Successions, Trusts, and Acquisition of Real Property in Switzerland by Foreigners

Summary

The Acquisition of Real Property in Switzerland by a Foreigner
Successions and Acquisition of Real Property in Switzerland by Foreigners
- Acquisition by Statutory Heirs
- Acquisition by Appointed Heirs and Legatees
Trusts and the Acquisition of Real Property in Switzerland by Foreigners
Legislative Developments

The Acquisition of Real Property in Switzerland by a Foreigner

The acquisition of real property in Switzerland by foreigners is governed by the Federal Act on the Acquisition of Immovable Property (ANRA), its implementing ordinance (OANRA), as well as the applicable cantonal and municipal legislation.

This legislation restricts the acquisition of real property by foreigners in order to prevent foreign control over national territory, by subjecting such acquisitions to an authorization regime (art. 1 and 2 ANRA).

The ANRA establishes objective (“the acquisition of real property”) and subjective (“by a foreigner”) criteria for its applicability, as well as exemptions and grounds for authorization. The Federal Act further reserves to the cantons the power to introduce specific grounds for authorization.

The acquisition of real property

The acquisition of real property refers to the acquisition of ownership rights (or analogous rights) over real property, whether directly or indirectly through a legal entity (cf. Art. 4 ANRA).

The acquisition of shares in a real estate company also constitutes an acquisition of real property, provided that the securities are not listed (Art. 4 para. 1 let. e ANRA). Accordingly, the acquisition of shares in listed real estate companies does not fall within the scope of the ANRA. The same applies to the acquisition of shares in listed Swiss real estate funds (Art. 4 para. 1 let. c ANRA).

By a foreigner

“Foreigners” refers to foreign nationals domiciled abroad, as well as foreign nationals domiciled in Switzerland who are neither nationals of an EU or EFTA Member State nor holders of a valid C settlement permit (Art. 5 para. 1 let. a and abis ANRA; Art. 2 and 5 OANRA).

The ANRA therefore does not apply to Swiss nationals, whether domiciled in Switzerland or abroad, to EU/EFTA nationals domiciled in Switzerland, or to nationals of other countries holding a valid settlement permit (C permit).

Legal entities with their registered office abroad are also considered foreigners, even if they are owned by individuals of Swiss nationality (Art. 5 para. 1 let. b ANRA).

Likewise, legal entities with their registered office in Switzerland in which foreigners hold a dominant position are also considered foreigners (Art. 5 para. 1 let. c ANRA). Foreigners are considered to hold a dominant position in particular where they hold more than one-third of the participation or voting rights, or are creditors of the legal entity for an amount exceeding half of its equity (cf. Art. 6 ANRA).

The Authorization Regime

Unless an exemption applies, the acquisition by a foreigner of ownership of real property (or analogous rights over such property), as well as the acquisition of shares (including a single share) in a company holding real property, requires the prior authorization from the competent cantonal authority, namely the authority of the canton in which the property is located (Art. 2 para. 1 ANRA; see below Grounds for Authorization).

Exemptions from the Authorization Regime

The ANRA establishes a number of exemptions to the authorization requirement (Art. 2 ANRA).

Real Property Used as a Permanent Establishment

No authorization is required where the real property serves as a permanent establishment for carrying on a trade, operating a factory, or conducting any other industry in commercial form, as well as for carrying on a craft or a liberal profession (Art. 2 para. 2 let. a ANRA).

The acquired property may be used for the purchaser’s own business activities or leased to a third party for the conduct of an economic activity under a commercial lease. In such circumstances, a foreigner may therefore acquire real property for investment purposes.

However, the acquisition of residential rental property continues to require prior authorization (Art. 3 OANRA).

Primary Residence

No authorization is required where the real property serves as the primary residence of the individual acquiring it, at the place of his legal and effective domicile (Art. 2 para. 2 let. b ANRA).

The acquisition must be made in the purchaser’s own name and not through a legal entity (Art. 8 OANRA). Where the area of the property exceeds 3,000 m², the Land Registry directs the purchaser to apply for authorization (Art. 18a para. 2 let. c OANRA).

If the property is no longer used as a primary residence, there is no obligation to alienate it. The owner may lease it or use it as a secondary residence. The owner may also acquire a new primary residence in Switzerland at his new place of domicile without alienating the former property.

Categories of Purchasers

Art. 7 ANRA sets out exemptions from the authorization requirement for certain categories of purchasers, including statutory heirs (Art. 7 let. a ANRA, discussed in detail below), close relatives of the transferor (ascendants, descendants, and spouses; Art. 7 let. b ANRA), and existing co-owners and joint owners (Art. 7 let. c ANRA). The exemption also applies to EU/EFTA cross-border commuters and British nationals benefiting from acquired rights predating 1 January 2021, provided that they acquire, in their own name, real property with a surface area not exceeding 1,000 m² for their personal use (Art. 7 let. j ANRA; Arts. 8 and 18a para. 3 OANRA).

Grounds for Authorization

The ANRA establishes a number of exemptions to the authorization requirement (Art. 2 ANRA).

Banks and Insurance Companies

Authorization is granted where the real property is intended for capital investment by an insurance institution, for staff pension or public interest purposes, or to cover claims secured by a pledge in enforcement proceedings (Art. 8 para. 1 ANRA — this ground for authorization does not apply to private individuals).

Authorization may also be granted where the real property is used for the pension provision of employees of companies in Switzerland (Art. 8 para. 1 let. c ANRA). Occupational pension foundations subject to the Federal Act on Occupational Retirement are not considered foreign, even if they are controlled by foreign persons.

The Heir Subject to the Authorization Requirement

An heir subject to the authorization requirement may be authorized to acquire the real property, provided that the property is alienated within two years, unless the heir demonstrates close ties to the property (Art. 8 para. 2 ANRA — this point is discussed in detail below).

Hardship Cases

In cases of hardship, an individual who cannot rely on a ground for authorization may nevertheless be authorized to acquire a primary residence, a secondary residence, or a holiday home from another individual (Art. 8 para. 3 ANRA).

The transferor (whether Swiss or foreign) must be in financial distress and must have unsuccessfully offered the property for sale, at cost price including a reasonable return, to persons not subject to the authorization requirement. The transferor must also have used the property for personal purposes as a primary residence, secondary residence, or holiday home (cf. Memorandum of the Federal Office of Justice, 2009, p. 10).

Cantonal Grounds for Authorization

The cantons may provide for additional grounds for authorization in their legislation (Art. 9 ANRA).

The acquisition by a foreigner of real property intended for the construction of affordable rental housing may be authorized in areas experiencing a housing shortage (Art. 9 para. 1 let. a ANRA). This ground for authorization has been introduced by the cantons of Fribourg, Geneva, Graubünden, Jura, Neuchâtel, Ticino, Valais, and Vaud.

Secondary Residence

The cantons may provide that authorization may be granted where the real property serves as a secondary residence for an individual in a place with which he maintains particularly close ties that are worthy of protection, for as long as such ties subsist (Art. 9 para. 1 let. c ANRA; this ground for authorization has been introduced by the cantons of Appenzell Ausserrhoden, Basel-City, Fribourg, Graubünden, Jura, Lucerne, Neuchâtel, St. Gallen, Solothurn, Ticino, Uri, Valais, Vaud, and Zurich).

Family or marital ties with persons residing in Switzerland, or stays for vacation, medical treatment, study, or other temporary purposes, do not in themselves constitute close and legally protected ties (Art. 6 OANRA).

The acquisition must be made in the purchaser’s own name and not through a legal entity (Art. 8 OANRA), and neither the purchaser nor his spouse or children must already own a secondary residence or holiday home in Switzerland (Art. 12 let. d ANRA; Art. 11 OANRA).

Holiday Homes

The cantons may also provide that authorization may be granted to an individual acquiring real estate as a holiday home (Art. 9 paras. 2 to 4 ANRA).

The cantons are allocated a quota defined by the Confederation (Art. 9 OANRA and Annex 1 to the OANRA). The national annual quota of 1,500 authorizations is distributed among seventeen cantons as follows: Valais (330 units), Graubünden (290), Ticino (195), Vaud (175), Berne (140), Lucerne, Schwyz, Fribourg (50 each), St. Gallen (45), Neuchâtel (35), and Uri, Appenzell Ausserrhoden, Obwalden, Nidwalden, Glarus, Schaffhausen, and Jura (20 each). Each acquisition is counted against the quota, except where the seller had previously obtained authorization for the acquisition of that property (Art. 9 para. 4 let. a ANRA).

The acquisition must be made in the purchaser’s own name and not through a legal entity (Art. 8 OANRA), and neither the purchaser nor the purchaser’s spouse or children may already own a secondary residence or a holiday home in Switzerland (Art. 12 let. d ANRA; Art. 11 OANRA). The total area of the property must not exceed 1,000 m² (Art. 10 para. 3 OANRA).

