Technical article

Switzerland and Cyprus: Heirs Who Move to Low-tax Places Inside Europe

A resident who is not domiciled in Cyprus is exempt from the Special Defence Contribution, the levy on dividends and interest.

By Neil Solomon · 4 min read

Imagine a family where a widow in the United States has a trust for two grown children. One is weighing a move to Zurich. The other is weighing a move to Limassol. Both places have a name for being easy on taxes. The widow asks what each child would pay on trust income.

Switzerland. A resident pays income tax on worldwide income and tax on worldwide wealth. The federal top rate is 11.5% over CHF 793,900, and the cantons and towns add their own. Geneva, for example, has a top basic cantonal rate of 18% over CHF 609,103, plus a communal amount of 25% to 51% of that. In Zurich the wealth tax runs from 0.05% to 0.30% in 2026. All of that is PwC, tier B.

On trusts, Switzerland has no law for foreign trusts, and the treatment follows a cantonal circular. Charles Russell Speechlys (tier B) says payouts from an irrevocable, fully discretionary trust are generally subject to income tax for the beneficiary. Payouts from a revocable trust count as gifts from the settlor, taxed by family relationship if the giver lives in Switzerland. The rate on the income depends on the canton, so one figure for the whole country does not exist.

Switzerland counts a person as resident after 30 consecutive days if they plan to work, or 90 consecutive days if they do not.

Gift and inheritance tax is cantonal as well. Every canton except Schwyz and Obwalden levies one or both. Spouses are exempt everywhere, and most cantons exempt direct descendants. The tax applies where the dead person or the giver lived, or where local real estate sits.

Cyprus. A resident pays income tax on worldwide income, with a top rate of 35% over EUR 72,000 (about US$79,000) from 2026. The headline for newcomers is a different one. A resident who is not domiciled in Cyprus is exempt from the Special Defence Contribution, the levy on dividends and interest. A person becomes domiciled after 17 years of residence in the last 20. For a domiciled resident the levy is 5% on dividends from 2026 and 17% on interest, with 3% on certain bonds. After the non-domiciled period, a person can elect a flat EUR 50,000 a year. All of that is PwC, tier B.

Cyprus counts a person as resident with more than 183 days, or on a 60-day route for someone with a permanent home and local work or business, and no more than 183 days in another state. A legal wiki (tier U) gives the 60-day route, and it says a 2026 reform dropped the requirement of not being resident elsewhere. PwC's individual page lists no inheritance or gift tax. Its quick chart shows gift tax as nil only up to a third-degree relative, while a law-firm guide says there is no gift tax at all. It does describe a 20% capital gains tax on Cyprus property only, and no transfer fees from parents to children.

You might say: "A low-tax place means my child pays little." The table shows two different pictures. In Switzerland the income tax on the trust payout is the real cost, and it varies by canton. In Cyprus the exemption is from the special levy on dividends and interest, which is narrower than the phrase low-tax place suggests. The headline and the detail can sit a long way apart.

You could ask each child for the canton and the town they are considering, since the Swiss rate depends on them. You could also count the years: the Cypriot exemption is a 17-year clock, and the flat EUR 50,000 follows it.

The family reach is practical. A Swiss canton that taxes inheritance by relationship will treat a stepchild or a niece differently from a child. A Cypriot move for a retired parent may matter for the children who visit.

If a relative of yours has settled in Switzerland or Cyprus, what surprised them most about the tax? Share it here. Another family may be choosing between the two.

Figures are estimates for planning, based on public data. Date read: October 2026.