Germany–Switzerland · Gift tax
Donor in Switzerland · German residenceReceiving a gift from Switzerland while living in Germany
If a person living in Germany receives a gift from Switzerland, Germany may generally subject the entire acquisition to German gift tax. Swiss cantonal gift tax may arise at the same time. Unlike inheritances, ordinary lifetime gifts are generally not covered by the Germany–Switzerland agreement on estate and inheritance taxes. Relief from double taxation is therefore usually assessed under the domestic tax credit rules in section 21 of the German Inheritance and Gift Tax Act (ErbStG). A special exception applies to gifts of business enterprises.
Starting point
Donor in Switzerland – recipient in Germany
A typical cross-border gift arises where parents or other relatives live in Switzerland and transfer assets to a child or another recipient living in Germany.
The gift may consist, for example, of Swiss bank balances, a securities account, real estate, company shares or a direct gift of money.
For German gift tax purposes, the fact that the assets come from Switzerland is not decisive. The recipient’s residence in Germany alone may trigger unlimited German tax liability on the entire gift.
Section 2 ErbStG
The recipient’s residence in Germany may bring the entire gift within German taxation
Under section 2(1) no. 1 ErbStG, unlimited German gift tax liability arises if either the donor or the recipient qualifies as a German resident (Inländer) when the gift is completed.
An individual qualifies as a German resident for these purposes in particular if they have a residence or habitual abode in Germany.
If the recipient lives in Germany, the entire acquisition may therefore generally be subject to German gift tax.
- The recipient’s residence in Germany is generally sufficient
- Assets originating in Switzerland are not protected from German tax
- Bank balances and securities accounts may be included
- Swiss real estate may also be relevant
- German valuation rules apply
Swiss gift tax
Gift taxes in Switzerland are generally levied at cantonal level
Switzerland has no general federal gift tax. The taxation of gifts is generally governed by cantonal law.
Whether Swiss gift tax arises, and how much is payable, therefore depends in particular on the competent canton, the relationship between donor and recipient, and the type of assets transferred.
Spouses and direct descendants are exempt from gift tax or receive particularly favourable treatment in many cantons. The tax burden may be substantially higher for siblings, more distant relatives and unrelated persons.
The canton matters
Tax rates, allowances and exemptions differ significantly.
Family relationship
Direct descendants often receive more favourable treatment than other recipients.
Asset type
Special jurisdiction rules may apply to real estate and businesses.
Germany–Switzerland
The inheritance tax treaty generally does not apply to ordinary gifts
Germany and Switzerland have a separate double taxation agreement covering estate and inheritance taxes.
However, this agreement generally does not extend to gift tax. Ordinary lifetime gifts therefore do not follow the same treaty framework as inheritances.
This has practical consequences: if both Germany and a Swiss canton may tax the same gift, relief from double taxation generally needs to be sought under domestic tax credit rules.
Do not treat inheritances and gifts as equivalent
The existence of a Germany–Switzerland inheritance tax treaty does not mean that every gift between the two countries is covered by that agreement.
Special exception: gifts of business enterprises
A special Germany–Switzerland consultation arrangement applies to gifts of business enterprises. Under this arrangement, the rules of the inheritance tax treaty that apply to inheritances are applied correspondingly to such business gifts.
Section 21 ErbStG
Swiss gift tax may generally be credited against German gift tax
Despite its title, section 21 ErbStG also applies to lifetime gifts.
If the same acquisition is subject to a Swiss cantonal tax corresponding to German inheritance or gift tax, that foreign tax may be credited against German gift tax where the statutory conditions are met.
The German Federal Fiscal Court has expressly confirmed this for Swiss gift tax as well. In a case involving a donor in the canton of Ticino and a recipient in Germany, Ticino gift tax was credited against German gift tax under section 21 ErbStG.
Conditions for the tax credit
In particular, the foreign tax must have been assessed, be attributable to the recipient, have actually been paid and no longer be subject to any entitlement to a reduction. The assets concerned must also qualify as foreign assets within the meaning of section 21 ErbStG.
No automatic full relief
The credit is limited to the German tax attributable to the foreign assets concerned. Differences in valuation rules, allowances or tax rates may therefore leave German gift tax payable even after a credit has been granted.
German tax-free allowances
German personal allowances generally also apply to gifts from Switzerland
Where unlimited German gift tax liability applies, personal allowances are generally determined under section 16 ErbStG.
| Recipient | Personal allowance |
|---|---|
| Spouse / registered civil partner | EUR 500,000 |
| Child | EUR 400,000 |
| Grandchild whose relevant parent is still alive | EUR 200,000 |
| Grandchild whose relevant parent has already died | Generally EUR 400,000 |
| Other recipients in tax class I | EUR 100,000 |
| Tax class II | EUR 20,000 |
| Tax class III | EUR 20,000 |
Allowances apply separately to each donor
For example, a child can generally use a separate EUR 400,000 allowance for gifts from each parent. However, previous acquisitions from the same person within ten years must be taken into account.
Section 14 ErbStG
Multiple gifts within ten years are aggregated
Multiple transfers of assets received by the same recipient from the same person within ten years are generally aggregated for German gift tax purposes.
The personal allowance is therefore not available afresh for each individual gift. A new allowance can only be used in full once the relevant ten-year period has expired.