Overview

Natural persons

Category	Foreigner subject to ANRA	Exemptions from the Authorization Requirement	Grounds for Authorization (ANRA)	Cantonal Grounds for Authorization
Swiss nationals (domiciled in Switzerland or abroad)	No — not subject to ANRA	—	—	—
EU/EFTA nationals domiciled in Switzerland	No — not subject to ANRA	—	—	—
Non-EU/EFTA nationals domiciled in Switzerland with a C settlement permit	No — not subject to ANRA	—	—	—
Non-EU/EFTA nationals domiciled in Switzerland with a B permit	Yes — subject to ANRA	Real property used as permanent establishment (Art. 2 para. 2 let. a ANRA). Primary residence (Art. 2 para. 2 let. b ANRA). Statutory heirs, close relatives of the transferor, co-owners and joint owners, cross-border commuters (Art. 7 ANRA).	Heirs or legatees subject to the authorization requirement where they can demonstrate close ties with the property that are worthy of protection (Art. 8 para. 2 ANRA).	Social housing construction (Art. 9 para. 1 let. a ANRA) Secondary residence in a place with which the purchaser maintains extremely close ties (Arts. 9 para. 1 let. c and 12 let. d ANRA; Arts. 6, 8 and 11 OANRA). Holiday home (Arts. 9 paras. 2–4 and 12 let. d ANRA; Arts. 8, 10 para. 3 and 11 OANRA).
Non-EU/EFTA nationals domiciled abroad	Yes — subject to ANRA	Real property used as permanent establishment (Art. 2 para. 2 let. a ANRA). Primary residence (Art. 2 para. 2 let. b ANRA). Statutory heirs, close relatives of the transferor, co-owners and joint owners, cross-border commuters (Art. 7 ANRA).	Heirs or legatees subject to the authorization requirement where they can demonstrate close ties with the property that are worthy of protection (Art. 8 para. 2 ANRA).	Social housing construction (Art. 9 para. 1 let. a ANRA). Secondary residence in a place with which the purchaser maintains extremely close ties (Arts. 9 para. 1 let. c and 12 let. d ANRA; Arts. 6, 8 and 11 OANRA). Holiday home (Arts. 9 paras. 2–4 and 12 let. d ANRA; Arts. 8, 10 para. 3 and 11 OANRA).

Legal entities

Legal entities with their registered office abroad (irrespective of whether their shareholders are Swiss or foreign)	Yes — subject to ANRA	Real property used as permanent establishment (Art. 2 para. 2 let. a ANRA).	Banks and insurance companies (Art. 8 para. 1 ANRA). Heirs or legatees subject to an obligation to sell the property within two years (Art. 8 para. 2 ANRA).	Social housing construction (Art. 9 para. 1 let. a ANRA)
Legal entities with their registered office in Switzerland and under the control of foreigners	Yes — subject to ANRA	Real property used as permanent establishment (Art. 2 para. 2 let. a ANRA).	Banks and insurance companies (Art. 8 para. 1 ANRA). Heirs or legatees subject to an obligation to sell the property within two years (Art. 8 para. 2 ANRA).	Social housing construction (Art. 9 para. 1 let. a ANRA)
Legal entities with their registered office in Switzerland that are not under the control of foreigners	No — not subject to ANRA	—		—

Procedure

Authorization applications must be submitted to the competent cantonal authority in the canton where the property to be acquired is located (Art. 15 para. 1 let. a ANRA). Each canton designates its competent authority. The Federal Office of Justice has published a list of the designated authorities on its website, available here.

Land Registry

The transfer of ownership of real property takes effect upon registration in the Land Registry (Art. 656 para. 1 CC). Such registration is constitutive of the transfer of ownership (Art. 971 para. 1 CC), subject to the exceptions set out in Art. 656 para. 2 CC, including acquisition by succession. In that case, registration in the Land Registry has only declaratory effect: the heirs become owners of the property prior to registration, but may not dispose of it until such registration is effected.

Where the Land Registrar cannot immediately rule out the possibility that the acquisition is subject to the authorization requirement, he suspends the registration procedure and grants the purchaser a period of thirty days to apply for authorization from the competent authority, or to obtain a ruling that the acquisition is not subject to the ANRA. If the purchaser fails to take such steps within that period, or if authorization is refused, the Land Registrar rejects the application for registration (Art. 18 para. 1 ANRA; Art. 18a OANRA).

The Land Registry is not involved in the transfer of shares in a real estate company. In such a case, the purchaser must undertake the necessary steps independently.

In the context of an acquisition by succession, the Land Registry is involved at the stage of registering the transfer of ownership from the deceased to the heirs.

Successions and Acquisition of Real Property in Switzerland by Foreigners

Acquisition by Statutory Heirs

Statutory heirs under Swiss law are not subject to the authorization requirement, even if they qualify as “foreigners” within the meaning of the ANRA (Art. 7 let. a ANRA). Statutory heirs are persons related to the deceased by kinship or marriage (Arts. 457 et seq. CC).

Appointed heirs, that is, heirs designated by the deceased through a testamentary disposition (a will or inheritance agreement), do not benefit from the exemption from the authorization requirement set out in Art. 7 let. a ANRA.

The exemption from the authorization requirement applies to statutory heirs called to succeed the deceased under the rules of intestate succession, but also to potential statutory heirs. Potential statutory heirs are persons who belong to the class of heirs designated by law, even if, at the time of the opening of the succession, they succeed as appointed heirs or as legatees, although under the rules of intestate succession they would not have been called to succeed because a closer heir would have taken precedence (ATF 108/1982 Ib 425).

The aforementioned judgment concerned the great-nephew of the deceased, domiciled abroad, who had been designated as legatee by his great-aunt. The great-nephew’s mother (the deceased’s niece) would herself have been called to inherit the deceased’s real property in the absence of the legacy in favor of the great-nephew. The Federal Supreme Court held that the great-nephew benefited from the exemption from the authorization requirement set out in Art. 7 let. a ANRA as a potential statutory heir (Art. 458 para. 3 CC). This outcome is moreover justified by the fact that the deceased could have bequeathed the real property to her niece, subject to the obligation to transfer it to her son (cf. Arts. 488 paras. 1 and 3 CC).

Statutory heirs benefit from the exemption set out in Art. 7 let. a ANRA without restriction, even if the statutory heir thereby becomes the owner of a second holiday home or secondary residence, notwithstanding the rule according to which authorization is refused where the purchaser, his spouse, or his children already own such a residence in Switzerland (Art. 12 let. d ANRA; Art. 11 OANRA; judgment 2C_10/2014 of 4 September 2014). In other words, Art. 12 let. d ANRA applies only to acquisitions of real property subject to the authorization requirement, and excludes acquisitions by statutory heirs through the devolution of a succession.

Acquisition by Appointed Heirs and Legatees

An appointed heir or legatee who is not a statutory heir does not benefit from the exemption from the authorization requirement set out in Art. 7 let. a ANRA when acquiring real property through succession or by way of a legacy.

Likewise, the assignment of an inheritance share (Art. 635 CC) by a statutory heir to an appointed heir who is not a statutory heir is subject to the authorization requirement.

In support of his application for authorization, the heir or legatee may invoke the grounds for authorization previously described, namely (1) the acquisition of a primary residence (Art. 2 para. 2 let. b ANRA; Art. 18a para. 2 let. c OANRA), (2) the acquisition of a holiday home in a tourist area (Art. 9 para. 2 ANRA; Art. 8, 10 para. 3 OANRA) or (3) the acquisition of a secondary residence in a place with which he maintains particularly close ties that are worthy of protection (Art. 9 para. 1 let. c ANRA; Art. 6, 8 OANRA), provided that neither he, nor his spouse or children, already owns a property of the same kind in Switzerland (Art. 12 let. d ANRA; Art. 11 OANRA).

In the absence of such grounds, the heir or legatee may invoke close ties with the property that are worthy of protection (Art. 8 para. 2 ANRA).

If the heir or legatee subject to the authorization requirement cannot invoke any ground for authorization, authorization is nevertheless granted, but subject to the condition that the property be alienated within two years from the date of notification of the decision (Art. 8 para. 2 ANRA). This condition is entered in the Land Registry (Art. 14 ANRA). If the property is not sold within that period, it is sold at public auction and the heir or legatee may only claim reimbursement of the cost price; any surplus accrues to the canton (Art. 27 para. 2 ANRA). Finally, failure to comply with this condition constitutes a criminal offense (Art. 30 ANRA).

Trusts and the Acquisition of Real Property in Switzerland by Foreigners

Where a trust holds real property in Switzerland, it is the trustee who is formally registered as the owner of the property (cf. Art. 656 para. 1 CC). The registration of the trustee as owner in connection with a trust may be recorded by way of a notation in the Land Registry (Art. 149d paras. 1 and 3 PILA).

The transfer of real property into a trust is subject to the authorization requirement if any of its participants, namely the trustee and/or the beneficiaries, qualifies as a foreigner within the meaning of the ANRA. Conversely, the authorization requirement does not apply if neither the trustee nor the beneficiaries qualify as foreigners within the meaning of the ANRA. The guidelines of the Federal Office of Justice impose the additional condition that any subsequent extension to additional beneficiaries be excluded under the trust instrument. In practice, the competent authorities require the trustee to notify them of any amendment to the trust deed, including the addition of new beneficiaries, so that they may reassess the situation.

