Inheritance Law in Belgium and Switzerland
Marieke Martens

We live, we work and we die. People basically work to make money and spend it but also save it. After somebody has died what will happen to the money and the possessions? Firstly the division of the money and possessions takes place, according to the will. But what if there is now will? If there is a will or not, the possessions and money will not be inherited for free. The inheritance law is a collection of articles, which explains what happens to and with the inheritance of the person who died when there is no will and when there is a will. In this paper two countries will be compared based on their inheritance law. The first country is Belgium, which is part of the EU and has no specific advantages if it comes to being a tax paradise. The other country, which will be used in this research, is Switzerland, which is not part of the EU and is very famous for being a tax paradise. Both countries do have one thing in common: they are both West-European countries. Because Switzerland is a tax paradise it can be assumed that the inheritance law in Switzerland is more favourable than in the Belgium. This statement basically states that in Switzerland you have to pay less inheritance tax, there are better condition if it comes to making wills or not, than in Belgium, which results in a higher inheritance than in Belgium. These are the fields of Inheritance law that will be covered in the paper in order to answer he statement.

I. Statutory inheritance law

II. Forms of Wills and Making Wills

III. Executors of the will

IV. Taxes

Statutory inheritance law

Statutory inheritance law is applied when a person who dies has no or partly no will or testamentary contract. In legal terms a person dies intestate. Firstly the law book used in the country in order to regulate the inheritance law is being introduced. Secondly the order of heritance is explained. This means, which persons receives the inheritance first and last.

Note: A person who dies intestate is called “the deceased”. A person who created a will or testamentary contract is called “ the testator”.

Wills

A will is defined as “a legal declaration of how a person wishes his or her possessions to be disposed of after death “ and “ a legally executed document containing this declaration”(dictionary). In inheritance law there are different forms of wills and they differ in every country. A closer look will be taken to these different wills in Switzerland and Belgium.

Executors of the will

In law an executor is a person who is appointed by a testator to carry out the wishes expressed in his will (Collins English Dictionary). The way to execute the contract differs from country to country. It can also happen that no executor is appointed, what happens than will be explained later.

Taxes

On money and possessions of a deceased or a testator, taxes are levied. The higher the tax the more someone has to pay over the inheritance. Also in taxes there are different sorts. Taxes that are levied differ from country to country but they can even differ from province to province within a country.

After having given a brief introduction to all different parts that will be dealt with in the paper it is time to take a deeper look in all of these fields in Belgium and Switzerland.

I Statutory Inheritance Law

Switzerland

Swiss Civil Code (Schweizeriches Zivilgesetzbuch) modulates the inheritance law of Switzerland. Only part III of the Swiss Civil Code deals with inheritance law and it is published in German, French and Italian.

Under Swiss law, in case of wholly missing or partly missing will a family focused order is applied in order to determine who is receiving the inheritance first and last:

• The biological and adopted children, grandchildren, great- grandchildren, etc. of the deceased form the first order of inheritance. Children always inherit in equal shares.

• The parents of the deceased constitute the second order of inheritance. The parents are each entitled to 50 percent of the inheritance. If the parents aren’t alive anymore than the inheritance will go to their descendants so the brothers and sisters of the deceased.

• Grandparents, uncles, aunts, cousins constitute the third order. They inherit in equal shares.

Outside the order system the spouse inherits, which means that she has a special position towards the deceased. The spouse receives:

a) 50 percent of the inheritance, if there are descendants of the deceased. The other half will go to the descendants.

b) 75 percent of the inheritance if no descendants but the parents of the deceased are alive. The other quarter is than inherited by the parents

c) the whole inheritance if there are no descendants and no parents. This means that the grandparents, aunts, uncles and cousins don’t inherit anything.

The above-mentioned beneficiaries inherit all rights and obligations of the deceased. If a beneficiary wishes to waive his or her claim to the inheritance this can be done after the awareness of the inheritance.

