Starting Point in the Scenario
The Serra-Waldner family (fictitious) is a Spanish-German family with a long tradition of land ownership and wealth in the illustrative range of CHF 300–400M. The couple (mid-60s; he of German, she of Mallorcan descent) has lived in Palma de Mallorca for decades. The family also owns a summer house on the Costa Brava and a winter chalet in the Bernese Oberland. Their three adult children live in Madrid, Munich and Milan; there are five grandchildren.
What prompts the considerations in this scenario: possible changes to Spanish and Balearic inheritance and gift tax law and the wish to pass on the family wealth in an orderly way across several generations. The family might consider a dual strategy:
- Palma remains the cultural centre of family life (family ties, the bodega in Llucmajor)
- A second home base in the Upper Engadine (Sils and surroundings) as a Swiss counterpart
- Coordinating Spain–Switzerland double taxation questions (the treaty covers income and wealth; inheritance tax effects need to be assessed separately)
- Assessing a succession structure across three generations, e.g. a family foundation
Typical Process in This Scenario (6 Phases)
Phase 1: Tax and Legal Clarification (months 1–3)
- A tax advisory firm in Palma could analyse the inheritance and gift tax position in Spain
- A law firm in Zurich could assess the requirements for lump-sum taxation (taxation based on expenditure) in the Canton of Graubünden
- Spain–Switzerland double taxation questions would need to be clarified with specialists from both countries
- A trust office in Vaduz could outline the possibilities and limits of a family foundation
Phase 2: Organising the Spanish Properties (months 3–5)
- The Palma villa could be included in a succession arrangement under Spanish law – with a lifelong right of use (usufructo vitalicio) for the couple
- The bodega in Llucmajor could be passed on to one of the children as cultural family heritage
- A sale of the rarely used Costa Brava summer house could be assessed with a local agent
Phase 3: Property Search in the Engadine (months 5–8)
- Search for suitable properties in Sils and the surrounding area, including outside public listings
- A sale of the Bernese Oberland chalet could be prepared discreetly in parallel
- Viewings with the couple and one of the children
- Possible target property: a historic 19th-century Engadine house with generous grounds and a lake view
- Price in the illustrative range of CHF 15–20M, depending on location, condition and market situation
Phase 4: Acquisition and Residence (months 8–10)
- The acquisition structure (direct or via a foundation) would need to be clarified in advance with the competent authority under the Lex Koller rules
- Lump-sum taxation would need to be agreed in advance with the cantonal tax administration; the outcome and assessment base remain open
- In this scenario, the couple could move their main residence to the Engadine and keep Palma as a secondary residence
Phase 5: Renovation and Furnishing (months 10–13)
- An energy-efficient renovation (e.g. to Minergie standard) would need to be assessed with regard to heritage protection and local building law
- Preserving historic elements such as the Stuben (parlours) and the façade; heat pump and photovoltaics where permissible
- Family furniture from Palma could be integrated into the interior
Phase 6: Family Governance (months 13–15)
- A family council across three generations with regular meetings, alternating between Palma and the Engadine
- Possible education or provision arrangements for the grandchildren, to be designed with specialists
- A charitable family foundation for cultural projects in the Engadine and on Mallorca would be conceivable
Possible Outcome in the Scenario (illustrative)
Tax Considerations (simplified model calculation, not tax or legal advice)
- Spain: Depending on the legal situation, degree of kinship and structure, inheritance and gift tax can vary widely – for wealth of this size, illustratively anywhere from small amounts to tens of millions.
- Switzerland, lump-sum taxation: Assuming an assessment base of e.g. CHF 720,000 and an assumed overall rate of around 32%, the illustrative annual tax would be around CHF 230,000.
- Succession structure: Depending on its design, the residence of those involved and the applicable law, a family foundation can help organise succession; the tax effects in Spain, Switzerland and Liechtenstein must be assessed individually by specialists.
- Palma: The property would remain subject to Spanish law; a succession with a right of use would need to be structured under Spanish law.
Two Home Bases
- Palma: cultural roots, the bodega, the family’s summer gatherings
- Engadine: Swiss residence, a historic house, the family’s winter gatherings
- Next generations: clear rules and early involvement of children and grandchildren
What the Scenario Shows
1. Legal changes are often a trigger, but rarely the only reason. Possible changes to inheritance tax law can prompt a family to rethink succession. Whether relocating or a foundation solution makes sense depends on the individual case and must be assessed by specialists.
2. Two residences mean two legal systems. A scenario involving Palma and the Engadine requires coordination between Spanish, Swiss and possibly Liechtenstein specialists. The timeframe is therefore usually longer than for an acquisition in a single country.
3. Succession structures need time and involvement. A foundation or similar structure does not replace understanding within the family; a family council can involve the next generation early on.
4. Choosing a location is also a cultural decision. Families often choose a second home base based on origin, landscape and community – tax aspects are one factor among several.