For the purposes of determining whether the authorization requirement applies, it is necessary to examine the situation of the various persons involved in the trust relationship, since they may hold rights conferring upon them a position analogous to that of an owner of real property (Art. 4 para. 1 let. g ANRA). The analysis therefore also adopts an economic approach.

The case law has addressed various scenarios involving the application of the ANRA in the context of trusts, as set out below.

Irrevocable Discretionary Trust with Foreign Beneficiaries

In 2013, the Land Commission II of the canton of Vaud was called upon to rule on the transfer of real property into an irrevocable discretionary trust established under the law of Jersey, whose settlor was Swiss. The trustee was a company administered by directors who were Swiss nationals or nationals of a European Community member state, domiciled in Switzerland. Ninety percent of the shares were held by Swiss nationals or nationals of a European Community member state domiciled in Switzerland, with the remaining 10% held by the company itself. The beneficiaries were the settlor, the settlor’s grandchildren, and the descendants of the settlor’s grandchildren or, failing that, a Swiss tax-exempt public interest foundation. The beneficiaries, however, were foreigners within the meaning of the ANRA.

The Land Commission held that, even in the case of a discretionary trust, foreign beneficiaries occupy a position analogous to that of an owner within the meaning of Art. 4 para. 1 let. g ANRA. Foreign beneficiaries may therefore only be authorized to acquire the property if they are able to invoke a ground for authorization or an exemption from the authorization requirement (Arts. 2 and 7 ANRA). The beneficiaries were unable to rely on the exemption from the authorization requirement available to statutory heirs (Art. 7 let. a ANRA), the Commission noting that, in order to benefit from the exemption, the acquisition must be made directly and in the purchaser’s own name, and not through a company or another legal structure, such as a trust (cf. Art. 8 OANRA). The Land Commission accordingly refused the requested authorization (decision of 19 April 2013, RDAF 2013 I 590).

Irrevocable Discretionary Trust with Swiss Beneficiaries

Also in 2013, the same Land Commission was called upon to rule on the transfer by a Swiss settlor of real property into two discretionary and irrevocable trusts. Both trusts were established under the law of Jersey. In the first trust, the beneficiaries were, successively, the settlor, his daughter, and, upon her death, her two children. In the second trust, the beneficiaries were, successively, the settlor and then his grandchildren. The corporate trustee was a company whose directors were Swiss nationals or nationals of a European Community member state domiciled in Switzerland. The share capital of the corporate trustee was held through a holding company whose directors were Swiss nationals or nationals of a European Community member state domiciled in Switzerland. This holding company was 90% owned by Swiss nationals or nationals of a European Community member state domiciled in Switzerland, with the remaining 10% held by the holding company itself. The trust protector was of Swiss nationality, as were all of the beneficiaries.

The Land Commission held that, since all participants in the trust (settlor, trustee, protector, and beneficiaries) were Swiss, the ANRA was not applicable.

The Land Commission ruled that the transfer of the real property into the trust was not subject to the authorization requirement under the ANRA. It nevertheless attached a condition to its decision requiring the trustee to notify the Commission, for its prior approval, of any change in circumstances, in particular any extension of the class of beneficiaries or change of trustee, or any modification of the corporate trustee’s organizational structure (board members, shareholders, financing, etc.) (Art. 14 para. 4 ANRA).

Transfer of a Holiday Home to a Trust with Foreign Beneficiaries

In 2026, the Swiss Federal Supreme Court ruled on the transfer of a holiday home located in Grindelwald in the canton of Berne into an irrevocable trust established under the law of the State of New York (judgment 2C_437/2024 of the Federal Supreme Court of 5 February 2026). The settlor was a British national. The trustees were the settlor’s wife, also a British national, and the couple’s two sons, who were American nationals. The beneficiaries of the trust were the wife, the sons, and, in due course, their own descendants. The sons also held the position of trust protectors. None of these participants was domiciled in Switzerland. They all qualified as foreigners subject to the subjective limb of the authorization requirement within the meaning of Art. 5 para. 1 let. a bis ANRA.

The cantonal authority responsible for applying the ANRA (the Regierungsstatthalteramt Interlaken-Oberhasli) found that the transfer of the holiday apartment into the trust was not subject to the authorization requirement under the ANRA, subject to compliance with certain conditions.

Ruling on an appeal by the Federal Office of Justice, the Administrative Court of the canton of Bern held that, since the trustees and the beneficiaries were the same persons (the settlor’s wife and sons), civil ownership and economic enjoyment coincided in the same hands, so that there was no “indirect” acquisition within the meaning of Art. 8 let. a OANRA. Furthermore, these persons satisfied all the conditions of the exemption set out in Art. 7 let. b ANRA as the spouse and lineal descendants of the transferor. The Federal Office of Justice, for its part, took the view that the husband could not initially have acquired the holiday apartment indirectly through a trust, since the acquisition of a holiday home must be made in the purchaser’s own name and not through an entity (Art. 9 para. 2 ANRA and Art. 8 OANRA). Accordingly, it would be equally impermissible for the wife and sons to achieve the same result by way of Art. 7 let. b ANRA (governing transfers between ascendants, descendants, and spouses). The contrary outcome would be incompatible with Art. 9 para. 2 ANRA read in conjunction with Art. 8 OANRA. The appeal by the Federal Office of Justice was dismissed, subject to modifications to certain conditions imposed on the trustees in the decision declaring the acquisition not subject to the authorization requirement.

The Bernese Administrative Court took the view that the direct acquisition requirement of Art. 8 OANRA applies to cases requiring authorization, but not necessarily to acquisitions already exempt from authorization under Art. 7 let. b ANRA, as was the case here. Without definitively resolving this question, it held that, in the circumstances, the identity between the trustees and the beneficiaries meant that civil ownership and economic enjoyment were united in the same hands, so that there could be no question of an indirect acquisition.

The Federal Office of Justice appealed this judgment to the Swiss Federal Supreme Court, which granted the appeal, annulled the judgment of the Bernese Administrative Court, and held that the transfer of the holiday home into the trust was subject to the authorization requirement under the ANRA.

The Federal Supreme Court recalled that the requirement of direct acquisition in the purchaser’s own name set out in Art. 8 let. a OANRA is intended to prevent indirect acquisitions of holiday homes and, more broadly, to prevent any mechanism for circumventing the law. Both Art. 7 let. b and Art. 9 para. 2 ANRA (as well as Art. 8 let. a OANRA) are designed for direct acquisitions by individuals acting in their own names.

The Federal Supreme Court held that a trust constitutes an interposed legal structure giving rise to an indirect acquisition, which is incompatible with the requirement of direct acquisition of holiday homes in the purchaser’s own name (Art. 9 para. 2 ANRA and Art. 8 let. a OANRA).

Furthermore, the exemption from the authorization requirement set out in Art. 7 let. b ANRA (family transfers) does not apply to the transfer of real property into a trust, since the personal status required by Art. 7 let. b ANRA — namely being married to the transferor or connected to the transferor by kinship in the direct ascending or descending line — is by definition absent in the context of a trust.

The Federal Supreme Court accordingly held that the transfer of the holiday home was, in these circumstances, subject to authorization. Since the grounds for authorization are very restrictive (cf. Art. 8 ANRA), the proposed transfer therefore could not be carried out.

Legislative Developments

In response to the housing shortage, the Federal Council intends to further restrict the acquisition of real property by foreigners. On 15 April 2026, it opened a consultation on a draft revision of the ANRA, which runs until 15 July 2026.

The draft revision proposes to:

subject the acquisition of primary residences by third-country nationals holding a B permit to the authorization requirement, with an obligation to resell within two years in the event of departure;

restrict the acquisition of commercial real property to purchasers who operate the establishment themselves, so that foreigners would no longer be permitted to acquire commercially leased property;

reduce the cantonal quotas for holiday homes from 1,500 to 750, with a reserve of 150 units allocated to cantons that have not introduced the holiday home ground for authorization in their legislation, to be used for hardship cases within the meaning of Art. 8 para. 3 ANRA or in anticipation of the future introduction of that ground;

subject transfers of holiday homes between foreigners to prior authorization, to count against the cantonal quota;

reintroduce the authorization requirement for the acquisition of shares in real estate companies, real estate funds, and real estate SICAVs, to the extent that these investment vehicles relate to residential property, including listed shares, which would in practice lead to a prohibition given the very restrictive grounds for authorization.

22 May 2026

Trusts and Estate Litigation in Switzerland

Analysis of the actions for recovery of the estate, hotchpot, and reduction in the context of trusts under Swiss law.

Frequently used as an estate planning tool, trusts offer the ability to derogate from standard succession rules — most notably by allowing the transfer of assets to beneficiaries to be phased over time. They are also presented as an effective alternative to the formalities typically associated with the administration of an estate, such as probate, the issuance of a certificate of heirship, or the joint management of estate assets by the co-heirs until the final settlement.