Belgium

The principles for the statutory inheritance law can be found in Belgian Civil Code (Het Burgerlijk Wetboek). To be precise the third book contains all the articles of Belgian inheritance law. The Belgian Civil Code is published in Dutch and French

As in the Swiss law, the Dutch law also applies a family focused order in case of a partly or wholly missing will:

• The descendants form the first order. Firstly these are the deceased’s biological children and grandchildren. Also adopted children are descendants and no distinction is made between a normal- and a full adoption. Children of the deceased’s partner, which are not biological, do not get inheritance. If somebody do wishes these non-biological children to inherit his or her estate, than he or she has to adopt them or indicate them as legatee, but than a will has to be made.

• The brothers and sisters of the deceased and their descendants constitute the second order, so the cousins of the deceased. They inherit if there are no direct descendants of the first order. Although the deceased’s parents are part of the third order, the brothers and sisters of the deceased can never exclude the parents. Every single parent mandatory receives one fourth of the inheritance of the child.

• The parents and grandparents of the deceased form the third order. But if the brothers and sisters of the deceased are still alive the parents belong to the second order. If there are no brothers and sisters than the parents belong to the third order.

• The aunts, uncles, cousins of the deceased form the fourth order.

Again for the spouse there are special rules. A surviving spouse is also an heir, but the amount of the inheritance depends on the situation:

- the spouse is entitled to life interest in the estate, when the deceased has one or more children

- if no children are alive, but are other legally recognised heirs than the spouse is entitled to the matrimonial property

- if no relatives or legally recognised heirs are alive than the surviving spouse receives the entire estate.

II Forms of Wills and making wills

Switzerland

A will is the most important compromise of making provision in order to distribute the property in case of a person’s death. Another form of creating a provision in case of one’s death is a testamentary contract. The testator has to fulfil two norms before he or she can establish a testament or a testamentary contract: - the person has testamentary capacity

- the person is over 18 years old

Will (testament)

The Swiss civil code has accepted three sorts of wills:

• Certified testament

• Autographed testament

• Emergency testament

A certified testament is written and explained by the notary or another official person, which is competent to do this. The testament than has to be carried out by the notary in presence of 2 witnesses, these witnesses have to put their signature next to the testator’s signature.

An autographed- or holographic testament is written and signed by the testator. It must certainly be written by hand, otherwise the testament will be declared void. A notary and witnesses are not needed. The testator must put the year, month and day, when created, in the testament. The date is important in order to stipulate whether the testator had a reasonable judgement when the testament was created.

An emergency testament is an oral testament made in the presence of 2 witnesses. It only applies in very rare and exceptional situations such as war, epidemic, deadly peril, etc.

Testamentary contract

A testamentary contract is a contract between two people also called parties. It creates contractual provisions in the event of death. The person who makes the contract can also create any unilateral provision that can also be created in a testament. A testamentary contract is valid when a notary prepares it. The two parties have to be present when the contract is created and certified. Also 2 independent witnesses have to sign the contract in order to confirm that the two parties were capable and aware of what they were doing.

Belgium

A testament can be defined, as the last will; to be specific the decision is made of who will inherit what after the death of the person. So somebody receives the allowance over certain goods after passing away. It is a one-sided act, in which only the will of the testator counts. In Belgium a person has to fulfil some requirements before establishing a testament:

- the person has testamentary capacity - the person has be at least 16 years, but than he or she can only control half of his o her possessions. When 18 years the person has control over the all the possessions.
Wills (testament)

The Belgian law recognises three forms of testaments:

• Notary testament

• Holographic Testament

• International testament

A notary testament, also called public or authentic testament, is created by at least one notary accompanied by 2 witnesses. The witnesses are a deposit that the testator dictated the testament himself or herself and that he or she did it out of free will. The testament stays a secret until the testator dies. After the death of the testator the testament has to be registered within 4 months. The notary is responsible for registering the testament.

The testator himself makes a holographic testament. No notary is needed and no witnesses are present. In case a witness do puts his signature under the testament, than the testament is declared void. To create a legal holographic contract, it should fulfil certain conditions:

1. The contract should be hand-written by the testator, so typing is not allowed. The contract is declared void if it is wholly or partly written by somebody else even if the testator insists on somebody else writing it. The testator is allowed to make changes or corrections. If the testator drastically changes his testament it is advised to write a new testament.

