In good news for taxpayers, the Vaud government has raised the exemption threshold for taxes on inheritance and gifts to direct descendants (i.e., children). Here are the changes in a nutshell, along with our advice.
Two key changes to Vaud legislation governing inheritance and gift tax took effect in 2025. Under the updated Law on Transfer Duties for Real Estate Transfers and the Tax on Inheritances and Donations (LMSD):
- · The exemption threshold for gifts to direct descendants has been raised from CHF 50,000 per year to CHF 300,000 per year (Article 16c bis of the LMSD).
- · The exemption threshold for an inheritance to direct descendants has been raised from CHF 250,000 to CHF 1,000,000 (Article 31 of the LMSD).
This gives parents wanting to provide financial support to their children more options and greater flexibility.
→ Read the official explanation onthe Vaud government website (in French)
Reason for the changes
The Vaud government has rolled out a series of measures over the past few months to lighten the tax burden in the canton. The goal is to make Vaud more attractive from a tax perspective and leave more money in residents’ wallets.
These two changes to the LMSD are part of these efforts, as Vaud is one of the few cantons that still taxes inheritance and gifts to direct descendants. While the reform hasn’t abolished these taxes completely, it does make Vaud more competitive.
The Prysm perspective
We see this as great news – from now on, people with significant assets can plan their estate more freely and confidently, with the assurance that their heirs won’t have to pay such a hefty tax bill.
The higher exemption thresholds also open up new opportunities for people who want to make regular gifts or plan out their succession over time. They also make it easier to pass on a small business.
What’s more, they could put an end to the gimmicks some people have used to circumvent the low exemption thresholds, such as by dressing up their gifts as loans. Such maneuvering comes with the risk of falling afoul of the tax authorities.
Our advice
In some situations, of course, the higher thresholds won’t be of much help. If you want to make gifts of over CHF 300,000, we suggest comparing various options carefully because your children could end up owing a considerable amount of taxes.
In any case, we suggest you plan ahead and speak with our experts sooner rather than later. Opportunities always come with risks, and it’s important to address them carefully.
Our goal at Prysm is to help lower your tax bill while complying with all applicable legislation.