Assets settled into trust no longer form part of the estate of the settlor. They are intended to be distributed in accordance with the terms of the trust, in lieu of the statutory devolution of the estate, subject to the validity of the trust and the Swiss rules relating to equality among heirs and forced heirship rights. These aspects may be addressed through the action for recovery of the estate, hotchpot, and the clawback claim (action for reduction).

The action for recovery of the estate

The foregoing assumes, however, that the trust is valid.

Swiss law does not recognise the trust as an institution of domestic law. That said, trusts established under foreign law are automatically recognised pursuant to the Hague Convention on the Law Applicable to Trusts and on their Recognition (art. 11 para. 1).

The trust must be valid under its governing law (art. 8 of the Hague Convention on Trusts). The validity of a trust requires the satisfaction of three conditions (the three certainties rule; Knight v. Knight, Court of Chancery, 1840): certainty of intention (the settlor must have genuinely intended to create a trust, failing which the trust may be recharacterised as a sham trust), certainty of subject matter (the trust assets must be identifiable and effectively transferred to the trustee), and certainty of objects (the beneficiaries must be ascertainable).

Extensive powers reserved to the settlor over the trust — such as the power to decide on asset distributions or a veto right over investments — may indicate the absence of a genuine intention to create a trust. In such circumstances, a trust could be characterised as a sham trust (ATF 143/2017 II 350, para. 4.2; Rahman v. Chase Bank Trust, Royal Court of Jersey, 1991; Federal Supreme Court judgment 5A_436/2011 of 12 April 2012, concerning a discretionary trust governed by British Virgin Islands law that was characterised as a sham trust).

Should the trust be characterised as a sham trust, the trust assets would still be considered to form part of the settlor’s estate. It would follow that the trustee would hold the estate assets placed in trust without a valid legal basis. In such circumstances, an heir may seek the restitution of the relevant assets to the estate by way of an action for recovery of the estate (hereditatis petitio, art. 598 et seq. CC) against the trustee.

This action allows an heir to claim the remittance of estate assets from any person who, without being an heir, is in possession of them. The action also extends to assets deriving therefrom (real subrogation), namely assets acquired in replacement thereof (for example, securities acquired in replacement of other securities).

Prior to, or concurrently with, an action for recovery of the estate, an heir may apply for interim measures (art. 261 et seq. CPC ; and not the protective measures based on art. 551 et seq. CC (Federal Supreme Court judgment 5A_763/2012 of 18 March 2013, consid. 5) against the trustee, in particular an order prohibiting the disposal of assets. An advantage of such action is that it is subject to the exclusive jurisdiction of the courts of the deceased’s last domicile (art. 86 PILA).

Hotchpot

Where a validly constituted trust includes descendants of the deceased settlor among its beneficiaries, the rules governing hotchpot may apply.

General Principles Governing Hotchpot

Statutory hotchpot (art. 626 para. 2 CC) seeks to restore equality among descendants. It requires descendants to bring into account, within the estate, inter vivos gifts made by the deceased that constitute endowments. Statutory hotchpot presupposes the fulfilment of the following conditions:

(1) an inter vivos disposition. The classification of a disposition as inter vivos or mortis causa is governed by the law applicable to the succession (art. 4 of the Hague Convention on Trusts; art. 90 et seq. PILA). As a general rule, a disposition is inter vivos if it already affects the deceased’s assets during his or her lifetime. Conversely, it is mortis causa if intended to affect the estate of the deceased.

(2) the inter vivos disposition must constitute a gift, namely a transfer made without consideration and with donative intent (animus donandi); and

(3) the disposition must constitute an endowment, namely a disposition intended to establish, secure, or improve the descendant’s position in life. In this regard, only the intention of the deceased to confer an endowment character upon the gift is relevant. The jurisprudence of the Federal Supreme Court is, however, inconsistent on this point: luxury assets, as well as dispositions concerning objects or property intended for comfort or leisure, do not qualify as endowments. Thus, the endowment character was denied in relation to the gift of a motorboat intended for leisure purposes (ATF 76/1950 II 188 para. 8), as well as the gift of a precious stone valued at USD 500,000 intended to remain within the family estate (judgment 5A_512/2019 of 28 October 2019, para. 7.4);

(4) the deceased must not have exempted the beneficiary of the gift from hotchpot.

Statutory Hotchpot in the Context of a Trust

In the context of an inter vivos trust, the settlor transfers assets to the trustee, who is required to manage and apply them for a purpose previously defined by the settlor in favour of one or more beneficiaries. A trust may be revocable or irrevocable, depending on whether the settlor has reserved the right to revoke it and recover the assets transferred into trust. It may further be discretionary or fixed-interest: it is discretionary where the trustee has discretion as to the distributions to be made to the beneficiaries; it is fixed-interest where the beneficiaries have a vested right to such distributions.

The transfer of assets by the settlor to the trustee is not subject to hotchpot, as the trustee is neither a descendant nor an heir. By contrast, distributions made by the trustee to the beneficiaries, where they are also descendants of the deceased settlor, may, depending on the circumstances, be subject to the obligation to account in hotchpot, unless the deceased has exempted them therefrom.

Recent Federal Supreme Court Case Law

According to the jurisprudence of the Federal Supreme Court (ATF 151/2024 III 361), the assets of an irrevocable trust do not form part of the estate, irrespective of the tax treatment of the trust. The same applies to a revocable trust: upon the death of the settlor, it becomes irrevocable, since the settlor can obviously no longer revoke it.

The assets of a discretionary trust cannot be directly attributed to the beneficiaries, since they hold no vested right to receive distributions. They hold merely an expectancy in this respect. The mere fact of being designated as a beneficiary cannot be regarded as a gift subject to hotchpot. This conclusion is not undermined by the fact that, according to general life experience, the trustee will comply with the settlor’s original intentions. Statutory hotchpot in respect of assets held in trust pursuant to art. 626 para. 2 CC is therefore excluded.

Likewise, the designation of trust beneficiaries conferring upon them a vested right to the distribution of income and/or capital (fixed interest trust) is subject to hotchpot. In this regard, the Federal Supreme Court judgment provides no guidance as to the valuation of the amount subject to hotchpot. It may be conceivable to calculate such amount by capitalising future income.

By contrast, distributions made by the trustee to descendants during the settlor’s lifetime are in principle subject to hotchpot pursuant to art. 626 para. 2 CC.

This conclusion is consistent with the jurisprudence of the Federal Supreme Court, according to which gifts made through a legal entity of which the deceased was the sole shareholder are subject to hotchpot, provided that the other conditions of art. 626 para. 2 CC are met (judgment 5A_425/2020 of 15 December 2022). Accordingly, the same treatment applies to gifts received during the settlor’s lifetime, as well as to the designation of trust beneficiaries holding a vested right to the distribution of income and/or capital.

The aforementioned judgment ATF 151/2024 III 361 related not to a trust, but to a Liechtenstein fiduciary entity (Treuunternehmen). The Federal Supreme Court nevertheless held that, given the similarities between this institution and the trust, the legal principles developed for trusts could be transposed to the case at hand.

Reconciling Statutory Hotchpot with the Hague Convention on Trusts

The Federal Supreme Court did not apply the Hague Convention on Trusts, as the Treuunternehmen falls outside its scope, notwithstanding the characteristics common to both institutions.

In the context of a trust, the application of the rules on statutory hotchpot (art. 626 et seq. CC) to distributions made by a trust may come into conflict with the Hague Convention on Trusts, which requires Switzerland to recognise the effects of the trust.

Article 15 of the Convention does reserve the mandatory provisions of domestic law from which no derogation is permitted, in particular in matters of wills, devolution of estates, and especially reserved shares. However, the rules on hotchpot are default rules: the testator may unilaterally order or exclude hotchpot, and an heir may avoid it by disclaiming the inheritance. It could therefore be argued that the rules on statutory hotchpot do not carry the mandatory character required by article 15 of the Convention and are consequently excluded by the Convention.

The Modification of the Scale of Values

The Federal Supreme Court did not rule on whether the creation of a trust — in particular where it is established in favour of certain descendants — may be construed as expressing the deceased’s intention to derogate from the principle of equality, thereby excluding the rules on statutory hotchpot.

Where the deceased has made testamentary dispositions departing from the rules of intestate succession, it would be inappropriate to rely on succession rules from which the deceased deliberately intended to derogate. In such circumstances, there is no reason to supplement that intention, nor to seek to restore an equality among heirs that the testator manifestly never intended. This is referred to as a modification of the scale of values (ATF 124/1998 III 102, para. 5; judgment 5A_769/2023 of 9 April 2024, para. 4.1).

A modification of the scale of values excludes statutory hotchpot. In such circumstances, distributions made by the trust would not be subject to hotchpot, unless the deceased has explicitly ordered it.

The Intention to Give

Donative intent (animus donandi) is one of the conditions required for the application of statutory hotchpot. In the context of a discretionary trust, however, the settlor voluntarily relinquishes control over the assets upon the creation of the trust, without definitively determining their allocation. Accordingly, donative intent — or even an intention to maintain equality among heirs — should be considered absent.

