Federal Council approves signing of new Franco-Swiss double taxation agreement relating to inheritance

Bern, 03.07.2013 - At its meeting today, the Federal Council gave the go-ahead for the signing of the new Franco-Swiss agreement on the avoidance of double taxation in the area of inheritance tax. The draft was amended at Switzerland's request and makes provision for improvements on three points compared to the original version: a minimum period of residence for heirs resident in France, more favourable provisions for real estate companies and a new date for initial application.

The signing of the inheritance tax agreement between Switzerland and France will occur in July. The new agreement must be approved by parliament before coming into force. It is in line with the principles of international tax law. As is the usual practice, the text of the agreement will be published at the time of signature.

Among the main changes, the text provides that France can tax heirs and beneficiaries resident in France but deducts any inheritance tax paid in Switzerland. Switzerland thereby retains its primary right of taxation and its taxing power is not affected. In addition, the agreement establishes tax transparency for real estate companies: indirectly held property will in future be taxable in the place where the property is situated.  

The current agreement dates from 1953 and has not been revised since then. In 2011, France informed Switzerland that it was considering rescinding the agreement because it was no longer in line with its policy on agreements. In Switzerland's opinion a revision was preferable to an unregulated situation because the agreement guarantees legal certainty for taxpayers and avoids the risk of double taxation.

In July 2012 a preliminary draft agreement was initialled and was submitted to a hearing. Due to the negative reaction of various cantons and interested parties, Switzerland proposed  improvements in the draft to France. In the subsequent discussion, a more favourable arrangement was found in the following three following points:

  • heirs and beneficiaries of the deceased who are resident in Switzerland must have been resident in France for at least eight out of ten years prior to the period of receipt, in order for France to be able to exercise its taxing power.
  • real estate which is held indirectly via a company is taxable where these assets are located. However, this tax is only applicable if the deceased or his/her family owns half of this company and that the property represents more than a third of all of the assets of this company.
  • The agreement will be applicable subsequent to approval by parliament and after the deadline for the optional referendum has expired. Originally application of the agreement had been envisaged from 1 January 2014.

The signing of the agreement will allow structured dialogue to be pursued on pending financial and tax matters between the two countries: administrative assistance in tax matters, regularisation of untaxed assets, expenditure-based taxation (lump-sum taxation) and the Basel-Mülhausen airport.


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Anne Césard, SIF Communications
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Federal Department of Finance
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