Should Swiss investors worry about the US Estate Tax in 2026?
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Many think investing in the United States Exchange Traded Funds (ETFs) is dangerous. They believe that because of the US Estate Tax, they will lose a lot of money. This tax will heavily tax the assets of a decedent.
The US estate tax means that your beneficiary will only get a portion of your estate when you decease. Because of that, many people recommend not investing in American ETFs (or even stocks).
But is that even true? Not really! Indeed, many people forget about the US-Switzerland double taxation estate tax treaty.
In this article, we detail the US Estate Tax and the US Estate Tax Treaty with Switzerland. And we see what this means for Swiss investors.
The US Estate Tax
In the United States, when an estate is transferred from a deceased person, the beneficiary has to pay a tax on this estate.
This estate tax is a United States federal tax. It means it will apply everywhere in the United States. In addition to that, some states have added extra inheritance taxes. And some states have removed the estate tax. However, we will focus on the US Federal Estate Tax since this is the one that matters in our case.
This US Estate Tax law taxes inheritance at 40% of the estate’s value. It is a very significant estate tax. It is among the top estate taxes in the world.
For American citizens, estates of up to 13.99 million dollars (as of 2025) are exempt from the US Estate Tax. This exemption is adjusted every year for inflation. It means that most American investors do not care about this law. Very few investors have estates worth that much money.
It is important that the exemption is for filing the US estate forms. If you are above the threshold, you will have to file the exemption. The exemption works on the gross estate value. But the tax itself will be made on the taxable estate value. The main difference between these two numbers is that you can deduct your mortgage from your taxable estate value.
However, this law also applies to non-resident aliens. It means it applies to everybody who invests in US products. And unfortunately, the large exemption of 13.99 million dollars only applies to US citizens.
Non-resident aliens only have an exemption of only up to 60’000 dollars. It means that if you have US assets valued at more than 60’000 dollars, you must pay this estate tax. You will not be paying this tax, but it will be the beneficiary of your estate, likely your spouse.
So this means that if you invest in a US ETF, you will be subject to estate tax. In general, this means that if you have more than 60’000 USD in US ETF, your beneficiaries will lose 40% of this value. It is a very significant tax. This loss could be terrible if your beneficiaries rely on your portfolio.
Because of that, many people assume that they should not invest more than 60’000 in US ETF. But this is not true in Switzerland!
The US Estate Tax Treaties
The United States has many tax treaties with other countries in the world.
The United States has two kinds of tax treaties:
- Income Tax Treaties
- Estate Tax Treaties
For this current problem, we are only interested in estate tax treaties.
These treaties can change how citizens of other countries are taxed either on income or on the estate. In the case of estate tax treaties, these treaties generally provide better conditions for foreign citizens.
The United States has about 60 income tax treaties currently. But they only have 15 estate tax treaties. And fortunately for us, Switzerland is on the list. It means that this treaty must be considered if we want to consider the US Estate Tax.
If you are interested, you can find the list of US Estate Tax Treaties from the IRS. This list should be kept complete.
The US Switzerland Estate Tax Treaty
In 1951, the United States and the Swiss Confederation signed an estate tax treaty. To this day, this treaty is still valid. And this tax treaty is perfect for Swiss investors that have US assets.
The official name of the tax treaty is “Convention between the Swiss Confederation and the United States of America for the avoidance of double taxation concerning taxes on estates and inheritances”.
What does this mean for Swiss investors? First, this treaty works both ways. There are some exemptions for Swiss people regarding US taxes, and there are some exemptions for Americans regarding Swiss taxes. But here, we are only interested in exemptions for Swiss people.
The law article states that decedent citizens of Switzerland (or domiciled in Switzerland) have a right to a certain proportion of the same exemption that would apply to a United States citizen. We saw before that this exemption was 13.99 million dollars.
The critical part is the proportion. It is relatively easy to figure out. It is the proportion of US assets in your entire net worth. You divide the value of your assets in the US by your entire estate value, and you will get your proportion of US assets. We also run some examples to make that clearer.
If you want all the details, you can read the original 1951 US Swiss Estate Tax Treaty (in German). It is a relatively short read. And I would say that for an official document, it is a straightforward document.
Examples
We can give a few examples to make it simpler:
- The decedent’s estate is one million dollars, with 200’000 dollars in US assets and the rest in Swiss assets. The decedent has 20% of US assets. It means he can get an exemption of up to 20% of 13.99 million, 2.798 million dollars. So, his beneficiaries will not pay any US taxes.
- The decedent’s estate is 2 million dollars, with 1.8 million dollars in US assets. The decedent has 90% of US assets. So, he can get an exemption of up to 90% of 13.99 million, which is 12.591 million. Therefore, there will not be any US estate taxes.