2. The testament should be signed by the date the testament is created. So the year, month and the day should be mentioned.

3. The testator should sign the testament. This means with the full name and the signature.

An International contract is written or typed by the testator. It is used when a testator or a legatee lives in a foreign country

III Executors of the Will

Switzerland

A testator is allowed to nominate an executor of his choice. The most important duty of the executor is to carry out the deceased’s testament. Within 14 days of notification, the executor of a testament has to declare whether he or she agrees to be an executor. The executor has to carry out these duties: - symbolize the beneficiaries - take care of the estate - pay the debts - distribute the bequests - distribute the residuary estate
When a testator did not choose an executor of his choice or when the executor did not agree on being an executor, the Swiss authority than will choose an administrator who holds the same duties as the chosen executor. These are the cases in which an administrator will be chosen: - the beneficiary lives in a foreign country and has no legal representative - uncertainty about beneficiaries being alive - where the Swiss law requires the choice of an administrator
In Switzerland, the choice of an executor is not obliged. But it has become a habit of choosing an executor.

Belgium Also in Belgium a testator can choose an executor. The main job of the executor is to execute the testator’s testament. A relative, a friend or a notary can be an executor, this depends on what is written in the testament. The executor of the testament also has to declare whether he or she does accept to be an executor. Within Belgian Civil Law there are two executors: an executor without proprietary and an executor with proprietary. Both before mentioned executors of a testament are obliged to fulfil certain functions: - take care of the estate - create an estate description
These are the two obligations that both types of executors have to fulfil. The executor with proprietary has to fulfil a couple of extra functions: - Paying the debts of the estate - Distribute the bequests - Sale of goods

The executor is done with his job when the testament has been fully carried out. His job is not allowed to be longer than 1 year. If the job does take longer than one year, than the executor can decide to proceed or not. If not than the Belgian Law can choose a trained administrator who can take over the job where the executor stopped.

IV Taxes
Switzerland
Taxes at a federal level do not exist. Switzerland is a country divided up by cantons (like provinces). Therefore taxes are levied on a cantonal level.

Inheritance tax
Also inheritance tax is levied on a cantonal basis. Nowadays the cantons are n the process of eliminating the inheritance tax for the descendants. Inheritance taxes are levied by the cantons and communes when: - the deceased’s estates have had their domicile in Switzerland - the estates of a foreign deceased involves Swiss real property or unincorporated business enterprises in Switzerland
Tax rates depend on the existing relation (relation between the deceased and the heir) and the size of inheritance or gifts. Gifts and inheritance collected by the surviving spouse are taxed at rates up to 6%. Gifts and inheritance received by an unrelated person are taxed on ratings ranging 20% to 40%.
The taxable base is mostly the market value of a property. After having determined the rate applicable on relationship and the canton will then surcharge based in the value of property. Below are the different rates in the different cantons shown in order to give a good overview.
Canton of Bern
The inheritance of the descendants and the spouse are not taxed. In heritance or properties that are received by people, other then the spouse and the descendants, taxes are levied at rising rates. An amount of € 10.00 can be deducted from the taxable inheritance. Assets utilized in business, only half of the net value taxes are levied. The table below shows the rising taxes, so the lowest tax rate is 1% and the highest is 2,5%, which is really low. But these taxes rates are multiplied by a multiplier depending on the level of relationship also shown below.
TAX BASE, CHF (€) TAX RATE

Up to 100,000 (€65,290) 1%

100,000 – 200,000 (€130,581) 1.25%

200,000 – 300,000 (€195,871) 1.50%

300,000 – 400,000 (€261,161) 1.75%

400,000 – 500,000 (€326,452) 2%

500,000 – 600,000 (€391,742) 2.25%

Over 600,000 (€391,742) 2.50%

Tax Multiplier Bern
|Multiplier |Relationship |
|6 |Parents, grandparents, siblings and other persons living|
| |together with the donor for at least ten years |
|11 |nephews, nieces, in-laws, aunts and uncles |
|16 |others |

