In international situations, the boundary between de jure residence and effective presence becomes a crucial tax issue. Any person or entity carrying on business or holding assets in a country without being domiciled there for tax purposes may be required to appoint a tax representative, or even be reclassified as a de facto tax resident. In both France and Switzerland, these obligations are based on precise legal provisions. Knowing and applying them can prevent transactions from being blocked, taxes from being raised and cross-border disputes from arising.
Tax representation of non-residents in France
The appointment of a tax representative is compulsory for individuals or legal entities not domiciled in France (outside the EU, Iceland and Norway), in cases expressly covered by the General Tax Code (CGI). This is the case in particular:
– When a non-resident sells real estate located in France, in accordance witharticle 244 bis A of the CGI for individuals andarticle 219 of the CGI for foreign companies.
– When a company not established in France is liable for French VAT without having a permanent establishment within the meaning ofarticle 283-1 of the CGI.
– When a non-resident taxpayer generates French-source income taxable underarticle 164 B CGI.
The appointment is made using CERFA form n°15948*01, which must be submitted before the deed of sale is signed, particularly in the case of real estate sales. The representative must be accredited by the tax authorities, be domiciled in France and be jointly and severally liable for payment of the tax due.
In the absence of a representative, the sale may be blocked or be subject to lump-sum taxation without application of the standard allowances (see BOFiP-BOI-RFPI-PVINR-30).
Tax domicile rules in Switzerland ?
Swiss tax law, governed by the Federal Act on Direct Federal Taxation (LIFD) and supplemented by cantonal legislation, attaches central importance to the notion of effective tax residence.
According to Articles 3 and 4 LIFD, a natural person is domiciled in Switzerland for tax purposes if he or she is permanently resident there or stays there for more than 30 days with gainful employment, or more than 90 days without gainful employment.
For legal entities, a permanent establishment is deemed to exist when an independent activity is carried out on a permanent basis from a fixed place of business (office, worksite, representation), with a certain degree of decision-making autonomy (cf. AFC Circular of June 8, 2005, amended in 2011).
In practice, this means that a French company with an employee or an office in Geneva may be required to declare itself liable for cantonal and federal tax, even if it has no local legal form.
Similarly, a person domiciled abroad but regularly using a secondary residence in Switzerland, holding bank accounts there or having family ties there, may be requalified as a de facto tax resident by the cantonal tax authorities.
Legal and tax implications of a lack of representation
Failure to provide tax representation or declare domicile may result in:
– In France, automatic taxation of capital gains on real estate (with a 33.33% or 75% levy depending on the case), non-application of deductions for length of ownership (see form 2074-IMM), and penalties for non-compliance with reporting obligations.
– In Switzerland, retroactive reclassification as a permanent establishment, with taxation of local profits, VAT liability when worldwide sales exceed CHF 100,000, and possible tax arrears over several years.
These consequences can also call into question bilateral tax treaties, in the case of tax residency deemed fictitious or contested.
Securing representation with method
Tax representation should not be seen as a mere administrative formality, but as an essential tool for legal certainty, in particular:
– when transferring residence,
– prior to a real estate sale,
– in the case of cross-border activity not yet structured locally,
– or in the case of indirect real estate ownership (SCI, holding company).
It makes it possible to control the interpretation of flows, avoid recharacterization and preserve treaty rights in a bilateral environment that is often closely monitored.
Our support
BERGEOT PAOLI Associés assists individuals and legal entities with issues of domiciliation or tax representation between France and Switzerland. We analyze residency in the light of domestic and treaty law criteria, structure declaratory arrangements, liaise with the relevant tax authorities and set up the necessary tax representation.
We work in close collaboration with your notaries, banks, Swiss advisors or specialized lawyers to ensure complete, preventive and legally secure tax compliance.
Find out more about our services in tax management and relations with the tax authorities.