- The decedent’s estate is 25 million dollars, with 2 million dollars in US assets. It means the decedent has 8% in US assets. Therefore, he can get an exemption of 8% of 13.99 million. This is a 1.119 million USD exemption. His beneficiary must pay US estate taxes on 0.88 million dollars (2 million minus the exemption). His beneficiaries will pay about 352’000 USD.
As you can see, most investors will pay no US estate. In fact, if your total net worth is below the exemption, you do not have to worry about this tax.
We can take a final example of my situation. Once I retire, my gross estate value (different from my net worth) should be about 3.6 million USD. I expect to have a house for about 1’500’000 USD, 100’000 USD in cash, and the rest in my investment portfolio (about 2 million USD). And my portfolio is currently 80% in US assets. So I will have 80% of 2.0 million USD in US assets. This is 1.60 million USD in US assets. It is 44% of my entire estate.
So, I will get an exemption of 6.15 million USD. It is much more than the value of my US assets. Therefore, I do not expect to pay any US estate tax. Or more simply, since my gross estate value is lower than 13.99 million USD, I do not have to worry about the estate tax.
The exemption changes in 2026
The current large exemption is partly due to a change in 2017, the Tax Cuts and Jobs Act (TCJA). This almost doubled the exemption at that time. Normally the exemption was supposed to go back to normal in 2026. This means we will go from about 14 million to about 7 million USD.
But in 2025, the Trump administration passed a new bill (Trump calls it the Big Beautiful Bill). And this new bill changed the exemption to 15 million USD in January 2026. Every year after that, the exemption will be adjusted for inflation.
Before the new bill, there were some unknowns about the US estate tax, but with this change, Swiss investors do not have to worry about the US estate tax for a while.
What happens on death with US stocks?
Some people are also worried about what would happen in case of death with US stocks, especially on a foreign broker. I have discussed that matter with Interactive Brokers to be clear on exactly what needs to be done.
On death, no US assets can be distributed by Interactive Brokers until they receive some information about the estate tax. And there are three cases for that:
- If you have less than 60’000 USD in US assets at the time of death, then a simple letter, signed by the heirs, stating that the US assets are below the limit is enough.
- If you have more than the limit of the US-Swiss estate tax treaty (13.99 million USD currently), you must fill out a 706-NA form and send it to the IRS. Once this is received and processed, the IRS will send you a transfer certificate. Sending this certificate to IB will let you disburse the assets. It is important to know that it may take more than a year to get the transfer certificate.
- If you have more than 60’000 USD but less than the exemption of the tax treaty, the situation will be faster. You must fill out both 706-NA and 8833 forms and send them to the IRS. Then, you need to send a copy of these two forms to IB, with a letter signed by the heir (or executor) stating that these two forms have been properly filed with the IRS. This will be faster because you do not have to wait until the IRS comes back to you.
Unless you fall into category 2, it should be fast and relatively straightforward to get back your assets. In category 3, you will have to fill out some IRS forms, but they are both only two-pagers.
Conclusion
We are investing in US ETFs because they are the most efficient ETFs available to Swiss investors. Because of the large exemption of the estate tax treaty, we are not worried about US estate tax.
For most Swiss investors, the US estate tax is of little concern! Switzerland and the United States have an excellent estate tax treaty.
This treaty says that Swiss investors can be treated like US citizens. It means that Swiss investors can get an extensive exemption. This exemption is still prorated based on the percentage of US assets in your net worth at your death.
There are only very few cases where you would even pay this tax. It is only when you have a substantial net worth (more than 10M).
So, Swiss investors do not have to worry about investing in US assets. United States ETFs are still the best ETFs available to Swiss investors.
Residents of another European country can see if their country has an estate tax treaty with the United States. If they have, you can try to find details about how this will impact you. If they do not, you will only be exempted up to 60,000 US dollars. And you should probably avoid having more than that in US assets.
Talking about US ETFs, you may want to learn about why Swiss investors may lose access to them.
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Hi, just to understand — does the need to provide 706-NA and 8833 forms also apply if I hold for example 10 million of Coca Cola stocks (US company) with for example Saxo Bank (Swiss broker) or only in case I hold Coca Cola (or VT) with IB?
Hi Marco
In theory, it applies to both. In practice, I find it unlikely that a Swiss broker applies this rule unless you are above the exemption. If you are above the exemption at death, your heirs are legally obligated to pay the estate taxes at the IRS, but I do not think a Swiss broker will necessarily block your assets until you file the IRS documents.
Thanks for the informative article!
I’m holding a B permit and live in Switzerland, so my understanding is that the treaty applies. I’m wondering: Do residences/citizenships of heirs also matter in this?
Thanks!
Hi RC,
I think it will apply indeed. But if your heirs are outside of Switzerland, I have no idea how it works.
Thanks for the reply!