Canton of Geneva
The rates depend on the degree of relationship between the deceased and the beneficiaries. In the table shown below, shows how much tax there is rated over the property that a certain person receives. A more detailed list of the three degrees can be found in part I statutory inheritance.
DEGREE OF RELATIONSHIP TAX RATE

Descendants and ascendants:
First degree 0 – 6 %
Second degree 0 – 7.2%
Third degree 0 – 7.8%
Spouses 0 – 6%
Others 0 – 26%
A multiplier also multiplies these tax rates. The tax multiplier in Geneva is not the same for every year. Descendants and spouses are not a subject to the multiplier.

Canton of Zurich
The inheritance of spouse and descendants are not taxed. In Zurich over a certain amount of money people do not get taxed and this amount of money differs per person: - parents CHF200,000 (€130,581) - fiancés, siblings, grandparents, stepchildren, godchildren, foster children and home helps employed for at least 10 years get CHF15,000 (€9,794)

- CHF50,000 (€32,645) for the partner of the deceased or the donor if the couple had lived together for at least 5 years in the same household and none of the previously mentioned deductions apply;

- CHF30,000 (€19,587) for dependent persons who have a permanent or partial occupational disability.

Below the table shows the amount of money and their tax rates:

TAX BASE, CHF (€)
TAX RATE
Up to 30,000 (€19,587)
2%
30,000 – 90,000 (€58,761)
3%
90,000 – 180,000 (€117,523)
4%
180,000 – 360,000 (€235,045)
5%
360,000 – 840,000 (€548,439)
6%
840,000 – 1,500,000 (€979,355)
7%

Also these rates get multiplied by the multiplier. The multiplier varies according to the relationship.

MULTIPLIER

RELATIONSHIP MULTIPLIER
Parents 1

Grandparents, stepchildren 2

Siblings 3

Stepparents 4

Uncles, aunts, descendants of siblings 5

Others 6

Belgium

In Belgium the inheritance tax is also not levied on a federal level, but in this case on a regional level. Belgium is divided in three regions: Brussels region, Flemish Region and Walloon Region. The tax is levied at progressive rates according to kinship. For residents the tax base is the gross value of the property, less any debs incurred by the property. For non- residents tax is chargeable at the gross value of the property, without any debts.

Brussels region

The spouse, descendants and ascendants each receive a certain tax-free amount of €15,000. Or children under 21 this amount counts €2,500 for each year below the 21 years old. For the rest of the people the tax free amount counts €1,250.

INHERITANCE TAX: BRUSSELS REGION

TAX BASE(€) TAX RATE

Up to €50,000 3%

€50,000 - €100,000 8%

€100,000 - €175,000 9%

€175,000 - €250,000 18%

€250,000 - €500,000 24%

Over €500,000 30%

For brothers and sister 20 % tax applies to €12.500 and lower. 65% applies to €250,000. The tax rates of the aunts, uncles, cousins, nieces and nephews, which range between 25% and 70%, are even higher than the ones of the brother and sisters. For all irrelevant persons 40% tax is paid over €50,000 and less. And over an amount 175,000 the person has to pay 80%.

TAX BASE (€) TAX RATE

Up to €12,500 3%

€12,500 - €25,000 4%

€25,000 - €50,000 5%

€50,000 - €100,000 7%

€100,000 - €150,000 10%

€150,000 - €200,000 14%

€200,000 - €250,000 18%

€250,000 - €500,000 24%

Over €500,000 30%

Flemish region

TAX BASE(€) TAX RATE

Up to €50,000 3%

€50,000 - €250,000 9%

Over €250,000 27%

For brothers and sisters the percentage can range between 30% and 65%. For all other persons the property is taxed between 45% and 65%. Both minimum rates apply €75,000 and both maximum rates apply to €175,000 and over.

Walloon region

The spouse, descendants and the ascendant each get €12,500 tax-free. This sum is decreased to €25,000 in case if the total inheritance is not higher than €125,000. For children under the age21 receive 2,500 every year. Only € 620 can be given tax-free to all the other beneficiaries.

