The Tax Treatment of Family Trust in Switzerland

Published on: 22 April 2025

Family trust is a beneficial tool for succession planning in Switzerland, particularly for high-net-worth families. From Swiss tax perspective, trusts are not obliged to pay tax in Switzerland provided that the settlor and beneficiaries are non-Swiss tax residents, which is especially supportive for Switzerland to be an influential international financial center in the world.   

But if the settlor is a Swiss tax resident when the trust is created, the trust is transparent itself from Swiss tax perspective. The trust assets are attributed to the settlor’s personal assets, subject to his/her income, wealth, and inheritance/gifts taxes in Switzerland. In split of this, succession planning is still an important incentive for Swiss residents to set up family trust.

If the settlor is a non-Swiss tax resident when the trust is created while later the settlor relocates to Switzerland, the pre-immigration trust may be regarded as independent from the settlor from Swiss tax perspective, provided that the trust is irrevocable, and the settlor does not retain control over the trust assets as well as not being a beneficiary of the trust. So long as that the trust does not make distribution to a beneficiary, the trust assets are not taxable in Switzerland. Whilst in the case of distribution and the beneficiary being a Swiss tax resident, Swiss taxation may arise regarding the distribution. Nevertheless, it is highly recommended for a client to obtain a prior tax ruling from the Swiss tax authority regarding a pre-immigration trust’s tax treatment in Switzerland.