The Action for Reduction

Assets held in the name of a fiduciary entity or a trust may be subject to reduction pursuant to art. 522 et seq. CC, as the protection of reserved shares under Swiss law is not defeated by the recognition of trusts (ATF 151/2024 III 361, para. 8, unpublished, judgment 5A_89/2024; see in particular art. 15, 16 and 18 of the Hague Convention on Trusts).

The Action for Reduction in General

Certain transfers of assets are added to the existing estate assets to the extent that they are subject to reduction (art. 475 CC). The amount of the reserved share — being one half of the statutory share (art. 471 CC) — is thus calculated on the distributable estate to which are added the transfers enumerated in art. 527 CC, namely:

(1) inter vivos gifts made by way of advancement of inheritance in the form of endowments where they are not subject to hotchpot (art. 527 no. 1 CC).

Art. 527 no. 1 CC refers to the transfers contemplated by art. 626 para. 2 CC, namely those not subject to hotchpot where (i) the beneficiary of the transfer does not succeed — by reason of prior death (art. 542 para. 1 CC), renunciation (art. 566 CC), unworthiness to inherit (art. 540 CC), or disinheritance (art. 477 CC) — and no hotchpot by representation applies (art. 627 CC), (ii) the beneficiary is a descendant who would otherwise be subject to statutory hotchpot but has been exempted therefrom by the deceased, or (iii) the beneficiary is an heir other than a descendant and the transfer constitutes an endowment;

(2) transfers made by way of early settlement of inheritance rights (art. 527 no. 2 CC). This covers the case where the deceased paid consideration to an heir in exchange for the latter’s renunciation of the succession by means of an onerous renunciation agreement (art. 495 CC). Such consideration is subject to reduction to the extent that it exceeds the reserved share of the renouncing heir (see art. 535 and 536 CC);

(3) transfers that the deceased was free to revoke, and those made within the five years preceding death, with the exception of customary gifts (art. 527 no. 3 CC);

(4) transfers made by the deceased with the manifest intention of circumventing the rules governing reserved shares (art. 527 no. 4 CC). This provision is applied restrictively; the intention to prejudice must be established with complete clarity (see ATF 140/2014 III 193, para. 2.2.1);

(5) finally, art. 82 CC provides that a foundation may be challenged, in the same manner as a gift, by the heirs or creditors of the founder. This provision merely reiterates the ground for reduction set out in art. 527 no. 3 CC (see ATF 90/1964 II 365, para. 3c).

The Action for Reduction in the Context of a Trust

A trust is a legal relationship whereby the settlor entrusts assets to one or more persons, the trustee, who is required to manage those assets and apply them for a purpose established in advance by the settlor (definition based on Federal Supreme Court judgment 5A_30/2020 of 6 May 2020, para. 3.1).

The trust relationship involves a separate fund (see art. 11 of the Hague Convention on Trusts) over which the trustee holds a “legal title” — which may be understood as a title of effective control independent of any right of ownership. The trustee must administer this separate fund exclusively in the interest of the beneficiaries and in accordance with the trust instrument (“equity compels the trustee to hold, manage and distribute… in strict accordance with the terms of the trust and the fiduciary duties imposed upon him”).

The trustee’s title of effective control over the separate fund is tempered by the personal and proprietary rights of the beneficiaries therein. The beneficiaries have, in particular, personal rights (in personam equitable rights) against the trustee to ensure compliance with the terms of the trust, but also proprietary rights in rem, namely tracing, through which they may seek restitution to the trust of assets improperly transferred by the trustee to a third party acting in bad faith and in which they hold an “equitable interest” (see art. 11 let. d of the Hague Convention on Trusts). Finally, the beneficiaries may in principle unanimously terminate the trust or vary its terms (Saunders v. Vautier, 1841).

The judgment ATF 151/2024 III 361 merely states that assets held in the name of a fiduciary entity or a trust may be subject to reduction pursuant to art. 522 et seq. CC, as the protection of reserved shares under Swiss law is not defeated by the recognition of trusts (see, in particular, art. 15, 16 and 18 of the Hague Convention on Trusts), and that there is no doubt that such transfers of assets are, in principle, subject to the action for reduction (unpublished para. 8 in judgment 5A_89/2024).

Potentially subject to reduction are (i) the transfer(s) from the settlor to the trustee and (ii) distributions made by the trustee to the beneficiaries.

The Trustee as Defendant

The transfer of assets by the settlor to the trustee during the settlor’s lifetime unquestionably constitutes an inter vivos transaction, such that a reduction of the settlor’s transfer to the trustee may be contemplated under the various grounds set out in art. 527 CC (see ACJC/663/2015 GE of 5 June 2015, para. 10.3, concerning a matrimonial clawback within the meaning of art. 208 CC).

Whether the trust is revocable, irrevocable, discretionary, or fixed-interest, the trustee does not have the status of an heir within the meaning of this provision. It follows that, pursuant to art. 527 no. 1 CC, the settlement into trust — more precisely, the transfer to the trustee — would not be subject to reduction.

The transfer by the settlor to the trustee in the context of a revocable trust appears to be subject to reduction under art. 527 no. 3 CC, on the ground that it constitutes a freely revocable gift (this scenario is moreover mentioned in the Federal Council’s message of 29 August 2018 on the revision of succession law, FF 5865, p. 5932).

The same applies to the transfer by the deceased settlor to the trustee of a trust — whether revocable or irrevocable — established within the five years preceding death (art. 527 no. 3 CC).

Finally, the creation of a trust by the settlor may have had no purpose other than to circumvent the rules governing reserved shares, in which case a reduction of the transfer from the settlor to the trustee pursuant to art. 527 no. 4 CC may be contemplated.

The Beneficiaries as Defendants

Regardless of the nature of the trust (revocable, irrevocable, discretionary, or fixed-interest), the amounts actually distributed to the beneficiaries are subject to reduction pursuant to art. 527 no. 1 CC. In accordance with the jurisprudence of the Federal Supreme Court (aforementioned judgment ATF 151/2024 III 361), the fact that the gift is made indirectly, through the trustee, does not affect its reducible nature.

Likewise, regardless of the nature of the trust, if the distribution was made within the five years preceding the death of the settlor, a reduction pursuant to art. 527 no. 3 CC may be contemplated.

Finally, regardless of the nature of the trust, if the trust was created with the manifest intention of avoiding the rules on reserved shares, distributions made to the beneficiaries may be subject to reduction pursuant to art. 527 no. 4 CC.

Assets held in a discretionary trust that have not yet been distributed to the beneficiaries are not subject to reduction in the hands of the beneficiaries, as they only have an expectancy to receive distributions rather than a vested right (see the aforementioned judgment ATF 151/2024 III 361 on hotchpot). Such assets should therefore be subject to reduction at the level of the trust itself.

Necessary Joinder of Parties

The action for reduction is a constitutive claim seeking the creation, modification, or dissolution of a specific right or legal relationship affecting multiple persons, thereby requiring the necessary joinder of all parties to the trust — including the trustee and the beneficiaries (ATF 140 III 598 para. 3.2, on necessary joinder arising from constitutive actions).

It follows that both the trustee and the beneficiaries must participate in the proceedings, namely by being joined as defendants in the action for reduction. This necessary joinder reflects the respective rights and prerogatives of the trustee (title of effective control) and the personal and proprietary rights of the beneficiaries. In this regard, it should be accepted that the trustee’s standing to be sued — as well as the grounds for reduction — must be inferred from the position of the trustee vis-à-vis the beneficiaries.

In practice, proceedings must therefore be brought against all parties to the trust.

Order of reductions

The reduction of inter vivos dispositions is carried out in reverse chronological order (art. 532 para. 2 no. 3 CC). Where several inter vivos dispositions were made simultaneously, they are reduced pro rata (art. 523 and 525 CC). The order of reduction is of particular significance, as the forced heir may obtain reductions only in proportion to his forced share with respect to all reductible dispositions. Should the forced heir fail to seek the reduction of a particular disposition, he shall be deemed to have waived that right; nevertheless, such disposition shall be imputed against his forced share.

Jurisdiction

The action for hotchpot, when combined with an action for partition of the estate, as well as the action for reduction, lies within the jurisdiction of the court of the succession forum, namely the court of the deceased’s last domicile (art. 86 para. 1 PILA).

11 May 2026
Foundations and estate planning

An overview of the use of the foundations in estate and succession planning: current limitations and prospects for reform.

The Use of Foundations

A Swiss foundation is a private law entity established to permanently dedicate assets to a purpose defined by its founder. In this respect, it serves a similar function to that of a trust.

A foundation is a legal entity independent of its founder. Unlike a trust, it has legal personality in the same way as other legal entities. It belongs to itself, has neither members nor owners. The foundation holds the assets derived from its founder’s endowment. It is governed by a board of directors, which is responsible for managing those assets to achieve the purpose of the foundation. The beneficiaries, the scope of the benefits and the conditions thereof are set out in the foundation deed or in a separate set of regulations.

Foundations established under foreign law, particularly those incorporated under the law of Liechtenstein or in offshore jurisdictions, are regularly used for estate and wealth planning purposes.