My heirs are indeed outside of Switzerland. I read up on it some more, and my current understanding is that the estate tax would solely depend on my residence.
(For future readers of this comment: If anyone has different info, I’d be glad to hear about that)
I would still recommend speaking with an expert on this kind of issue.
Hi Baptiste,
If you only hold cash (e.g., 100k) in your IBKR account and pass away, my understanding is that you would have 0% exposure to U.S. assets. Would the estate tax therefore consider that you fall under the 0% exemption?
And the same question applies if the investment is only in something like CHSPI, for example — it seems there would be no U.S. assets involved at all.
Thanks.
Hi David,
Yes, in this case, you would not have to pay any tax. But I would think that you still need to go through the process of information to release everything.
I just looked deeper. Cash balance at US broker is an US asset regardless of the currency. However, cash at foreign branches is not. If the account is at IBKR UK, it is not an US asset.
Thanks for sharing, that makes sense!
Hi.
Curious as to what kind of home you’ll have for 300k in Switzerland. Is it a 1-room home? Or is it located at the peak of Matterhorn? :-)
Thanks
Hi MixMax
I only counted the net value of the house, so likely 35% of a house at about one million, it was a rough estimation.
Hi.
Can you explain/elaborate? I was under the impression that my house counts towards my total wealth for the market value it has. What’s the “net value” in this situation?
Hi MixMax
I believe that the IRS would take debt into account for the estate computation. At least they do for US persons in the US. They take the taxable value (market value minus mortgage).
Now, I am not entirely sure this would work that way for our case. I’d have to research it further.
Last time I checked the form debt isn’t taken into account when computing the ratio for treaty purpose. The whole value of the house will be used, mortgage is ignored.
(Mortgage is used after, when computing the tax due/rate).
It looks like you are right. I have checked the IRS and they consider the gross estate for the limit before which you have to file the estate tax form. Then, the taxable estate is taken into account for the final bill. So, it’s more a filing exemption threshold than a full exemption. I will update the article accordingly.
Hello Baptiste,
It seems that on 4th July 2025 the OBBB( One Big, Beautiful Bill) was adopted, where the threshold for tax exemption will be raised to $15 milion as of 1st January, (indexed to inflation)
Hi Theodor,
You are absolutely right; I need to update my article accordingly!
Hello Baptiste,
I am afraid I might be wrong. I triple checked on several sites and nowhere it is mentioned that the OBBB is also valid to non-residents. I believe that the OBBB only applies to US residents( also confirmed by chatgpt, but never just trust the AI), and for non-residents the tax treaty & the prorated share basis still applies, which was 13.6m$. Even on the IRS page, there is no information about it. It was too nice to be true :D. I will keep checking anyways during the year if IRS will have more information.
Keep up the good work :)
Regards
Theo
Hi Theodor
Actually, I believe you were right. The US-CH estate tax treaty says that a Swiss resident at death will be taxed (for estate) at the same rate as an US citizen. As a result, I believe that if the OBBB is increasing the level for US citizens, it does also increase the potential for Swiss citizens, unless there is an exception in the bill itself.
Hi Baptiste,
Thank for the useful article as always!
If you are planning to retire/move out of Switzerland, the treaty of the new country would then be really crucial to assess what to do with your US ETFs? And what is you still have a residency in Swiss, though not your primary?
thanks and regards
Hi Kirsten
Absolutely right. IF you move out, you may have to worry. What is important for a tax treaty is the tax residency. So, if you pay taxes in another country, the tax treaty won’t apply to you, even if you have a secondary residence in Switzerland.
Thank you for the reply! Retirement feels far away, though planning for it appropriately seems appropriate to avoid unpleasant high tax surprises.
It’s indeed important to plan in advance even though sometimes it feels very remote indeed.
Dear Baptiste, thank you very much for this comprehensive article, it’s much appreciated. Two questions: A) does this ‘US assets’ principle apply to ETFs on US assets that are incorporated in Ireland? Let’s say, I own 10m in the UBS MSCI World ETF (IE00BD4TXV59). I thought the principle applies to ‘direct holdings’ i.e. stocks only, not ETFs, correct? B) does this principle apply to the new Bitcoin/Ethereum ETPs which are apparently incorporated in Switzerland (e.g. XS2940466316). Thank you very much for clarifying.
Hi MK
1) No, it does not. It applies to ETFs as well, but only to ETFs domiciled in the United States. If your ETF is domiciled in Ireland, you should not be subject.
2) Since the domicile is Switzerland, I would say it does not apply. I would expect the rules for ETP to be the same as the rules for ETF, but I am not entirely sure.
