SWITZERLAND Law and Practice Contributed by: Olivier Sigg and Quentin Thorens, Walder Wyss
Foundations may serve a planning function in certain circumstances, as well as trusts, although such instru- ments do not exist under Swiss domestic law (see 9. Trusts, Foundations and Related Entities ). 6.2 Tax and Regulatory Constraints Since inheritance tax is levied at the cantonal level in Switzerland, the tax consequences of available plan- ning mechanisms vary from one canton to another. As previously discussed regarding the taxation of gifts (see 5.1 Lifetime Transfers ), under certain conditions a gift may be recharacterised as an advance on inher- itance and consequently be subject to inheritance tax rather than gift tax. Estate planning must therefore carefully take this risk into account. The creation of a usufruct also entails tax implications. As a general rule, the usufructuary must declare the usufruct as part of their taxable wealth and is subject to income tax on the deemed rental value of the asset. With respect to loans, it is essential to comply with the conditions set by the tax authorities in order for the loan to qualify as arm’s length. Failing this, the transaction may be requalified as a hidden gift and trigger gift tax consequences. Business succession planning is addressed below (see 8. Family Business Succession Planning ). Finally, foundations and trusts are primarily used in the context of international tax planning. It is important to note that trusts and foundations are not necessar- ily treated identically under civil law and tax law. For example, although the settlor of a discretionary trust may be considered to have relinquished ownership from a civil-law perspective, tax authorities may still attribute the assets to the settlor for tax purposes.
Digital assets with patrimonial value include crypto- currency holdings, online accounts (eg, Wise or Pay- Pal accounts), and any other assets with an ascer- tainable financial value. In principle, such assets pass automatically to the heirs, who become their owners immediately upon the death of the deceased. The heirs’ right to obtain information regarding such assets nevertheless remains difficult to implement. That said, it is presently the subject of a legislative reform pro- ject aimed at facilitating heirs’ access to digital assets with patrimonial values. Currently, issues relating to access to these assets may be highly complex, mak- ing advance planning for their transfer essential (see 7.2 Planning Considerations ). Digital assets without patrimonial value include, in particular, email accounts, electronic messaging accounts and social media profiles. The legal posi- tion under Swiss law in respect of these assets is sig- nificantly more complex and requires a more detailed analysis. Digital assets without patrimonial value, which in cer- tain circumstances may also be characterised as per- sonal data, are protected during a person’s lifetime by several legal provisions. In particular, Article 13 of the Swiss Federal Constitution and Article 28 of the Swiss Civil Code safeguard personality rights, includ- ing the protection of private life and personal data. In addition, the Swiss Federal Act on Data Protection grants data subjects specific rights, notably the right to obtain information regarding the processing of their data and, where applicable, to request its rectification or deletion. However, personality rights generally cease upon death. Moreover, Swiss succession law provides that only transferable patrimonial rights pass to the heirs, to the exclusion of rights that are inseparably linked to the deceased’s personality. As a result, strictly personal data and other non-transferable personali- ty-related rights do not, in principle, form part of the estate and are therefore not transmitted to the heirs. This creates a practical and legal tension: although the data may continue to exist, heirs will often lack both a substantive right to their protection and a legal basis to obtain information and access to them.
7. Succession of Digital Assets 7.1 Legal Framework
When addressing the succession of digital assets under Swiss law, a distinction must be drawn between digital assets that have patrimonial value and those that do not.
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