Living in France and working in Switzerland
Please note that tax law is a complex subject and you should not rely on this article without professional advice on the facts of your case.
Working in Switzerland
The introduction in 2010 of the new UK income tax of 50% will encourage many high earners in the UK to move to lower tax jurisdictions. It is expected that many high earning entrepreneurs will move to Geneva and relocate their companies and staff which, will in turn increase the demand for accommodation. There is evidence this has already started with UK hedge funds relocating there. Anecdotal evidence of the shortage of places in international English speaking schools and the demand for high value residential property with good access to Geneva airport is widespread. Rental prices in the centre of Geneva are high and availability limited, so many people live in France, on the South side of Lake Geneva, and commute over the border to work.
The attraction of Switzerland now extends to people with high incomes who may not have the capital usually associated with the profile of people relocating to Switzerland. It is doubly attractive for such people who often run their own businesses with international links as Switzerland has an extensive double tax network and corporation tax rates in some cantons are very attractive.
The Swiss Property Market
Unlike most other countries, the Swiss property market has continued to enjoy price growth over the past year with house prices in Switzerland 4.3% higher than a year ago. This growth has been helped by demand from foreign residents, which looks set to continue.
The difficulty for investors is that property purchases in Switzerland for non residents are notoriously difficult with ownership of residential property usually only possible in designated tourist areas, making a buy to let in say the centre of Geneva impossible. For people working in Geneva the costs of residing there are high and for the cost of a daily commute a more desirable property in France can be had. Either way an option is to buy in France within commuting distance of Geneva.
Living in France
Towns such as Bons en Chablais, Anthy-sur-Leman, Thonon-les-bains, Sciez and Evian-les-Bains are all within an hour and a half drive of Geneva some with ferry access to Lausanne and Geneva. These are all very liveable places for people whose income and net wealth means living in Switzerland is not an option.
Often the first stop for buyers seeking the shortest commute is Douvaine in France, it is the closest town with good access to Geneva. Apartments here start from around €200.000. This is not as pretty as the other towns and for those looking for something which could also be used as a holiday home, the search may have to encompass areas further afield.
A town which is a popular summer destination for second homes and only an hour and a half drive from Geneva is Evian-les-Bains. Wendy Bull at www.wendyshouses.com says that prices in these French areas have been stable for the last year with vendors willing to negotiate and there are good opportunities for purchasers. Prices for houses start at €350.000 with lakeside homes from around €800.000.
A Frontalier permit will allow a French resident to travel to and from Geneva for the purpose of employment. It is also possible to stay in Geneva during the week and return home for the weekend.
For tax purposes the position will depend on which canton the individual works in and whether they return to France each night or only at weekends. Geneva exceptionally taxes a French resident worker at source on his Swiss salary. This is calculated on the basis of the Geneva tax rates which takes into account the salary level and the family position of the tax payer. The French resident is taxed in France but is given a credit for the tax paid in Geneva.
For most other cantons, including Vaud, Valais, Berne, Soleure, Bâle Neuchâtel and Jura tax is paid in France on the basis of the Swiss salary with an exchange rate fixed annually by the French resident provided, the taxpayer returns to France broadly speaking each night. An individual will be taxed as a person returning to France provided not more 45 nights a year is spent in Switzerland and not more than one night per week. The tax return is the same as for someone working in France. If the taxpayer only returns to France at the weekends, they will have to register and pay tax in Switzerland.
If an individual is taxed in Switzerland, then the employer will deduct the tax and pay it to the Swiss authorities. Even if an individual works in a canton other than Geneva the employer will still have to deduct tax and a declaration will have to be made stating that the individual is French resident in order to prevent the individual from being taxed twice. This does not alter the position it is simply a collection mechanism to prevent tax evasion.
An independent worker – effectively self employed – working in any Swiss canton but resident in France is taxable in Switzerland. Insofar as social security is concerned the principle is that contributions are made in the country where the individual works. However the French general system can be opted into.
Solicitor and Chartered Tax Adviser