Inheritance tax in an intercantonal tax allocation

Depending on the canton in which the decedent had his last residence, it is determined whether and to what extent an inheritance tax is due. If the decedent leaves behind real estate located in a different canton from his canton of residence, the intercantonal tax allocation comes into effect, which allows the cantons to tax their share of the total estate.

In the event of an inheritance, inheritance taxes are often due. Whether they are due and how much they may be depends on the canton in which the decedent lived. For example, no taxes are due in the canton of Schwyz, but they are in Lucerne. If the estate also includes real estate located in a different canton than the decedent's canton of residence, an intercantonal tax allocation is carried out. More detailed information about the tax allocation can be found in our article "What is a Tax Allocation?".

On June 2, 2017, the Federal Court ruled in a case that involved the intercantonal tax allocation. A decedent, who lived in the canton of Schwyz, left behind assets to his community of heirs as well as his co-ownership of a property in the canton of Lucerne. Subsequently, the division office of the Lucerne municipality where the property was located assigned 14.62% of the total taxable net estate (assets and the tax value of the property minus debts and mortgage debt) to its own municipality. This corresponds to the quota of the entire estate located in Lucerne. Against this, the community of heirs filed an objection, which was dismissed by the municipal council of the Lucerne municipality and then corrected the share to 18.74%. The inheritance taxes, which thus became due in Lucerne, amounted to 9'378.65 Fr. The community of heirs took the case to the Canton Court of Lucerne and due to the dismissal, up to the Federal Court.

They argued that only the heirs taking over the property would be liable for inheritance tax and therefore demanded a correction. However, the Federal Court dismissed the complaint, since the tax allocation had been correctly carried out. In the event of an inheritance, each involved canton (residence canton and property cantons) may tax each part of an estate in proportion to the assets attributable to it (canton quota) to the total assets (net estate). It does not depend on which assets had been assigned to the heirs. They would be liable for taxes in all cantons involved in the taxation of the estate.

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