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Should Swiss investors worry about the U.S. Estate Tax in 2024?

Baptiste Wicht | Updated: |

(Disclosure: Some of the links below may be affiliate links)

Many think investing in the United States Exchanged Traded Funds (ETFs) is dangerous. They believe that because of the U.S. Estate Tax, they will lose a lot of money. This tax will heavily tax the assets of a decedent.

The U.S. 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 U.S.-Switzerland double taxation estate tax treaty.

In this article, we detail the U.S. Estate Tax and the U.S. Estate Tax Treaty with Switzerland. And we see what this means for Swiss investors.

The U.S. 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 U.S. Federal Estate Tax since this is the one that matters in our case.

This U.S. 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 12.92 million dollars (as of 2023) are exempted from the U.S. Estate Tax. It means that most American investors do not care about this law. Very few investors have estates worth that much money.

However, this law also applies to non-resident aliens. It means it applies to everybody who invests in U.S. products. And unfortunately, the large exemption of 12.92  million dollars only applies to U.S. citizens.

Non-resident aliens only have an exemption of only up to 60’000 dollars. It means that if you have U.S. 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 U.S. ETF, you will be subject to estate tax. In general, this means that if you have more than 60’000 USD in U.S. ETF, your beneficiaries will lose 40% of this value. It is a very significant tax. This loss could be terrible if your beneficiaries are depending on your portfolio.

Because of that, many people assume that they should not invest more than 60’000 in U.S. ETF. But this is not true in Switzerland!

The U.S. 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 U.S. Estate Tax.

If you are interested, you can find the list of U.S. Estate Tax Treaties from the IRS. This list should be kept complete.

The U.S. 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 U.S. 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 U.S. 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 12.92 million dollars.

The critical part is the proportion. It is relatively easy to figure out. It is the proportion of U.S. assets in your entire net worth. You divide the value of your assets in the U.S. by your entire estate value, and you will get your proportion of U.S. assets. We also run some examples to make that clearer.

If you want all the details, you can read the original 1951 U.S. 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.


We can give a few examples to make it simpler:

  • The decedent’s estate is one million dollars, with 200’000 dollars in U.S. assets and the rest in Swiss assets. The decedent has 20% of U.S. assets. It means he can get an exemption of up to 20% of 12.92 million, 2.584 million dollars. So, his beneficiaries will not pay any U.S. taxes.
  • The decedent’s estate is 2 million dollars, with 1.8 million dollars in U.S. assets. The decedent has 90% of U.S. assets. So, he can get an exemption of up to 90% of 12.92 million, which is 11.62 million. So, there will not be any U.S. estate taxes.
  • The decedent’s estate is 25 million dollars, with 2 million dollars in U.S. assets. It means the decedent has 8% in U.S. assets. So, he can get an exemption of 8% of 12.92 million. This is an 1.033 million USD exemption. His beneficiary must pay U.S. estate taxes on 0.966 million dollars (2 million minus the exemption). His beneficiaries will pay about 386’000 USD.

As you can see, most investors will end up paying no U.S. Estate.

We can take a final example of my situation. Once I retire, my net worth should be about two million CHF. I expect to have a house for about 300’000 CHF, 100’000 CHF in cash, and the rest in my investment portfolio. And my portfolio is currently 80% in U.S. assets. So I will have 80% of 1.6 million CHF in U.S. assets. This is 1.28 million CHF in U.S. assets. It is 64% of my entire estate.

So, I will get an exemption of  8.26 million dollars. It is much more than the value of my U.S. assets. So, I do not expect to pay any U.S. Estate Tax.

The exemption may change 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.

Unless there is a change by the US Congress, the exemption will go back to normal in 2026. This means we will go from about 13 million to about 7 million USD.

While this is a significant difference, this remains a huge exemption. So, I am not worried about this change. It is also entirely possible that there will be new tax changes until then.


For Swiss investors, the U.S. 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 U.S. citizens. It means that Swiss investors can get an extensive exemption. This exemption is still prorated based on the percentage of U.S. 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) and a small proportion of U.S. assets.

So, Swiss investors do not have to worry about investing in U.S. assets. United States ETFs are still the best ETFs available to Swiss investors.

If you are from another European country, you can see if your 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 U.S. dollars. And you should probably avoid having more than that in U.S. assets.

Talking about U.S. ETFs, you may want to learn about why Swiss investors may lose access to them.

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Baptiste Wicht started in 2017. He realized that he was falling into the trap of lifestyle inflation. He decided to cut his expenses and increase his income. This blog is relating his story and findings. Since 2019, he has been saving more than 50% of his income. He made it a goal to reach Financial Independence. You can send Mr. The Poor Swiss a message here.