Swiss foundations are widely used for charitable purposes. By contrast, their use for estate and wealth planning remains non-existent in Switzerland.

The Prohibition of Maintenance Foundations

Swiss foundations are rarely used for estate and wealth planning purposes. This is because Swiss law strictly limits family foundations to specific purposes, namely covering the costs of education, supporting family members in establishing themselves, or providing financial assistance, and similar purposes (art. 335 para. 2 of the Swiss Civil Code).

A family foundation is only permissible where its purpose is limited to addressing specific, concrete, and exceptional needs, such as meeting expenses arising from an accident or illness, funding education, or supporting personal projects.

Under current law, the Swiss Civil Code prohibits family entails, understood as the successive transfer of a dedicated pool of assets within a family. A direct consequence of this prohibition is the nullity of maintenance foundations – that is, foundations whose purpose is to grant their beneficiaries the enjoyment of the foundation’s assets and income. This prohibition was introduced to prevent the accumulation of inalienable property and to protect the foundation’s beneficiaries from a life of idleness.

In a 2009 landmark ruling, the Federal Supreme Court found that this prohibition was rooted in moral, indeed puritanical considerations that have since become outdated (ATF 135/2009 III 614 consid. 4.3.1).

These considerations led the Federal Supreme Court to conclude that the prohibition on family entails in Switzerland does not preclude the recognition in Switzerland of a maintenance foundation validly established abroad – in this case, a foundation incorporated under the law of Liechtenstein (application of mandatory provisions of Swiss law pursuant to art. 18 of the Federal Act on Private International Law).

Paradoxically, a Swiss resident may establish a maintenance foundation under Liechtenstein law – the validity and effects of which will be recognized in Switzerland – whereas it would be impossible for that same resident to establish such a foundation under Swiss law.

Prospects for reform

On 27 February 2024, the Swiss Parliament passed a motion seeking to lift the prohibition on maintenance foundations, in order to facilitate estate and wealth planning within families.

This motion would provide an alternative to a Swiss-law trust, whose introduction failed in 2023 owing to a lack of political consensus, most notably over the proposed tax treatment.

Trusts established under foreign law are nonetheless recognized in Switzerland pursuant to the Hague Convention on the Law Applicable to Trusts and on their Recognition. It is therefore possible to establish a trust under foreign law and to appoint a Swiss trustee. Since the entry into force of the Federal Act on Financial Institutions (FinIA) on 1 January 2020, the activity of trustee in Switzerland has been subject to prior authorization from the Swiss Financial Market Supervisory Authority (FINMA).

26 March 2026

Trusts in Switzerland

Overview of the legal framework applicable to trusts in Switzerland, the regulatory requirements imposed on professional trustees, and the tax treatment of the different types of trusts, including CRS and FATCA reporting obligations.

What is a trust ?
The uses of a trust
The different types of trusts
The validity of a trust
The recognition of trusts in Switzerland
The Swiss regulatory framework
Trust Taxation in Switzerland
Trusts and Automatic Exchange of Information
Common reporting standard (CRS)
FATCA — Foreign Account Tax Compliance Act

What is a trust ?

A trust is a legal relationship enforceable against third parties that arises when the settlor, by executing a settlement or trust deed, transfers specific assets to a trustee, who must manage and use them for a purpose defined by the settlor for the benefit of one or more beneficiaries.

A trust involves:

the settlor: the person who, by unilateral act, creates the trust, transfers assets into it, establishes the rules governing it, and designates its beneficiaries;

the trustee: the person or entity responsible for administering and managing the assets held in trust for the benefit of the beneficiaries;

the beneficiaries: the persons for whose benefit the trust is established;

a distinct fund over which the trustee holds legal title. The trustee must administer this fund exclusively in the interest of the beneficiaries and in accordance with the trust deed. The beneficiaries of the trust hold a personal right (in personam equitable right) against the trustee to ensure compliance with the terms of the trust;

an optional protector: the person or entity responsible for overseeing the trustee or exercising certain powers over the trust. These powers may include, in particular, the power to appoint and remove the trustee, to approve the trustee’s remuneration, to add new beneficiaries, and to grant or withhold consent with respect to certain decisions of the trustee.

The settlor may retain certain prerogatives over the trust through reserved powers. These include the right to veto distributions proposed by the trustee or, conversely, the right to direct the trustee to make distributions, the power to issue investment instructions, the right to alter the classes of beneficiaries, and the right to amend or revoke the trust deed. In addition, the settlor may convey their wishes and intentions to the trustee by way of a letter of wishes.

Unlike a foundation, a trust does not have legal personality.

The uses of a trust

Estate Planning

Upon the settlor’s death, the trust assets continue to be held and managed in accordance with the terms of the trust, rather than being distributed in their entirety to the heirs. The trust thereby serves as a vehicle for preserving a family estate or a business across generations. It is particularly well-suited to individuals seeking to organize the intergenerational transmission of family wealth, safeguard the interests of minor or vulnerable beneficiaries, or ensure a phased distribution of assets over time.

Asset Protection

A trust created for asset protection purposes operates on the principle that the settlor is no longer the legal owner of the assets transferred into the trust. The trust fund ceases to form part of the settlor’s personal estate and cannot, as a general rule, be seized by creditors, subject to the possibility of a clawback action.

This structure is particularly well-suited to individuals residing in politically or economically unstable jurisdictions who seek to protect their assets from arbitrary government seizure, as well as to those engaged in high-risk professions who wish to ring-fence their personal wealth from potential liability.

Furthermore, so long as no distribution has been made, the trust effectively shields beneficiaries from claims brought by their personal creditors.

Tax Efficiency

Depending on the jurisdiction of residence of the parties involved in the trust, the establishment of a trust may give rise to tax savings, particularly with respect to wealth tax and taxes on investment income, where applicable.

Confidentiality

A trust safeguards the privacy of all parties involved and ensures that sensitive information remains shielded from public disclosure. Access to information relating to the trust structure, the settlor, the trust assets, the protector, the trustees and, where applicable, the beneficiaries, is strictly restricted to those directly concerned.

The different types of trusts

There are fundamentally three main types of trust:

Revocable Trust

In a revocable trust, the settlor retains the right to revoke the trust at any time — or may grant this right to another designated person. Upon revocation, the trust is terminated and all assets are returned to the settlor. As a general rule, a revocable trust automatically becomes irrevocable upon the death of the settlor

Irrevocable Trust

In an irrevocable trust, the settlor permanently and irrevocably transfers assets to the trust. Within this category, a distinction is made between the fixed interest trust and the discretionary trust.

Irrevocable Discretionary Trust

The trust deed defines only classes of beneficiaries. The decision as to who will ultimately receive distributions from the trust is left to the trustee. The trustee therefore has full discretionary power to decide which beneficiaries will receive distributions, when and in what amount. It is common practice for the settlor to communicate his motivations and wishes regarding the administration of the trust to the trustee by means of a letter of wishes.

The validity of a trust

From a Swiss law perspective, the validity of a trust is governed by its applicable law. The validity of a trust is subject to compliance with the three certainties rule, as established in Knight v. Knight (Court of Chancery, 1840):

Certainty of intention

It must be clear, from the terms used to create the trust and the circumstances of the specific case, that the settlor intended to establish a trust. A simulated trust would be invalid and constitute a “sham trust.” This principle is illustrated by the case of Rahman v. Chase Bank Trust (Royal Court of Jersey, 1991), in which the settlor had reserved extensive powers over the trust, including the power to distribute all income and capital of the trust fund to any person, including himself, as well as a veto right over any proposed investment. The breadth of these reserved powers demonstrated that the settlor never intended the trust to produce any real legal effects. The trust was considered as a sham trust.

Certainty of object

The beneficiaries must be named, identified or described in the trust deed with sufficient precision to be determined with certainty. In this regard, it is permissible to designate a class of beneficiaries — for example, the descendants of the settlor.

Certainty of subject matter

The assets transferred to the trust must be clearly identified and effectively transferred to the trustee, who will hold legal title over them. It is common practice for a nominal symbolic sum to be transferred to the trust upon its creation (for example, USD 100), with further assets being transferred at a later stage. The initial transfer must be genuine and properly documented to avoid the trust being recharacterised as a sham trust. In practice, the transfer of the nominal sum is documented by a photocopy of the relevant banknote, attached as an annex to the trust deed.

The recognition of trusts in Switzerland

Trusts established under foreign law are automatically recognised in Switzerland pursuant to the Hague Convention on the Law Applicable to Trusts and on their Recognition, which entered into force in Switzerland in 2007.

A trust validly constituted under the law of an offshore jurisdiction is therefore recognised in Switzerland. Such recognition implies in particular that the assets held in the trust constitute a separate fund, distinct from the personal assets of both the trustee and the settlor.

The Swiss regulatory framework

The Federal Act on Financial Institutions (FinIA) and its implementing ordinances (the Ordinance on Financial Institutions, FinIO; the FINMA Financial Institutions Ordinance, FinIO-FINMA) require trustees established in Switzerland to obtain prior authorisation from the Swiss Financial Market Supervisory Authority (FINMA).