INHERITANCE TAX: WALLOON REGION

TAX BASE (€) TAX RATE

Up to €12,500 3%

€12,500 - €25,000 4%

€25,000 - €50,000 5%

€50,000 - €100,000 7%

€100,000 - €150,000 10%

€150,000 - €200,000 14%

€200,000 - €250,000 18%

€250,000 - €500,000 24%

Over €500,000 30%

The brothers and sisters pay between 20% and 65%. For the aunts, uncles, cousins nieces and nephews the tax rate range between 25% and 65%. Property that a unrelated person receives than this is taxed between the 30% and the 80%. In all the 3 relationships shown the minimum tax rate belongs to inheritance up to €12,500. The highest rate of all the relationships belongs to inheritance higher than €175,000.

Conclusion

In conclusion it can be said that Switzerland and Belgium are far from the same if it comes to their Inheritance. Therefore it is also hard to say whose inheritance law is more favourable than the other. Switzerland has the more favourable inheritance. Firstly there are clear rules for the statutory inheritance, especially for the spouse. The Spouse in Switzerland receives more money then in Belgium, because in Belgium it is more complicated. So from my point of view it is not so favourable. Secondly the choice of wills is also different in Switzerland, because they have an oral will that is called the emergency testament. Because it is used in exceptional cases the Swiss legislator did think about unthinkable by putting it in the civil law. Thirdly the system of executors in Switzerland was far more developed than the one from Belgium. This was because in Belgium no time limit was given in which the executor should accept his function or not. In Switzerland there was only one kind of executor and in Belgium there were two, which made it again complicated. Lastly if it comes to inheritance it is perfectly clear who is more favourable than the other. Switzerland is definitely favourable for the spouse and the children of the deceased. So after taking a look at all the different parts of inheritance law it is obvious that Switzerland is more favourable than Belgium.

References
Dharmapala, D., & Hines Jr, J. R. (2009). Which countries become tax haven?. Journal of Public Economics, 93(9-10), 1058-1068. HOE STEL JE EEN TESTAMENT OP? MOGELIJKE VORMEN VOOR JE WILSBESCHIKKING. (n.d.). NETONLINE - IMMO - AUTO - JOBS - ROUTEPLANNER - ZOEKERTJES - NIEUWS - HOTELS. Retrieved November 6, 2009, from http://www.netonline.be/financieel/detail.asp?id=767
Inleiding tot het erfrecht; wie erft wat en wanneer!. (n.d.). Bespaar belastingen. Retrieved November 6, 2009, from http://www.bespaarbelastingen.be/algemeen/inleiding-tot-het-erfrecht-wie-erft-wat-en-wanneer/
Stuber, B. (n.d.). INHERITANCE LAW IN SWITZERLAND AND AUSTRALIA. Schweizer Kobras. Retrieved May 10, 2009, from www.schweizer.com.au/articles/InheritanceLawSwitzerlandAustralia.pdf
Switzerland Inheritance. (n.d.). Global Property Guide. Retrieved November 6, 2009, from http://www.globalpropertyguide.com/Europe/Switzerland/Inheritance
Tax Havens - the Best Tax Haven and A List of Tax Havens of the World . (n.d.). Learn Chinese - Private Lessons and Group Classes at Chinese Learning Center . Retrieved November 8, 2009, from http://chinese-school.netfirms.com/abacus-tax-havens.html
Welcome to the Swiss Portal of the federal government, the cantons and the communes - Will / testamentary contract. (n.d.). ch.ch - Schweizer Portal von Bund, Kantonen und Gemeinden - Privatpersonen. Retrieved November 7, 2009, from http://www.ch.ch/private/00029/00037/00356/00368/index.html?lang=en
Weyts, L., Castelein, C., & Goddeeris, F. (2006). Capita selecta notarieel recht . Leuven: Leuven University Press.
Wills & Inheritance Law in Switzerland. (n.d.). AngloInfo. Retrieved November 6, 2009, from http://geneva.angloinfo.com/countries/switzerland/wills.asp (2009). Collins English Dictionary: 30th Anniversary Edition. London: Collins.