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66 thoughts on “Should Swiss investors worry about the U.S. Estate Tax in 2024?”

  1. Dear Baptist

    Thank you for your helpful insights. Switzerland follows the European financial market regulation and collective investments authorized for distribution in Switzerland are listed in a FINMA list. Currently there are about 8,600 funds on it, with not a single fund domiciled in the USA. Do I understand correctly that as a (Swiss) non-professional private investor I can only invest in US ETFs domiciled in Europe?

    1. Hi Stephan,

      I don’t know which list you are talking about. But currently, we can still invest in US ETFs without issues, but Swiss banks cannot recommend them. Only execution-only brokers, like IB, can trade them.

      1. The intent of the list is not clear to me. But I believe this is the list of funds that Swiss financial services can recommend to their clients. But brokers have more choice because they don’t recommend, just give access.

  2. Hi, thanks for all the information. So please correct me if I’m wrong, if I have quite a bit of money and I tell IBKR that I am a professional investor then I can have access to U.S. ETF’s?
    I’m in Portugal, just moved here to become a resident under the NHR program which allows you to pay 0% taxes on all your income from foreign investments for 10 years, so I was planning on investing in U.S ETF’s through IBKR but after reading a lot of the information that you provide in your blog, now I’m unsure if I will be able to buy U.S. ETF’s through IBKR and I may have to change my residency to another jurisdiction, however you mention that someone with quite a bit of money can declare himself as a professional investor and then IBKR will allow you to buy ETF’s from the U.S. so I guess my question is, do you know where I can find all that information, basically I need to find out if someone who lives in Portugal can buy ETF’s from the U.S. if I tell IBKR that I am a “professional investor,” and I would also appreciate massively if you could tell me where I can read about Taxes, as I understand if you declare to IBKR that you are a “Professional Investor” then the U.S. will treat you differently than if you were a no-professional investor when it comes to Taxes, so any idea where I can read about all this, mainly investing via IBKR as a professional investor, access to U.S. ETF’s, and withholding of taxes on income sourced from U.S. ETF’s as a professional investor.
    Thanks in advance!

    1. Hi Alex,

      If you satisfy the criteria of a MiFID pro investor, then yes, in theory, you should have access to US ETFs with IB. I have never tried this, though.
      In theory, you can qualify by having a disposable net worth of 500’000 CHF and have investment experience or a 2M CHF net worth.
      I don’t think it makes much difference for taxes, but again, not sure here.
      I would recommend talking with a professional advisor for such requests.

  3. Thank you for this analysis which provides great hope. Do you know if, on the basis you set out, the IRS has granted their vital tax certificate (or whatever it is called) to transfer investment funds to estate beneficiaries on succession?

      1. Sorry. I’ll rephrase – do you know anyone who has filed a US estate tax form 709-NA using your formula to calculate the US tax they owe and successfully received a US tax certificate? That’s the certificate the estate beneficiary needs to liquidate, say, an investment fund with a value greater than $60k. You only get that certificate if your US tax position is accepted by the IRS.

      2. Hi Glas,

        No, I don’t know anybody that had to do that. In theory, this should be relatively easy, but in practice, I have no idea how this holds.

  4. Hi Mr Swiss,
    Would I also be exempted from this tax if I am a resident in Switzerland holding a c permit but a holds British passport? Or is the treaty for only Swiss
    Citizens? Thanks for clarifying

    1. Hi Jaz,

      Reading the document, it seems that both residents and citizens should be exempted. But I am definitely not a lawyer, so I may be wrong. The document is fairly short if you want to read it yourself.

  5. Thanks a lot for the article, Baptiste! Do you know what happens when my beneficiary lives in the EU (Germany for example)? I guess though I am a Swiss resident, he’ll have to look at the EU-US treaties?

    1. I am not sure. Reading the document, it would seem that this depends mostly on the decedent. So, I would think that the US will not tax the decent at death even if the beneficiaries are not in Switzerland.
      But then, of course, inheritance law will differ. And then the beneficiary itself will need to consider US estate tax.
      But this is beyond my knowledge :)

  6. Great article indeed. Thank you for pulling together all details.
    Are all ETFs domiciled in the USA considered US products? I.e. VEU All World ex-US would still fall under the treaty?
    The administration dealing with the USA does scare me a bit – not for me but for beneficiaries ;-).

