Trust Law in Switzerland
Trust Law in SwitzerlandUpdated on Friday 21st October 2016
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Although many states have adopted a legislation regulating the incorporation and the activity of a trust, in Switzerland this is not the case, as there is no specific law which refers to this matter. Still, a trust can be registered in Switzerland, but only in accordance with the foreign legislation, which can be chosen by the settlor (the person who is opening a trust). Businessmen can receive legal assistance from our Swiss law firm on the rules applicable to such entities, the taxation system they must respect and many other aspects.
Trust regulations applicable in Switzerland
Investors who want to start a business in Switzerland as a trust can’t incorporate the business form here, but the local administration recognizes the activity of the foreign trusts on the Swiss market, under the regulations of the Hague Convention on the Law Applicable to Trusts.
The taxes applicable to trusts in Switzerland
Since the activity of a trust is recognized in Switzerland, it is taxed in accordance with the applicable legislation. In this sense, the Swiss law imposes the following taxes:
• income tax;
• withholding tax;
• gift tax;
• inheritance tax.
The taxation is performed following the regulations provided by the Circular Letter, a document adopted by the local authorities in 2008, which provides a harmonized perspective on the tax system applicable at each cantonal level. Our attorneys in Switzerland can offer more details on this matter, including on the differences established between revocable and irrevocable trusts.
Types of trusts recognized in Switzerland
As mentioned above, the Swiss legislation differentiates between revocable and irrevocable trusts. The first type of trust refers to the fact that the settlor has the legal right to influence the assets owned in the trust. In an irrevocable trust, the settlor disposed of the assets, which belong to the trust. In this sense, the legislation further distinguishes between:
• irrevocable fixed interest trusts;
• irrevocable discretionary trusts.
Persons who are interested in finding out more details on the Swiss trust law are invited to contact our law firm in Switzerland.