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      Who is subject to US estate tax?

      US estate taxation applies differently to US domiciliaries / citizens and non-US persons, referred to as nonresident aliens (NRAs). For transfer tax purposes, domicile is determined by an individual’s long-term intention to reside in the United States, rather than by immigration status or the substantial presence test. Most Swiss-based high-net-worth individuals (HNWIs) without a long-standing US connection are therefore treated as nonresidents.

      To understand who is exposed, it is important to distinguish between estate tax and inheritance tax, terms that are often used interchangeably but are conceptually different:

      US estate tax is levied on the estate itself. It is calculated based on the value of the decedent’s US-situs assets before those assets are distributed to heirs. The estate, rather than the beneficiary, is responsible for paying the tax.

      Inheritance tax, by contrast, is imposed on the recipient of an inheritance and typically depends on the beneficiary’s relationship to the deceased. The US does not impose a federal inheritance tax, although a few individual states do. 

      With this framework in mind, this article focuses on the US estate tax exposure that may arise for NRAs.

      Tran H. Luong
      Tran H. Luong

      Director, U.S. Tax Team, GMS, Tax & Legal

      KPMG Switzerland

      Benjamin Brackett
      Benjamin Brackett

      US Private Client Tax Expert, US Certified Public Accountant

      KPMG Switzerland

      What is the US estate tax exemption for nonresidents?

      The exemption available to nonresidents is just USD 60,000. As a result, even modest holdings, such as a US vacation home or a portfolio of US equities, can create a taxable estate. Estate tax rates are progressive, ranging from 18% to 40%. Understanding what constitutes a US-situs asset is therefore crucial for managing exposure:

          US-situs assets

          • US real estate

          • Physical assets located in the US (artwork, collectibles, vehicles, gold)

          • Shares in US corporations (including US mutual funds or US ETFs)

          • Certain interests connected to US trade or business 
             

              Assets generally not considered US-situs

              • US bank accounts not connected to US trade or business

              • American Depositary Receipts (ADRs) of foreign corporations

              • Proceeds from US life insurance policies on the life of a non-US person

                 

                   

                  US brokerage accounts and US-listed ETFs often create unintended exposure for Swiss investors, making proper asset classification essential.

                      How to reduce your US estate tax exposure

                      Non‑US individuals who hold American property often look for ways to reduce their exposure to US estate tax. Several structuring options can help shift ownership away from directly holding US‑situs assets (particularly real estate) and, as a result, help manage estate tax risk.

                          Using a foreign corporation

                          To address the estate‑tax issue more directly, some nonresidents interpose a foreign corporation between themselves and their US assets.

                          For example, an individual might establish a non‑US company – such as in Hong Kong, Singapore, Liechtenstein or the Cayman Islands – which then owns the US real estate.

                          Because shares of a foreign corporation are not considered US situs assets, they are outside the scope of US estate tax.

                          As a result, holding US real estate or US shares indirectly through such a company can eliminate US estate tax exposure on death.

                              Other ownership structures

                              Beyond corporations, a range of other structures such as non‑US trusts, partnerships or layered holding arrangements may help minimize transfer‑tax consequences. These structures can effectively convert US‑situs assets into non‑US assets for estate‑tax purposes.

                              However, these options come with important income tax and compliance considerations, including how the US treats certain foreign entities that hold US real estate. Close coordination with experienced US tax advisers is therefore essential.

                              The optimal solution depends heavily on the individual’s family situation, long‑term objectives, and the nature of the underlying investments. There is no single structure that works best in every case.

                              Ideally, planning should take place before acquiring US assets.

                                  Does the US have an estate tax treaty with Switzerland?

                                  Yes. The United States and Switzerland have an estate tax treaty that provides important relief for Swiss tax residents who own US-situs assets.

                                  However, the treaty does not fully exempt a Swiss tax resident from US estate tax. Instead, it allows qualifying Swiss tax residents (or NRAs from a US perspective) to access the US lifetime estate tax exemption (USD 15 million in 2026) on a pro-rata basis. 

                                  Under the treaty, NRAs may claim a portion of the US exemption corresponding to the ratio of their US-situs assets to their worldwide gross estate.

                                      For example, if 20% of an individual's worldwide assets are US-situs assets, they may apply 20% of the US exemption (USD 15 million for 2026) to reduce their US estate tax exposure. 

                                      In practice, if a Swiss tax resident (NRA) has a worldwide estate below USD 15 million, the proportional exemption will generally eliminate any US estate tax liability. However, a US estate tax return (Form 706-NA) will still need to be filed if US-situs assets exceed USD 60,000, even if no tax is ultimately due.  

                                          FAQs on US estate tax for non-US citizens

                                          Yes. Nonresidents are subject to US estate tax on their US-situs assets.

                                          Without treaty protection, the exemption for nonresidents is only USD 60,000, meaning even relatively modest holdings can create a taxable estate, with rates reaching up to 40%.

                                          The US-Switzerland has an estate and gift tax treaty can provide significant relief. 

                                          Nonresidents are taxed on US-situs assets, i.e. assets with a direct connection to the United States.

                                          This includes US real estate, shares in US corporations (public or private), and interests in US businesses.

                                          Tangible assets located in the US, such as property, artwork or personal items, are also included. By contrast, non-US assets, shares in foreign companies and non-US accounts fall outside the scope of US estate tax. 

                                          US estate tax exposure can often be reduced through careful structuring and the use of treaty relief.

                                          Ownership through foreign corporations, non‑US trusts or other non‑US entities may convert US-situs assets into non‑US assets, thereby reducing US estate tax exposure.

                                          Swiss tax residents may also benefit from the US-Switzerland estate tax treaty, which helps coordinate taxing rights and mitigate the risk of double taxation.

                                          Plan your US-Swiss estate efficiently

                                          Cross-border estate planning is complex. Our experts can help you optimize your structure and avoid unnecessary US tax exposure.

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                                          Meet our experts

                                          Tran H. Luong
                                          Tran H. Luong

                                          Director, U.S. Tax Team, GMS, Tax & Legal

                                          KPMG Switzerland

                                          Benjamin Brackett
                                          Benjamin Brackett

                                          US Private Client Tax Expert, US Certified Public Accountant

                                          KPMG Switzerland

                                          Ana Isabel Arraut Colon
                                          Ana Isabel Arraut Colon

                                          US Private Client Tax Expert, US Tax Attorney

                                          KPMG Switzerland

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