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Consequences of the end of the Franco-Swiss inheritance tax treaty

This article is for general information only. French law is a highly specialised area and you should only act or refrain from acting after receiving full professional advice on the facts of your particular case. This article is for general information and does not constitute investment advice. Always consult an IFA.

The recent termination of the France and Switzerland Inheritance Tax Treaty profoundly affects the taxation of Franco-Swiss estates.

Since 1 January 2015, effectively only article 750 ter, 2 ° of the French Tax Code applies to inheritance tax of such estates. This means that:

  1. If the deceased dies tax-resident in France, all his assets located in France or Switzerland, are taxable in France.
  1. If the deceased is Swiss tax-resident and owns French property or other assets located in France, these assets will be taxable in France. French property whether owned directly or through a company, will be taxable in France. Before the tax treaty was terminated French property owned by a company was not taxed in France. This was because the shares were transferred on death, not the underlying property and taxing rights were given to Switzerland by the treaty. In practice Swiss tax was usually very low.
  1. French residents receiving an inheritance from Switzerland are, subject to certain conditions, liable to French tax.

People who are resident in Switzerland with French assets or whose children are resident in France should review their inheritance tax position.

UK residents considering a move to Switzerland who own French property should also consider their French tax exposure. Protection they enjoy under the UK France Inheritance tax treaty will be lost following such a move.

November 2016