Swiss
Finance Minister Eveline Widmer-Schlumpf and her French counterpart
Pierre Moscovici have recently signed, in Paris, the new Franco-Swiss
agreement aimed at avoiding double taxation in the area of
inheritance tax. Both Ministers also signed a joint declaration
reaffirming their commitment to extensive bilateral dialogue, to
resolve outstanding tax issues.
Replacing
the existing bilateral accord from 1953, the new text is intended to
put an end to certain situations of non-taxation of inheritances. The
revised treaty provides that France can tax heirs and beneficiaries
resident in France, although after deduction of any inheritance tax
paid in Switzerland. Switzerland thereby retains its primary right of
taxation and its taxing power is not affected.
However,
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.
Furthermore,
the agreement establishes tax transparency for real estate companies.
Real estate held indirectly via a company is taxable where these
assets are located. However, this tax is not applicable if the
deceased or his/her family owns half of this company and property
represents more than a third of all of the assets of the company.
Finally,
the accord facilitates future information exchange between
Switzerland and France, permitting requests and group requests, even
in cases where taxpayers' banking details are not known.
According
to the Swiss Federal Department of Finance, the signing of the
Franco-Swiss agreement marks "a first concrete step" in
mutual dialogue. Underlining the commitment of both countries to
further strengthening cooperation and to deepening discussions, the Federal Department of Finance highlights the fact that a joint working group is to be set up in
September, tasked with finding a solution to contested tax issues.
The
working group will address issues including administrative assistance
in tax matters, the regularization of untaxed assets, Switzerland's
expenditure-based taxation (lump-sum taxation), and the application
of tax regulations governing the Basel-Mülhausen airport.
Welcoming
the joint signing of the treaty, French Finance Minister Moscovici
emphasized that the accord constitutes significant progress in the
fight against tax exile and tax evasion, as well as in strengthening
bilateral dialogue between France and Switzerland.
The
inheritance tax agreement must first be approved by the parliaments
of both treaty states, before the provisions can enter into force.
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