    1. Hi Eon,

      Yes, all US ETFs regardless of what they contain are US products and will apply to the U.S. Estate laws.
      Keep in mind that there is an advantage to US ETFs only if they contain US stocks. If you do not want to invest in the US, EU ETFs will be almost as good.

  7. Thanks for the post.
    Does this rule apply only to Swiss Citizen or Swiss (Tax) Resident as well? For example, if there is a someone who has citizenship of a country without such treaty, but living,working and paying taxes in Switzerland, does this Treaty Apply?

  8. Thanks for the post, this is excellent news, I was only aware of the 60k rule.
    Btw, you’ve written 20% at the second example also, I suppose that should be 90%.

    1. Mathematically, it seems that as long as the total assets are below the base tax-exempt amount ($11.7m as of this year), the share of U.S. assets doesn’t really matter as the actual tax exemption will always be higher than the U.S. assets.

  9. Thanks for that (and the blog in general which is great!).

    Maybe a silly question but if you own an Ireland domiciled ETF, listed in UK and tracking S&P (such as the Vanguard S&P 500 UCITS ETF – IE00B3XXRP09) would that qualify as US assets (since the underlying is US listed stocks) or is the domicile of the fund that counts.

    I understand that based on your summary it wouldn’t make a difference for a Swiss resident but as I may retire (thus also eventually die :P) in another jurisdiction this may be applicable to me.

    Thanks again!

    1. Hi Yiannis,

      No, that would not qualify as U.S. assets. You are not directly owning the assets, the Ireland provider is.
      So you are safe from a U.S. Estate point of view :)

      Thanks for stopping

  10. It’s probably worth noting that besides the actual tax there’s more effort involved.

    First the simple thing. As a CH citizen you can get back the full withholding amount by filling out and sending in the DA-1 form of the CH tax.

    Then for the inheritance, if you’re below 60k all is good, you will not have to do anything special. Above 60k you will have to go through the process of also filling out US taxes on inheritance, not just the “normal” Swiss taxes, even if in the end you will not have to pay to the US because you’re below the 11Mio. This might be more complicated as you will need to have valuations of all your assets (e.g. house) that will be accepted by the US not just the US assets.

    1. Hi Patrick,

      You are right, you won’t pay taxes, but you will still have to deal with U.S. Taxes. This is a good point. And it could be painful to do so.

      It’s correct about DA-1, but I think this has nothing to do with the estate tax treaty but with another treaty.

      Thanks for stopping by!

      1. Hi,

        I would be interested if you have done this now for 2020 and how much effort this was?


      2. Hi TPS,

        Have you done it in previous years, and if so were you able to get your 15% US taxes refunded?

        In my case they keep telling me that my US-164 (for US stocks with a Swiss based broker) and DA-1 (for US stocks with a US based broker) tax refunds are not allowed because the amounts are higher than my Swiss amount of whatever (I know I need to be more specific)… :-(

      3. Hi Pedro,

        Yes, I got it back two years ago. Last year, I did not get it back since we did not get enough dividends because of selling for the house.

        Unfortunately, the system is extremely confusing. First, there is a minimum of 100 CHF. So, if you could claim an amount less than 100 CHF, you would not be able to. However, in that case, you are allowed to declare the net dividends as income, which end up the same on your taxes.
        And on top of that, there is another limit. If you would have been less taxed than 15% in Switzerland, you won’t be able to reclaim the entire amount. So, if you have a low tax rate, you will likely end up being able to reclaim less.
        Finally, when doing the computations, some cantons will take into account the interest payments you are deducting from your taxable income. For some reason, they take this amount into account from the foreign dividends. So, having a mortgage (or other debts) make it less likely to get the DA-1 refund back.

        As you can see, this is extremely complicated and confusing :( In general, we should assume we can deduct it, but there are many exceptions.

    2. Do you have any more info regarding the DA-1 form? Where do you need to send it to get back the remaining 15%?

    3. Patrick comment is a good one on the 60k reporting requirement.

      “” states that an executor for a nonresident, not a citizen of the U.S. must file an estate tax return, Form 706-NA, United States Estate (and Generation-Skipping) Tax Return, Estate of a nonresident not a citizen of the United States, if the fair market value at death of the decedent’s U.S.-situated assets exceeds $60,000.

      What does this imply?

      In case of death, banks will block the account until inheritance is officially clarified. They will also verify if the account holder has more than $60,000 in US securities. In this case, a Form 706NA will need to be completed and sent to the US internal revenue service. The IRS will take between 6-9 months to reply and the account will be blocked depending on the bank’s policy.

      US ETF have some advantages, but they will also give some administrative tasks to your beneficiaries.

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