How the Swiss referendum rejected a proposal to introduce a 50% inheritance tax caught global attention. Switzerland is widely perceived as a preferred destination for the super-rich and if such a high inheritance tax were introduced, it could trigger an exodus of wealthy families and long-term damage to the Swiss economy. While voters ultimately rejected the proposal, the very fact that it was debated signals a deeper global rethink on wealth, inequality, and inter-generational transfers.
So, what exactly is inheritance tax? In simple terms, it is a tax levied on the recipient when assets are passed on after the death of the owner. This is different from an estate tax, where tax is charged on the estate of the deceased before distribution to heirs. The distinction matters, as it affects who bears the liability and how wealth is structured and transferred.
Globally, inheritance and estate taxes vary significantly. Japan currently has the highest inheritance tax in the world at around 55%, followed closely by South Korea at nearly 50%. The UK levies inheritance tax at up to 40%, while South Africa applies a rate of about 25%. The United States does not have a federal inheritance tax, but a few states have tax laws that can materially impact succession outcomes. These global benchmarks show that high taxation on inherited wealth is neither unusual nor unlikely.
Turning to India, many forget that inheritance tax once existed here. India abolished inheritance tax in 1985, then collected under the Estate Duty Act. However, in today’s context of widening inequality, fiscal pressures, and alignment with global tax regimes, there is a realistic possibility that India could reintroduce such a tax in a revised form. Politically, it is complex – since it targets the rich – but that very fact can also make it socially acceptable if framed as equitable wealth distribution.
What happens if such a tax is reintroduced? The biggest risk for wealthy families is unpreparedness. Wealth erosion, forced liquidation of illiquid assets, family disputes, and business continuity issues become real threats. This is where proactive planning matters. Protecting wealth is not just about tax optimisation; it starts with succession planning, clear ownership structures, liquidity planning, and governance frameworks. Early, structured planning allows families to retain control, flexibility, and dignity – regardless of future policy changes.
There will always be a tug of war between governments seeking to expand their tax base and wealthy individuals seeking to protect what they have built. That contest is not ideological, it is structural. Inheritance tax is not a question of “if” in many economies, but when and how. Those who plan early don’t just protect wealth – they protect legacy.