Voluntary self-disclosure without penalties and simplified taxation for heirs – Part 4: simplified taxation for heirs

In recent years, especially since the financial crisis of 2007/2008, actions against tax fraud and tax evasion have been intensified. The focus is not only on preventing future tax crimes. In Switzerland, the penalty-free voluntary disclosure and the simplified inheritance tax adjustment provide an incentive to legitimize previously undeclared income and assets. Findea explains these concepts in a four-part series of articles. This last article explains the simplified inheritance tax adjustment.

As explained in the second article, the simplified inheritance tax adjustment is only applicable for the direct federal tax and the income and wealth taxes of the cantons. It is regulated in Art. 153a DBG or Art. 53a StHG. When a person dies, all heirs, independently of each other, have the right to demand the simplified inheritance tax adjustment. This right is also granted to the executor or the estate administrator. The simplified inheritance tax adjustment is not available for estates that are liquidated officially or through bankruptcy proceedings. The option of simplified inheritance tax adjustment is subject to the same conditions as that of the penalty-free voluntary disclosure (see third article). These are: 1. The evasion must not yet be known to any tax authority. 2. The declaring person must unreservedly support the administration in determining the evaded assets and income elements; and 3. They must make a serious effort to pay the owed back taxes. A major difference from the penalty-free voluntary disclosure is the duration for which the back tax is requested. While it is a period of ten years for the penalty-free voluntary disclosure, it is only three years for the inheritance tax adjustment.

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