Inheritance Tax Rules Clarified in Switzerland and Germany

Switzerland’s inheritance tax varies by canton. All heirs generally owe tax, but the surviving spouse or registered partner and direct descendants (children and grandchildren) are usually exempt. In Appenzell‑Innerrhoden and Geneva, long‑term non‑marital partners are treated as taxable heirs and face the highest rates, while many cantons apply reduced rates if the partners cohabited for at least five or ten years. Graubünden exempts partners without defining the term, and rules for step‑children and foster children differ across cantons.

In Germany, the Federal Fiscal Court ruled that legal fees incurred during a partition auction to settle an inheritance dispute are deductible as inheritance‑tax liabilities. The case involved a brother who paid roughly €100,000 in attorney fees while dividing his late father’s assets, including securities and rental properties. The tax office had assessed an inheritance tax of about €770,000, but the court allowed the fees to be subtracted from the taxable estate, lowering the tax burden for the heirs.