Donation
Donation
In the absence of federal harmonisation in the area of inheritance and gift taxation, the vast majority of cantons have enacted their own rules in this area, each with their own tax rates. In Geneva, articles 11 et seq. of the law on registration duties (LDE) set out the principles applicable to gifts, particularly when a sum of money is involved. In this case, the duties (tax) are payable in Geneva only if the donor is domiciled in the canton. Under articles 239 et seq. of the Swiss Code of Obligations (CO), any inter vivos arrangement whereby one person transfers all or part of his assets to another without any corresponding consideration is considered a gift. However, certain sums are not taxed, depending on the relationship between the donor and the beneficiary. Under article 19 of the LDE, donations to relatives in the direct line, spouses and relatives in the direct line are exempt from duty up to CHF 10,000 and are taxed at 3% from CHF 10,001 to CHF 50,000, at 3.5% from CHF 50,001 to CHF 100,000 and then progressively up to 6% for donations of more than CHF 500,000. Since 1 June 2004, this scale has been reduced, and donations made by the donor to his or her spouse or direct relatives (father, mother or child) are now completely tax-exempt under article 27A of the LDE, while other donations, in particular to grandchildren and grandparents, are subject to an additional tax of 20% (art. 19 al. 4 LDE) and vary according to the relationship. For a gift between a brother and a sister, the rate of duty is 9% from CHF 5,001 to CHF 100,000, followed by a progressive rate for larger gifts. Where there is no particular family relationship, the gift is taxed at 24% from CHF 5,001 to CHF 100,000, followed by 26% for sums in excess of CHF 100,000. As you can see, even a gift of less than CHF 10,000 can be taxed, and it is necessary to analyse precisely who the beneficiary is and how they are related to the donor in order to estimate the duty that will be levied. It is important to remember that the above rules apply only to Geneva and differ from canton to canton.