Particularly in cross-border succession planning, the timing of transfers of money, securities, real estate and businesses can therefore significantly affect the overall German tax burden.
Swiss and German aggregation rules may differ
A gift may therefore result in different tax bases in the two countries. A foreign tax credit under section 21 ErbStG does not necessarily eliminate these differences in full.
Swiss real estate
A gift of Swiss real estate may have tax consequences in both countries
If a person living in Switzerland transfers Swiss real estate to a recipient resident in Germany, the first step is to examine the property’s treatment under Swiss cantonal law.
At the same time, Germany may subject the acquisition of the property to German gift tax because the recipient lives in Germany.
Swiss gift tax actually levied may generally be credited against German gift tax where the conditions of section 21 ErbStG are met.
For German tax purposes, the property must be valued under German valuation rules. A Swiss tax or cadastral value therefore cannot simply be adopted.
| Asset | Swiss assessment | German assessment |
|---|---|---|
| Swiss real estate | Cantonal gift tax and property-related consequences | Gift tax and German valuation rules |
| Swiss bank account | Cantonal gift tax in the specific case | Generally the entire acquisition where unlimited tax liability applies |
| Swiss securities account | Review cantonal treatment | Value of the transferred securities under German law |
| Shares in a Swiss AG or GmbH | Assess cantonal gift tax | Valuation and potential business property relief |
Businesses & shareholdings
Business gifts are a special Germany–Switzerland case
Where a business, business enterprise or shareholding is transferred without consideration, the precise type of asset must first be identified.
A special rule applies between Germany and Switzerland to gifts of business enterprises: the bilateral consultation agreement provides for the corresponding application of the inheritance tax treaty’s rules for inheritances to such gifts.
However, this special rule should not automatically be applied to every transfer of company shares. It must be established whether the transfer actually constitutes a gift of a business enterprise within the meaning of the agreement.
On the German side, the relief provisions for qualifying business assets under sections 13a and 13b ErbStG may also be relevant.
A shareholding is not automatically a business enterprise
The special treaty treatment and German business property relief each have their own conditions. Both must be assessed separately.
Example
A parent in Switzerland gives assets to a child living in Germany
A parent lives permanently in Switzerland. Their adult child lives in Germany. The parent gives the child a Swiss securities account.
Germany
The child’s residence in Germany generally results in unlimited German gift tax liability.
Allowance
As the donor’s child, the recipient generally has a personal allowance of EUR 400,000.
Switzerland
It must be assessed whether the competent Swiss canton taxes the gift.
Tax credit
Swiss gift tax actually paid may be eligible for a credit under section 21 ErbStG.
Section 30 ErbStG
Gifts from Switzerland generally need to be reported to the German tax office
An acquisition falling within the scope of German gift tax generally must be reported to the competent German tax office within three months of becoming aware of it.
For a lifetime gift, the reporting obligation generally applies to both the recipient and the donor. In cross-border cases, the recipient resident in Germany should in particular ensure that the German notification is properly submitted.
The notification should include details of the donor and recipient, the date and subject of the gift, its value, the family relationship and relevant previous acquisitions.
Notification and a gift tax return are not the same
The notification initially informs the tax office of the gift. The tax office then decides whether to request a formal gift tax return.
Documentation
Which documents are needed for a gift from Switzerland?
| Document | Purpose |
|---|---|
| Gift agreement or evidence of transfer | Establish the subject and date of the gift |
| Evidence of the donor’s residence | Determine the competent Swiss canton |
| Evidence of the recipient’s residence | Determine personal liability to German gift tax |
| Bank or securities account statement | Substantiate the value of transfers of money and securities |
| Property documents | Review German valuation and Swiss property-related consequences |
| Company documents | Classify the shareholding or business enterprise |
| Swiss gift tax assessment | Document the foreign tax for section 21 ErbStG purposes |
| Evidence of payment of Swiss tax | Substantiate a condition for the German tax credit |
| Records of previous gifts from the same person | Review ten-year aggregation under section 14 ErbStG |
Order of assessment
Assess a gift from Switzerland in eight steps
Donor
Establish Swiss residence, canton and nationality.
Recipient
Review German residence and personal tax liability.
Assets
Classify money, securities, real estate, shareholdings or a business.
Previous acquisitions
Record gifts received during the previous ten years.
Switzerland
Determine cantonal gift tax and local consequences.
Germany
Determine the allowance, valuation and tax payable.
Tax credit
Assess Swiss tax under section 21 ErbStG.
Notification
Fulfil German reporting and tax return obligations.
Frequently asked questions
Receiving a gift from Switzerland while living in Germany
Do I have to pay German gift tax if the donor lives in Switzerland?
Does the Germany–Switzerland inheritance tax treaty also apply to gifts?
Is there an exception for business gifts?
Can Swiss gift tax be credited in Germany?
Must the Swiss gift tax already have been paid?
Is Swiss tax always credited in full?
What is the allowance for gifts from parents to children?
What is the allowance for gifts between spouses?
Can the allowance be used again every ten years?
Is a cash gift from Switzerland taxable in Germany?
What applies to a Swiss securities account?
What applies to Swiss real estate?
Must a gift from Switzerland be reported to the German tax office?
Must I report the gift even if no tax is payable because of the allowance?
Which valuation rules apply to Swiss assets?
Who is liable for German gift tax?
Further reading
Further Germany–Switzerland topics
Germany–Switzerland tax advice
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