Trusts and Switzerland connections

Switzerland and trusts: a unique framework

Switzerland occupies a singular position in the trust landscape. Although it does not have national legislation enabling the creation of Swiss trusts, it has recognised foreign trusts since 2007 and has put in place, since 2020, a demanding regulatory framework for professional trustees through FINMA. This combination makes Switzerland a jurisdiction of choice for the administration of international trusts.

For families with a connection to Switzerland, whether through residence, nationality, bank accounts, real estate or Swiss beneficiaries, understanding the specific implications of Swiss law is essential for structuring and administering a trust optimally.

Swiss residents and trusts

Swiss residents considering establishing a trust or who are beneficiaries of an existing trust must take several dimensions into account:

• Income taxation: depending on the classification of the trust (revocable or irrevocable, discretionary or fixed), income may be taxed at the level of the settlor, the trust or the beneficiary. FTA Circular No. 30 provides the applicable guidelines.
• Wealth tax: assets of a revocable trust are included in the settlor's taxable wealth. For an irrevocable discretionary trust, the position is more nuanced and depends on the degree of control effectively retained by the settlor.
• Inheritance taxes: Swiss cantons apply different rules on inheritance taxes. Transfers via a trust must be analysed in light of the applicable cantonal legislation.
• Forced heirship: Swiss law grants reserved shares to legal heirs. A trust must be structured with these rights in mind to avoid subsequent challenge.

Swiss assets in a trust

Holding Swiss assets within a trust raises specific questions:

• Bank accounts: Swiss banks are accustomed to working with professional trustees and offer dedicated trust services. Account opening requires comprehensive KYC documentation and verification of the trustee's FINMA licence.
• Real estate: the acquisition of real estate in Switzerland by foreign persons is subject to the Lex Koller. A foreign trust is generally considered a foreign acquirer, which limits residential property purchases.
• Participations in Swiss companies: a trust can hold participations in Swiss companies, subject to compliance with applicable transparency and disclosure obligations.

The FINMA-licensed Swiss trustee: a decisive advantage

Choosing a FINMA-licensed trustee is a determining factor for families with a Swiss connection. FINMA licensing ensures that the trustee meets the highest standards in governance, risk management, anti-money laundering and protection of beneficiaries' interests.

Swiss Trustee, as a FINMA-licensed trustee based in Geneva, has an intimate knowledge of the Swiss legal and tax framework. We work in close coordination with cantonal tax authorities, banks and local legal advisers to ensure optimal structuring and administration of trusts involving Swiss elements.

Coordination with the Swiss ecosystem

Our base in Geneva places us at the heart of an exceptional ecosystem of financial and legal expertise. We regularly collaborate with law firms, fiduciaries, private banks and Swiss wealth managers to offer our clients integrated solutions perfectly suited to the Swiss context. This proximity is a major asset for families wishing to benefit from Swiss stability and professionalism in the administration of their trust.