Federal Council adopts dispatch on inheritance tax agreement with France
Bern, 04.09.2013 - At its meeting today, the Federal Council adopted the dispatch on the new inheritance tax agreement with France for the attention of parliament. The agreement will prevent a legal vacuum that is detrimental to taxpayers. It also constitutes a first concrete step in the tax dialogue with France.
On 11 July 2013 in Paris, Federal Councillor Eveline Widmer-Schlumpf and the French Finance Minister, Pierre Moscovici, decided to engage in a dialogue on outstanding bilateral tax and financial issues. They signed the new double taxation agreement in the area of inheritance on this occasion.
This agreement will enter into force after it has been approved by parliament in both countries and the referendum deadline has expired in Switzerland. France has refrained from requesting that the new text be applied from 1 January 2014. The draft agreement largely follows the principles of the OECD and Switzerland's agreement policy in both formal and material terms.
The current agreement dates from 1953 and has not been revised since then. It reflects the principles pursued by the two contracting states at that time, but it is no longer in line with France's current policy in this area. In 2011, France notified Switzerland that it wished to denounce the 1953 agreement. Switzerland informed the French authorities that it preferred a revision over a legal vacuum and the associated risk of double taxation. Negotiations were subsequently held by the two countries.
While the new agreement does indeed increase the tax burden for taxpayers in France, it ensures legal certainty and prevents the risk of double taxation, unlike a situation without any agreement. In the event of a legal vacuum, taxpayers would automatically suffer the consequences of any change in the domestic laws of the two countries and be exposed to the risk of double taxation. Moreover, they would not benefit from any system allowing for the amicable settlement of possible disputes in the area of inheritance. Worse conditions would apply for the taxation of heirs resident in France and there would be no exceptions for some real estate companies held by the deceased or his or her relatives.
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