JUSO Initiative: There is no rush – the 50% estate tax cannot be levied, as it is unconstitutional

Legal vacuum: No definition as to who is subject to tax

Under the current Swiss constitution, the initiative as drafted cannot be implemented as they failed to clearly define as to who is subject to tax, which is a basic constitutional requirement. According to the principle of legality (abgaberechtliches Legalitätsprinizp), a tax norm must unambiguously identify who is liable to tax (subject). This definition must be found either in the constitutional text itself or in a formal law.

As things stand, even if the initiative was adopted, the estate tax could not be levied before a formal estate tax law was introduced by the Swiss Parliament. Such new law might by subject to another popular vote, so it is not very likely to enter into force before 2030.

The initiative refers only to the “estate of the individual” as being subject to tax. In practice this refers to the estate of a deceased person. However, it is important to point out that under Swiss law deceased persons cannot be subject to tax since they are no longer considered a legal personality.

The initiative does not specify any other taxable subject such as heirs, recipients or legal representatives. In the absence of a defined subject, no tax liability can arise, and any attempt to collect such a tax would breach constitutional safeguards. Until this fundamental legal gap is addressed through formal legislation, the tax is unassessable and unenforceable.

Consequences

• No immediate applicability: The initiative, even if adopted, could not be enforced in practice prior to the implementation of a new legislation passed by Parliament, a process likely to last five to seven years, and which would probably be subject to yet another referendum.
• No tax claims can be raised: In the absence of a clear subject of tax, no valid tax assessments can be issued or collected.
• No retroactive effect or anti-avoidance measures: Since the tax itself is currently unconstitutional, any attempt to apply it retroactively or to impose anti-avoidance mechanisms (e.g. an exit tax) is equally unconstitutional. The Federal Council has already rejected such measures, citing both constitutional principles and international law constraints.
• Strong procedural position of the heirs: The right of not being taxed is constitutional and self-executing. Thus, the heirs have the constitutional right to reject any assessment of the estate tax.

Seeking Expert Advice

Any person possibly exposed to the consequences of the initiative is advised to contact a qualified tax expert.