On 15 May 2024, the Federal Council rejected the Young Socialists’ initiative ‘For a social climate policy – fairly financed through taxation’ without a counter-proposal. This week, the Federal Council commented on specific demands in the initiative text and, in particular, defused the issue of the impending exit tax, which is great news.
Demands of the inheritance tax initiative
The initiators are calling for the introduction of a gift and inheritance tax at federal level with a tax rate of 50% and a tax-free amount of CHF 50 million. No exceptions are envisaged, e.g. for spouses or direct descendants. The tax revenue is earmarked and is to be used for climate protection measures.
Under the heading of preventing tax avoidance, an exit tax is also to be implicitly introduced in that, if the initiative is accepted, measures are to be taken from the day of the vote to prevent tax avoidance.
The vote on the initiative is expected to take place in 2026.
Statement from the Federal Council
In particular, the demand to introduce an exit tax with effect from the day of the vote has led to uncertainty, which is why the Federal Council wanted to provide more clarity on this aspect in response to National Councillor Schneeberger’s interpellation.
The Federal Council states that it is opposed to an exit tax and specifies that moving abroad does not qualify as tax avoidance per se. It is also questionable whether the retroactive effect could even apply to the tax avoidance measures, such as a change of residence. According to the Federal Council, such a retroactive effect is highly problematic in terms of state policy, meaning that it can be assumed that the Federal Council will not implement this.
A retroactive right of taxation is not ruled out if a person makes a gift shortly after leaving Switzerland. However, such a tax would not be enforceable abroad at present, as Switzerland has not agreed enforcement assistance for inheritance tax claims with any state.
The Federal Council also notes that the implementation of the initiative, if adopted, would in any case have to comply with international law and the constitution and fulfil the principle of proportionality.
Next steps
In the report to be published by the beginning of February 2025 at the latest, the Federal Council will comment in more detail on the possible implementation of the initiative in the event of its adoption and will also address the measures to prevent tax avoidance. Potentially affected taxpayers will therefore have sufficient time to scrutinise any measures – if necessary at all – before the voting day. Premature relocations abroad are therefore not necessary.