced age are attacked on grounds of undue influence or diminished capacity. The typical forms of dispute are: • cantonal civil litigation for challenges to will validity, claims to reduce a share, and share-valuation and executor liability cases in the ordinary courts; • administrative recourse for complaints to the Child-and-Adult-Protection Authority ( Kindes- und Erwachsenenschutzbehörde , KESB) over guard - ians, curators and blocked minors’ assets; and • mediation and family charters for private lawyer or notary-led settlements. 5.2 Mechanism for Compensation Key characteristics of the Swiss approach to compen - sating justifiably aggrieved parties in private wealth disputes are as follows. • Restitution first, money second: wherever the disputed asset (shareholding, artwork, crypto- wallet, etc) can be clawed back, the court orders its return; cash is awarded only if restoration is impossible. • Pure compensation – no punitive damages: Swiss private law aims to neutralise the claimant’s loss or the defendant’s enrichment, not to punish. • Supervisory overlay for foundations and adult- protection regimes: The Foundation Supervisory Authority or the KESB can order removal of fidu - ciaries, freeze assets and require civil restitution; these administrative measures sit alongside the civil damages toolbox. Swiss courts focus on putting the aggrieved heir or beneficiary back to where they should have been – through restitution, compensatory damages and profit.
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