Taxation between France and Switzerland is based on two distinct systems, governed by bilateral agreements but applied independently. An incorrect declaration, an involuntary omission or a misunderstanding of the rules can have serious consequences: requalification, adjustment, penalties or double taxation. Here’s an overview of the most common errors in Franco-Swiss tax returns, and how to correct them effectively.
Reporting obligations in both countries
When a taxpayer resides in one country and receives income in the other, or retains assets in the departed state, he or she is often subject to tax obligations in both jurisdictions.
French residents must declare all their worldwide income. They must also mention the existence of foreign bank accounts (form no. 3916), life insurance policies taken out outside France, or real estate held abroad. Non-residents, on the other hand, must declare French-source income (notably property or professional income) using form 2042-NR.
In Switzerland, the declaration is cantonal and covers all the taxpayer’s worldwide income, unless otherwise agreed. Some cantons also require detailed declarations of real estate held abroad.
Frequent errors in Franco-Swiss declarations
A number of errors are recurrent in cross-border files:
- Omission of a Swiss bank account from a French tax return, particularly when it is no longer active but still open;
- Failure to declare property income earned in France by a Swiss resident, even though the bilateral agreement wrongly exempts him from local taxation.
- Double reporting of certain income (dividends, pensions, capital gains), due to disregard of the allocation key provided for in the agreement.
- Failure to declare a Swiss pension or life insurance policy, even though the French authorities consider it to be a foreign investment.
- Errors in tax rates or in the allocation of tax credits, particularly on income taxed in the source country.
These errors are often unintentional, due to the complexity of the rules, but can lead to tax reassessments, penalties and even tax audits.
Rectifying your declarationFramework and strategyegy
French legislation authorizes taxpayers to make spontaneous corrections to their tax returns within three years of the tax year, without penalty if the error is accepted as unintentional. In Switzerland, procedures vary from canton to canton, but a spontaneous correction is generally welcomed when it precedes an audit or a request for regularization.
However, the later the adjustment, the higher the stakes. When an adjustment is already underway, there is less room for negotiation, and the tax authorities may question the taxpayer’s good faith. It is therefore crucial to intervene as soon as an error or risk is detected.
Successful rectification requires a structured approach: analysis of discrepancies in declarations, full documentation of flows, justification of the treatment applied (agreement, specific regime, territorial affiliation), and where necessary, legal argumentation.
Support with tax process
BERGEOT PAOLI Associés assists taxpayers in fulfilling their Franco-Swiss tax obligations, whether this involves the initial declaration, a corrective audit or voluntary regularization. We analyze the structure of your income and assets, verify the correct application of tax treaties, ensure the formal conformity of your declarations and take charge of the dialogue with the competent administration, if necessary.
For rigorous assistance in your declaratory procedures and the regularization of your situation, discover our support in relations with the tax authorities.