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Switzerland Adopts Draft Law On French Inheritance Tax Deal

The Swiss Federal Council has sent a draft law on the new inheritance tax agreement with France for the attention of parliament. The agreement is designed to prevent a legal vacuum, detrimental to taxpayers, and constitutes a first concrete step in the tax dialogue with France.

On July 11, 2013, during a meeting in Paris, Swiss Federal Councillor Eveline Widmer-Schlumpf and French Finance Minister Pierre Moscovici decided to engage in a dialogue on outstanding bilateral tax and financial issues. Furthermore, they signed the new double taxation agreement (DTA) in the area of inheritance. The draft treaty largely follows the principles of the OECD and Switzerland's agreement policy in both formal and material terms.

The DTA will enter into force after it has been approved by parliament in both countries and after the referendum deadline in Switzerland has expired. France has refrained from requesting that the new text be applied from January 1, 2014.

The current agreement dates from 1953 and has not been revised since then. Although it reflects the principles pursued by the two contracting states at that time, 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 deal. Switzerland informed the French authorities that it preferred a revision to a legal vacuum and the associated risk of double taxation. Negotiations were subsequently held by the two countries.

Commenting, the Swiss Federal Department of Finance (FDF) stated that: '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.'

The FDF explained: '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.'



For further information please contact Victor da Cruz, international contact partner for our member firm in Switzerland on


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