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Natalie Peter

Harold Grüninger

Possibilities and limits of tax planning for inheritances and gifts - national and international

Workshop on the occasion of the ISIS seminar on 9/10 September 2019 entitled "Tax planning in the area of conflict between cost optimisation, tax compliance and Good citizenship - opportunities and risks".

09/2019
The complete seminar folder can be ordered for CHF
The corresponding case solutions can be purchased for CHF
150.00
(introductory price)
can be purchased in the shop.
The workshops are also available individually in the "Documents" section.
The case solutions and other documents can be obtained free of charge in the shop.

1st Liechtenstein Family Foundation

Facts

The Fondation de Famille Dupont in Vaud, which as a result of a "liquidity event" has large assets at its disposal with a total of around 50 beneficiaries (mainly in Germany, partly in Switzerland and the USA), gives you the following mandate:

  • Securing payments not dependent on need in favour of beneficiaries who are mainly resident in Germany.
  • Possibly check the relocation of the registered office and/or change in the organisational form in order to counteract the prohibition of the family fideikommissi (Art. 335 ZGB).
  • ensuring that any restructuring does not give rise to a high tax burden, and
  • Consideration of tax effects on the beneficiaries.

After detailed examination and calculation, you come to the conclusion that the Swiss Foundation is overfunded in terms of assets for its permissible purposes. You wish to transfer part of your assets to an Anglo-Saxon trust.

A German tax expert consulted advises against this because a trust solution would be unfavourable and uncertain from a German perspective. He suggests that a Liechtenstein family foundation be set up instead of a trust. This would be recognisable under German foreign tax law in contrast to a Swiss family foundation.

Questions

  1. What is the Swiss view on the establishment and maintenance of a trust by the Swiss Family Foundation from a tax law perspective?
  2. How do you assess the establishment and endowment of a Liechtenstein foundation under Swiss tax law and civil law? Does the concrete form of the Liechtenstein Family Foundation play a role (revocable, irrevocable, discretionary / fixed interest)? Do you recommend obtaining a ruling before restructuring/establishing a foundation? What taxes can be expected in Liechtenstein?
  3. How is a Swiss family foundation taxed, which in some cases provides maintenance payments in possible violation of Art. 335 ZGB?
  4. How are benefits to Swiss (VD and ZH) resident beneficiaries taxed and do you recommend special arrangements for the few US resident beneficiaries?

2. inheritance and gift tax Germany

Facts

Mr and Mrs Müller buy a pony farm with stable and residential house in Germany. Mrs. Müller moves her residence completely to Germany while her husband maintains his residence in the canton of Schaffhausen. He continues to work in Schaffhausen. On weekends he often travels to his wife in Germany and also spends some of his holidays at the Ponyhof.

The Ponyhof is registered in the name of both spouses. However, the financing comes from Mr. Müller's own resources.

Questions

  1. Where do the spouses live?
  2. Is a separate residence recognised?
  3. Will Mr. Müller be taxable at most in Germany?
  4. What are the tax consequences if Mr. Müller gives away or sells his share of the pony farm to his wife?

3. inheritance planning with a trust

Facts

Edouard Dunant, a French citizen, moved to Zurich from Israel in the 1990s and was a flat-rate resident until the end of 2009. He lives essentially from dividends paid by a Guernsey Trust. According to the Guernsey Trustees, this trust is irrevocable and discretionary.

After the abolition of the lump sum taxation at the cantonal level for the Canton of Zurich, Mr. Dunant declared a distribution of CHF 500,000 from the trust to him as income from trust. The tax administration requested trust documents for assessment purposes and, after reviewing them, classified this trust as transparent for tax purposes, with the result that the entire trust assets and trust income were attributed to Mr Dunant for tax purposes, while the declared distribution remained irrelevant for tax purposes because it was treated as a transfer from one account to another account of the same taxable entity (shifting from "left pocket to right pocket").

Mr Dunant has two children. Since the death of his second wife, he has been lovingly cared for by a housekeeper, whose financial future he would like to secure with half of the trust assets. The Trustees advise that the existing Trust should be established as a new irrevocable and discretionary Trust and endowed accordingly. They also recommend that the assets of the trust be transferred from Credit Suisse Zurich to Credit Suisse Guernsey.

Questions

  1. Can and on what basis the Zurich tax authorities demand trust documents (Trust Deed etc.)?
  2. What happens if Mr Dunant does not want to or cannot deliver them?
  3. Can the Zurich tax authorities classify an irrevocable and discretionary trust as transparent for tax purposes according to the Guernsey view?
  4. In the case of transparent classification, what are the tax implications of transferring trust assets to a new trust in favour of Mr Dunant and, after his death, from his housekeeper?
  5. What are the tax consequences of the death of Mr Dunant in Switzerland in relation to the trust assets in the two trusts (his and the housekeeper's)?
  6. What assets will one day belong to Mr Dunant's estate and will Mr Dunant's children be able to assert and enforce claims for a compulsory portion against the housekeeper and under what conditions? What does the inventory of the estate look like?

4. inheritance and gift tax France

Facts

The widow Breitschmid has four children, three sons and one daughter. The daughter lives in France and runs a hairdressing salon. The daughter is not married and has no children. The sons all live in Switzerland. Only one is married and has two children.

Ms. Breitschmid's assets amount to approximately CHF 20 million. They consist of real estate in Switzerland and bank assets. She wishes to draw up a will in which her four children will each receive equal benefits.

Mrs. Breitschmid and her children would like to keep the assets in the family as much as possible. The childless daughter and the two childless sons therefore agree that the assets will be transferred to the siblings after their death, whereby the assets will ultimately end up with Mrs Breitschmid's grandchildren.

Ms. Breitschmid is also generally not averse to making donations during her lifetime.

Questions

  1. How is the inheritance and gift tax liability regulated in France?
  2. Does it matter that the double taxation agreement with France has been terminated?
  3. Would lifetime gifts to the subsidiary reduce the tax liability in France?
  4. Would the granting of a beneficial use of the donated assets be a solution at best?
  5. The family is aware that the inheritance and gift tax in France is very high. Against this background, the daughter would also be prepared to waive her compulsory portion and receive an annuity. What are the tax consequences of this solution?
CHF
150.00

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