For the purposes of the FinIA, a trustee is defined as any person who, on a professional basis, manages or disposes of a separate fund in favour of a beneficiary or for a specified purpose, on the basis of the constitutive act of a trust within the meaning of the Hague Convention on the Law Applicable to Trusts and on their Recognition.

The authorisation from the FINMA is subject to compliance with the following requirements:

the trustee must have an adequate organisational structure, a minimum capital and appropriate own funds;
the management body of the trustee must comprise qualified executives with an adequate training to perform the activity of trustee and sufficient professional experience in the field of trusts;
the persons responsible for administration and management must be of good repute and possess the professional qualifications required for their role;
the trustee must have its effective place of management in Switzerland;
the trustee must ensure the conduct of an irreproachable business activity;
the trustee must have a dedicated compliance function.

Trustees are subject to the supervision of the FINMA, which is carried out in association with a supervisory organisation. Trustees must also engage an audit firm to conduct an annual audit covering, in particular, their organisational structure.

Finally, a professional trustee qualifies as a financial intermediary within the meaning of the Federal Act on Combating Money Laundering and Terrorist Financing (AMLA). As such, the trustee must affiliate with a self-regulatory organisation and comply with the obligations incumbent upon it under the AMLA and its implementing ordinances (AML Ordinance , AMLO-FINMA).

Trust Taxation in Switzerland

Swiss tax legislation contains no specific provisions governing the taxation of trusts. To ensure consistent treatment across cantons, the Swiss Tax Conference (STC) issued Circular No. 30 of 22 August 2007 on the Taxation of Trusts, which has since served as the primary reference framework in this area. In practice, cantonal tax authorities generally follow its guidance.

Since a trust has no legal personality, it is not itself a taxable entity, and no tax is levied on the trust. The taxation of the trust’s assets and income can therefore only arise at the level of the persons involved — the settlor or the beneficiaries — provided they are domiciled in Switzerland.

The trustee is responsible for administering and managing the trust’s assets exclusively in the interest of the beneficiaries. As the trustee holds only legal title over the trust property, such assets cannot be attributed to the trustee for tax purposes. Consequently, the trustee is not subject to tax on the trust’s assets and income.

Taxation may therefore only arise at the level of the settlor or the beneficiaries, depending on the qualification of the trust, and provided they are domiciled in Switzerland:

Revocable trust

A revocable trust is treated as transparent, meaning that its assets and income are attributed to the settlor for tax purposes. Although valid under civil law, the trust is disregarded for tax purposes. Accordingly, neither the establishment of the trust nor the transfer of assets to it is subject to taxation.

Any distribution made by the trust to the beneficiaries will be subject to gift tax, provided the settlor is domiciled in Switzerland. The applicable rate will depend on the settlor’s canton of residence and the degree of kinship between the settlor and the beneficiary.

Upon the settlor’s death, the trust becomes irrevocable (unless the power of revocation has been transferred to a third party). Where the settlor was domiciled in Switzerland at the time of death, the trust’s newly irrevocable character may trigger inheritance tax, the rate of which varies across cantons. In certain cantons, such as Geneva, the applicable rate is determined by the degree of relationship between the deceased settlor and the beneficiaries.

The tax treatment of the revocable trust may be summarised as follows:

Element	Tax treatment
Tax status of the trust	The trust is treated as transparent for tax purposes; its assets and income are attributed to the settlor.
Establishment of the trust	The establishment of the trust and the transfer of assets to it do not give rise to any taxation.
Taxation of the trust fund	The trust’s assets and income are attributed to the settlor for tax purposes for as long as the trust remains revocable.
Distributions to beneficiaries	Distributions are subject to gift tax, provided the settlor is domiciled in Switzerland. The applicable rate varies depending on the settlor’s canton of residence and the degree of relationship with the beneficiary.
Situation of the trust upon the settlor’s death.	The trust becomes irrevocable upon the settlor’s death, unless the power of revocation has been transferred to a third party.
Tax consequence upon death	Where the settlor was domiciled in Switzerland at the time of death, inheritance tax may be levied, the rate of which varies by canton and degree of relationship with the beneficiaries.

Irrevocable Fixed Interest Trust

For tax purposes trust assets are attributed to the beneficiaries, who hold a vested right to receive distributions from the trust.

Upon establishment of the trust, where the settlor is domiciled in Switzerland, the transfer of assets into the trust is treated as a gift from the settlor to the beneficiary, proportionate to each beneficiary’s respective share in the trust.

The beneficiary’s interest in the trust is subject to wealth tax, provided the beneficiary is domiciled in Switzerland. Where a beneficiary is entitled solely to periodic distributions (whether monthly or annual), the taxable wealth shall be determined by capitalisation of future distributions.

Distributions of trust capital, as well as capital gains realised by the trust, are exempt from taxation. By contrast, distributions of trust income are taxable in the hands of the beneficiaries. Capital distributions may only be made once all trust income has been fully distributed.

The tax treatment of the irrevocable fixed Interest trust may be summarised as follows:

Element	Tax treatment
Tax status of the trust	The trust is recognised for tax purposes. The settlor’s divestiture of assets is recognised for tax purposes.
Establishment of the trust	The transfer of assets into the trust is treated as a gift from the settlor to the beneficiaries, proportionate to their respective share in the trust.
Taxation of the trust fund	Each beneficiary’s interest in the trust is subject to wealth tax, provided the beneficiary is domiciled in Switzerland.
Distributions to beneficiaries	Distributions of trust capital or capital gains are not subject to taxation. Distributions of trust income are taxable in the hands of the beneficiaries.
Situation of the trust upon the settlor’s death	The trust becomes irrevocable upon the settlor’s death, unless the right of revocation has been expressly transferred to a third party.

Irrevocable Discretionary Trust

The tax treatment differs depending on whether the trust was established when the settlor was domiciled abroad or in Switzerland.

Settlor domiciled abroad at the time of the establishment of the trust

Where the trust was established when the settlor was domiciled abroad, the trust capital is attributed for tax purposes neither to the settlor nor to the beneficiaries. Accordingly, neither the settlor nor the beneficiaries are subject to wealth tax on the trust capital. This absence of taxation stems from the fact that the beneficiaries have no vested right to receive distributions, given the discretionary nature of the trust.

Distributions from the trust capital are not taxable at le level of the beneficiaries.

Distributions from the trust’s income, including capital gains, are however taxable at the level of the beneficiaries domiciled in Switzerland.

The tax treatment of the irrevocable discretionary trust may be summarised as follows:

Element	Tax treatment
Tax status of the trust	The trust is recognised for tax purposes. The settlor’s divestiture is recognised for tax purposes.
Taxation of the trust fund	The trust capital is attributed for tax purposes neither to the settlor nor to the beneficiaries. Accordingly, neither is subject to wealth tax on the trust capital.
Distributions to beneficiaries	Distributions from the trust capital, as well as capital gains realised by the trust, are not subject to tax. By contrast, distributions of trust income are taxable at the level of the beneficiaries.
Situation of the trust upon the settlor’s death	No consequence

Settlor domiciled in Switzerland at the time of the establishment of the trust

Where the trust was established at a time when the settlor was domiciled in Switzerland, the trust assets and their income remain taxable in the hands of the settlor. The applicable tax treatment is therefore identical to that of a revocable trust.

Settlor subject to lump-sum taxation at the time of the establishment of the trust

Where the trust was established at a time when the settlor was domiciled in Switzerland and taxed on an expenditure basis (lump-sum taxation), the irrevocable discretionary trust will be recognised for tax purposes with respect to foreign-source assets placed in the trust. The settlor’s divestiture of such foreign-source assets will be recognised, resulting in a tax treatment identical to that of an irrevocable discretionary trust established abroad. This follows from the fact that foreign-source assets are not taken into account in the control calculation for expenditure-based taxation. Gift tax may be levied on foreign-source assets thus transferred to the trust. By contrast, the transfer of Swiss-source assets to the trust will not be recognised for tax purposes, and their tax treatment will remain identical to that applicable to a revocable trust.

Element	Foreign-source assets	Swiss-source assets
Consideration in the control calculation	Foreign assets are not taken into account in the control calculation for lump-sum taxation purposes.	Swiss assets are taken into account in the control calculation for lump-sum taxation purposes.
Taxation upon transfer to the trust	The transfer may trigger gift tax liability.	No taxation arises upon transfer.
Tax recognition of the trust	The irrevocable discretionary trust is recognised for tax purposes and the settlor’s divestiture of assets is accordingly acknowledged.	The trust is not recognised for tax purposes. Assets transferred in Switzerland remain attributed to the settlor for tax purposes.

