Transmission of Shares in Foreign Companies: Anticipate the Risk of Double Inheritance Taxation

The holding of shares in foreign listed companies is now widespread in the portfolios of Swiss investors. The internationalization of investments has intensified with the rise of global trading platforms and wealth diversification strategies. However, while these assets may offer attractive economic potential, their transfer (by inheritance or donation) raises complex tax issues that should not be overlooked.

One of the main risks is exposure to double taxation in connection with inheritance or gift taxes.

What Swiss Law says...

Under Swiss law, the taxation of inheritances and gifts falls within the exclusive jurisdiction of the cantons. The place of taxation is generally determined by the tax residence of the donor or the deceased at the time of the transfer. This means that a Swiss tax resident, even if holding a portfolio of foreign shares, will, in principle, be taxed only in Switzerland.

...But it’s not always that simple.

This principle of territoriality does not always align with international practices. Many countries also claim the right to tax the transfer of shares if the issuing company is domiciled in their territory. The result: a single transfer can trigger taxation both in Switzerland and in the country where the shares originate.

The risk of double taxation

Double inheritance taxation occurs when two countries consider themselves entitled to tax the same transfer, based on different legal grounds:

Switzerland, as the country of residence of the donor or deceased.
The foreign country, as the country where the issuing company is based.

This situation may arise even when a double taxation treaty exists, if the treaty does not explicitly address inheritance matters or provides for an imperfect allocation of taxing rights.

Some common examples:

United States: Do you hold shares in U.S.-listed companies ? Be cautious: in the event of death, these shares may be subject to U.S. federal estate tax, even if the deceased and the heirs reside in Switzerland. Few taxpayers are aware that the U.S.-Switzerland estate tax treaty can limit this exposure, but only under specific conditions and with complex calculations based on the proportion of U.S.-situs assets in the global estate. This mechanism is difficult to apply in practice and often overlooked, exposing heirs to unexpected tax liabilities. Proactive planning is key to mitigating risk, optimizing the transfer, and preserving family wealth.
France: France applies inheritance tax under Article 750 ter of the French General Tax Code. According to this provision, France can tax the transfer of French shares even when the deceased and heirs are not tax residents in France, provided the shares were issued by a French company. At the same time, Switzerland, depending on the applicable cantonal law, may also tax the entire estate, without a bilateral mechanism to eliminate double inheritance taxation. In the absence of a treaty between the two countries on this matter, only proper estate planning can secure the transfer and optimize the overall tax burden.

What about shares from other countries?

This risk is not limited to the United States or neighboring countries such as France, Italy, Germany, or Austria. It can also arise from so-called "exotic" jurisdictions, which often apply unilateral tax policies or have not signed a tax treaty with Switzerland.

Plan ahead to protect your wealth

Given these uncertainties, it is essential to conduct a prior and in-depth analysis of the structure of your foreign shareholdings. This approach allows you to:

Identify assets likely to trigger cross-border or double taxation in the context of inheritance/gift;
Verify the existence, scope, and impact of applicable bilateral tax treaties;
Define and implement an appropriate wealth management strategy, such as early transfer, restructuring of legal ownership, or the use of an appropriate holding vehicle.

At RSM, we combine local expertise in Swiss tax law with access to an international network present in over 120 countries, enabling us to provide a comprehensive cross-border analysis, regardless of the country of origin of the shares.

A well-prepared transfer secures your legacy!

Are you wondering about your portfolio’s exposure to double taxation risk? Are you considering a donation or looking to plan your inheritance in advance?

Contact us for a tailored international tax review and inheritance strategy.