Dear Baptiste, thank you very much for answering. I‘m of the same opinion as you are. I will try to clarify and will respond here if I find out more (about ETP vs. ETF)
Dear Baptiste, dear all
I received an official legal opinion/advice from one of the major banks in Switzerland (via external law firm) which states the following – and I’ll post an example calculation below as well. No guarantees for whatever I’m stating obviously:
In the event of an inheritance, the community of heirs must proactively file an estate tax return (from a declaration threshold of USD 60,000). For US testators, the tax-free allowance is USD 13,610,000. Due to double taxation of income (EDBA CH-US), the same allowances also apply to Swiss residents. Assets above an individual allowance are taxed at 40% – however, this only applies to US assets.
Thus, the community of heirs must proactively file an estate tax return as soon as the estate contains US securities above the declaration threshold of USD 60,000. However, this does not mean that there is a tax liability. To determine tax liability, the US securities are compared to the total assets.
As we have already mentioned, only securities with a US ISIN are considered US securities (e.g., no funds domiciled in Ireland).
Example positions which would be affected (and specific example numbers to serve in the calculation further below)
iShares Ethereum Trust USD 200’000
iShares Bitcoin Trust USD 300’000
Microsoft USD 450’000
Nvidia USD 500’000
Total US assets USD 1’450’000
The calculation of the potentially owed US tax is based on the following formula (in USD):
US assets / total (worldwide) assets * 13’610’000 = allowance
Let’s go through the entire example:
Worldwide Estate
———————————————-
Securities: USD 15’000’000
Real Estate: USD 4’000’000
Worldwide Estate: USD 19’000’000
This would now be calculated as follows:
1’450’000 / 19’000’000 * 13’610’000 = 1’038’658
The US assets above this exemption amount of USD 1’038’658 are taxed at 40%. Assuming the given US assets totaling USD 1’450’000. The difference between the two amounts to USD 411’342. This means in concrete terms: As of today, a potential USD 164’537 would be due (40% of USD 411’342).
Thanks for sharing, MK! It’s good to get feedback from banks on that.
This seems accurate indeed except for the treaty which estate not income, as noted by Hans already.
The mention of “double taxation of INCOME (EDBA CH-US)” in MK’s 21 August 2025 at 6:28 am comment is misleading.
We’re discussing ESTATE (=inheritance) tax here, not INCOME tax, and in your ESTATE tax return, you must mention the treaty and the paragraph(s) on which you base your claim. And expect to wait 3 years or more for an answer from the IRS…
Many countries have double taxation of INCOME tax treaties with the U.S., but very few also have an ESTATE Tax Treaty. Search for “1951” in Baptiste’s original posts as well as my 5 January 2025 at 3:15 pm comment for the relevant information.
Thank you for the awesome article!
I am an Indian Citizen living and working in Switzerland on B-permit for last 4 years. Will the treaty apply to non-swiss citizens like me? Your article mentions “domiciled in Switzerland” – is there a technicality to it? Or living situation like me satisfies the domiciliary aspect of the treaty.
Hi Vivek
I am not aware of any technicality. This should apply to all Swiss residents that pay taxes in Switzerland.
There could be other treaties between India and Switzerland or US, but I have not heard about such cases.
Dear Baptiste,
Thank you for explaining in such of a understandable way! I found out some interesting info regarding the IRS certificate from Charles Schwab. They told me that you have to to a transfer certificate for sure with a joint account if you are a non-resident US or non-US citizen, and as well for the remaining spouse when they die. This is regardless of the amount of the account. the reason is the expat status so the IRS is sure they will receive their estate tax. I read in an article that the IRS puts a lien on U.S. stocks and blocks them until the case is cleared.
I just thought I would pass this along to you.
Hi Barbara,
You are welcome, I am glad my articles are well understandable :)
Thanks for sharing the details from Charles Schwab! It can be inconvenient indeed, but it does make sense from a tax point of view. IBKR would do the same and prevent distribution of assets before they have enough information.
Dear Baptiste,
Thank You Very Much for your article “Should Swiss investors worry about the U.S. Estate Tax in 2025?” as I found it useful on interpreting the application of The U.S. Switzerland Estate Tax Treaty.
I do have one specific question I am seeking your clarification on. I am a US Citizen domiciled in CH, married to a Swiss citizen, and the majority of our Investment Portfolio is in US Assets. With this if I were to pass away first and our US Assets would transfer to my spouse upon my death, would the same examples you have given for Descendent Estates apply to my spouse, and then when he/she passes away, also apply to our Trust Beneficiaries?
Thank You in advance for your feedback on this and any other relevant information you can share on the above situation. Very Much Appreciated, MQ
Hi MQ
I am glad you liked it.
I don’t know what would happen when you pass away since you are a US citizen. But when you first pass away second, I think everything will apply the same way since she is a Swiss citizen. The fact that you are a US citizen should not matter in this case.
Thank You Very Much for your quick feedback on my question Baptiste, it is much appreciated.