Trusts and Automatic Exchange of Information

Common reporting standard (CRS)

Switzerland applies the automatic exchange of information (AEOI) with States party to the Convention on Mutual Administrative Assistance in Tax Matters on the basis of the Multilateral Competent Authority Agreement (MCAA). In its relations with European Union member states, Switzerland applies the AEOI under the Agreement between Switzerland and the European Union on the Automatic Exchange of Financial Account Information. Both instruments give effect to the Common Reporting Standard (CRS). The list of jurisdictions party to these agreements is on the website of the State Secretariat for International Financial Matters (SIF). These international agreements are transposed into Swiss law by the Federal Act on the International Automatic Exchange of Information in Tax Matters (AEOIA) and its implementing ordinance (AEOIA-O). A directive issued by the Federal Tax Administration sets out the practical application of the CRS.

The CRS Framework

The automatic exchange of information under the CRS operates on the following principle: financial institutions identify accounts held by non-resident taxpayers and report the relevant information annually to their domestic tax authority, which then forwards it to the tax authority of the jurisdiction in which the account holder is tax resident.

The Trustee as a Reporting Financial Institution

A corporate trustee qualifies as a reporting financial institution (FI) when it meets the definition of an investment entity carrying out, on behalf of clients, investment, administration or management of financial assets.

The Trust as a Reporting Financial Institution

A trust may itself qualify as a reporting financial institution where its gross income is primarily derived from investment activities and it is managed by a financial institution, being either the trustee or a bank responsible for managing its assets.

In the absence of these conditions, the trust will be classified as a non-financial entity (NFE): passive where its income consists predominantly of passive capital income, or active where its income derives principally from an active business activity.

Where a trust qualifies as a reporting financial institution, the trustee may discharge the reporting obligations on its behalf. In such a case, the trust is treated as a trustee-documented trust and therefore classified as a non-reporting financial institution.

The Trustee-Documented Trust

Where a trust qualifies as a reporting financial institution, the trustee may assume the reporting obligations on its behalf. In such a case, the trust is treated as a trustee-documented trust and therefore classified as a non-reporting financial institution.

Underlying companies

Where a trust holds an underlying company, that company must be subject to a separate analysis under the CRS to determine its own classification — whether as a financial institution, an active non-financial entity (active NFE) or a passive non-financial entity (passive NFE).

Reporting

Financial institutions are required to report accounts held by passive non-financial entities (passive NFEs) where their controlling persons are reportable persons, namely individuals who are tax resident in a reportable jurisdiction. In the context of a trust, the following persons are treated as reportable persons: the settlor, the trustee, the protector, the beneficiaries and any other person exercising effective control over the trust, provided they are tax resident in a reportable jurisdiction.

Furthermore, investment entities that are professionally managed and established in non-participating jurisdictions are treated as passive non-financial entities (passive NFEs). Accordingly, their controlling persons are subject to reporting where they are tax resident in a reportable jurisdiction.

Where an active non-financial entity (active NFE) is resident in a reportable jurisdiction, the financial institution is required to report the relevant account. In such a case, only information relating to the entity itself is reported; the controlling persons are not subject to any reporting obligation

Where a trust qualifies as a financial institution (FI), the reportable information relates primarily to the identification of the reportable persons connected to the trust (settlor, trustee, beneficiaries, etc.), the aggregate value of the trust’s assets and any distributions made in favour of the beneficiaries.

Financial institutions are required to file their annual CRS report within six months of the end of the relevant calendar year, that is no later than 30 June of the following year.

FATCA — Foreign Account Tax Compliance Act

The Agreement between Switzerland and the United States of America of 14 February 2013 (IGA model 2), which entered into force on 2 June 2014, aims to ensure compliance with the Foreign Account Tax Compliance Act by Swiss financial institutions. It is given effect through the Federal Act on the Implementation of the FATCA Agreement between Switzerland and the United States.

The FATCA Framework

The FATCA (Foreign Account Tax Compliance Act) is a US law that requires foreign financial institutions to identify and report to the US tax authorities the accounts held by US Persons — namely US taxpayers, US tax residents, and entities controlled by US persons. Under the Model 2 FATCA Agreement, Swiss financial institutions report directly to the IRS (Internal Revenue Service).

US persons are identified through a W-9 form, while non-US individuals are identified through a W-8BEN form. Non-US entities are identified through a W-8BEN-E form, which serves in particular to identify any US controlling persons in the case of passive non-financial foreign entities (Passive NFFEs).

The Trustee as a Foreign Financial Institution

A corporate trustee qualifies as a foreign financial institution (FFI) where it meets the definition of an investment entity conducting investment, administration or financial asset management activities on behalf of clients (Type A investment entity).

The Trust as a Foreign Financial Institution

A trust may itself qualify as a foreign financial institution where its gross income is derived primarily from investment activities and it is managed by a foreign financial institution — whether a corporate trustee or a custodian bank — within the meaning of the “managed by test”. In such case, it is classified as a Type B investment entity.

Where the trust does not meet these conditions, it will be classified as a non-financial foreign entity (NFFE). A NFFE is passive where its gross income or assets are predominantly passive in nature (interest, dividends, capital gains, etc.); conversely, it is active where its income is predominantly derived from an operational activity.

Sponsoring and owner documented FFI

Sponsoring allows a trust to delegate its FATCA obligations to another entity known as a “sponsoring entity”, which fulfils those obligations on the trust’s behalf. It is common for the trustee itself to act as sponsoring entity, thereby ensuring the trust’s FATCA compliance.

Where the trust qualifies as an FFI, it may also obtain “owner documented FFI” status. To do so, it must hold an account with a participating financial institution — such as a bank — and provide it with the required documentation. That institution then assumes the trust’s FATCA reporting obligations, exempting the trust from registering directly with the IRS.

Reporting

FATCA requires foreign financial institutions (FFIs) located in a participating jurisdiction to register with the IRS, obtain a Global Intermediary Identification Number (GIIN), and report annually information on accounts held by US persons, as well as accounts of passive entities (passive NFFEs) where one or more controlling persons are US persons.

A US person is deemed to control a NFFE if he holds, directly or indirectly, more than 25% of the entity, or exercises effective control over it on another basis. In the case of a trust, the settlor, the trustee and the protector must be reported. The beneficiaries of a fixed-interest trust must be reported, as well as beneficiaries of a discretionary trust if they received a distribution from the trust during the relevant year.

With respect to beneficiaries of a discretionary trust, the FFI must report the amounts distributed to them during the relevant year. With respect to the settlor, the total value of the trust assets must be reported, together with any amounts distributed to him during the year in question. In the case of a fixed-interest trust, the amount to which the beneficiary holds a vested entitlement must be reported.

Where the trust qualifies as an active NFFE — that is, a non-financial entity whose income and assets are not predominantly passive in nature — no reporting obligation applies.

Reporting must be filed with the IRS by 31 May of each year.

20 March 2026

Successions, Trusts, and Acquisition of Real Property in Switzerland by Foreigners

Summary

The Acquisition of Real Property in Switzerland by a Foreigner

The acquisition of real property

By a foreigner

The Authorization Regime

Exemptions from the Authorization Regime

Real Property Used as a Permanent Establishment

Primary Residence

Categories of Purchasers

Grounds for Authorization

Banks and Insurance Companies

The Heir Subject to the Authorization Requirement

Hardship Cases

Cantonal Grounds for Authorization

Social Housing Construction

Secondary Residence

Holiday Homes

Overview

Natural persons

Legal entities

Procedure

Land Registry

Successions and Acquisition of Real Property in Switzerland by Foreigners

Acquisition by Statutory Heirs

Acquisition by Appointed Heirs and Legatees

Trusts and the Acquisition of Real Property in Switzerland by Foreigners

Irrevocable Discretionary Trust with Foreign Beneficiaries

Irrevocable Discretionary Trust with Swiss Beneficiaries

Transfer of a Holiday Home to a Trust with Foreign Beneficiaries

Legislative Developments

Trusts and Estate Litigation in Switzerland

The action for recovery of the estate

Hotchpot

General Principles Governing Hotchpot

Statutory Hotchpot in the Context of a Trust

Recent Federal Supreme Court Case Law

Reconciling Statutory Hotchpot with the Hague Convention on Trusts

The Modification of the Scale of Values

The Intention to Give

The Action for Reduction

The Action for Reduction in General

The Action for Reduction in the Context of a Trust

The Trustee as Defendant

The Beneficiaries as Defendants

Necessary Joinder of Parties

Order of reductions

Jurisdiction

Foundations and estate planning

The Use of Foundations

The Prohibition of Maintenance Foundations

Prospects for reform

Trusts in Switzerland

What is a trust ?

The uses of a trust

Estate Planning

Asset Protection

Tax Efficiency

Confidentiality

The different types of trusts

Revocable Trust

Irrevocable Trust

Irrevocable Discretionary Trust

The validity of a trust

Certainty of intention

Certainty of object

Certainty of subject matter

The recognition of trusts in Switzerland

The Swiss regulatory framework

Trust Taxation in Switzerland

Revocable trust

Irrevocable Fixed Interest Trust

Irrevocable Discretionary Trust

Settlor domiciled abroad at the time of the establishment of the trust

Settlor subject to lump-sum taxation at the time of the establishment of the trust

Trusts and Automatic Exchange of Information

Common reporting standard (CRS)

The CRS Framework

The Trustee as a Reporting Financial Institution

The Trust as a Reporting Financial Institution