files Archives

Wealth taxation differs significantly between France and Switzerland. While France concentrates its taxation on real estate via theIFI, Switzerland retains a tax on all assets, with rates varying from canton to canton. For taxpayers with assets in both countries, it is essential to understand the applicable rules, valuation methods, reporting obligations and the effects of tax treaties. This knowledge enables them to structure their assets in compliance with regulations. French and Swiss tax regimes: logic, basis and territoriality In France, the abolition of the ISF in favor of the IFI has refocused taxation on real estate assets alone, whether held directly or via companies. Financial investments are excluded from the tax base. Switzerland, on the other hand, continues to tax wealth at cantonal and municipal level, including all assets, whether real estate, accounts, securities or valuables. Thresholds and rates vary considerably from canton to canton. Tax residence determines the scope of taxation. A French resident declares all his worldwide real estate assets for IFI tax purposes, while a Swiss resident is subject to cantonal rules on all his assets. In the case of assets located in the other country, tax treaties regulate the respective taxation rights. Valuation and base exclusions Tax is calculated on the basis of the net taxable value, after deduction of justifiable debts. In France, only property-related debts are allowed. In Switzerland, personal debts can be deducted, but conditions vary from canton to canton. Certain assets benefit from special treatment. Life insurance policies, for example, can be

France-Switzerland tax residence: where are you taxed?

BERGEOT PAOLI ASSOCIÉS

Tax residency determines in which country you are taxed on your income, assets or pensions. Between France and Switzerland, the assessment criteria differ and can lead to situations of dual residence. A rigorous analysis will help you to secure your status and avoid any errors in declarations or tax reassessments. This issue lies at the heart of personal taxation, with concrete implications for working people, retirees and cross-border commuters. Criteria for determining tax residence Before settling or working on either side of the border, it’s essential to understand how the French and Swiss administrations define tax residence. Each country applies its own criteria, and bilateral agreements help to resolve any qualification conflicts. These rules apply equally to working and retired people, expatriates and cross-border commuters. Criteria for tax residence in France France considers a tax resident to be anyone whose home or main place of residence is in France, who carries out his or her main professional activity in France, or who has his or her center of economic interests in France. These criteria are cumulative and make it possible to establish residency in the event of a dispute. Criteria for tax residence in Switzerland In Switzerland, a person is considered a tax resident if he or she stays in the country for more than 30 days with gainful employment or more than 90 days without employment. Entry in the register of residents and center of economic interests are also decisive. Differences between tax domicile and civil domicile The tax

Tax residency: challenges for Franco-Swiss companies

BERGEOT PAOLI ASSOCIÉS

The taxation of companies operating between France and Switzerland is based on a fundamental principle: the precise determination of their tax residence. This legal and economic criterion determines the taxation system, the division of tax powers between countries, reporting obligations and the risk of tax reassessment. In a bilateral context, where national legislation coexists with international treaties, tax residence cannot be defined without an in-depth analysis of the decision-making structure, the location of strategic functions and the organization of economic flows. The challenge is twofold: to avoid conflicts of tax territoriality and to optimize the overall tax burden, while complying with anti-abuse rules. Criteria for granting tax residency Under French law, a company’s tax residence is based primarily on two criteria: the location of its registered office and that of its effective management. The latter takes on an essential dimension: it designates the place where strategic decisions are actually taken and executed, independently of the registered office. Switzerland, for its part, applies a similar approach, also taking into account the nature of the activity carried out, the personnel structure and the internal organization. In the event of a conflict of interpretation, the tax treaty between France and Switzerland attributes residence to the state where effective management is located. This notion implies a factual examination: frequency and place of meetings of management bodies, effective powers of directors, places where contracts are signed, domicile of directors. A company cannot be content with a theoretical registered office if its economic substance lies elsewhere.

Choosing between branch and subsidiary: the keys to successful implementation

BERGEOT PAOLI ASSOCIÉS

Setting up a business in Switzerland from France raises a central question: should we create a branch or a subsidiary? This structural choice has direct implications in terms of taxation, governance and legal liability. In a cross-border context, this is no mere formality, but a strategic decision to be taken with full knowledge of the facts. Here are the key elements to guide your thinking and secure your development. Efficiently structuring your presence in Switzerland Choosing between a branch and a subsidiary in Switzerland is more than just an administrative formality. It has major tax, legal and operational consequences, particularly in a Franco-Swiss context. In Switzerland, the tax authorities regard the branch as a mere extension of the foreign company, with no legal personality of its own. It is taxed locally on profits linked to its Swiss activity, while remaining attached to the head office for accounting purposes. In France, the Swiss branch of a French company is not considered an independent entity. Its results are included in French taxable income, with any offsetting mechanisms provided for in the bilateral tax treaty. A subsidiary, on the other hand, is a legally and fiscally autonomous company. Registered locally, it is subject to Swiss corporate income tax. This compartmentalization provides greater clarity for banking and commercial partners, while limiting the legal liability borne by the parent company. Taxation, governance and responsibility: criteria to assess Taxation is often the first criterion examined, but it should not overshadow governance issues. A branch office

Dividends between France and Switzerland: how are they taxed?

BERGEOT PAOLI ASSOCIÉS

Complex international tax issues arise when dividends are paid or received between France and Switzerland. Withholding rates, tax treaties, parent-daughter regime: each situation must be analyzed in the light of the beneficiary’s status and bilateral rules. Here are the points you need to know to secure your distributions. French-Swiss dividends: how are they taxed? When a French company pays dividends to a Swiss resident, a withholding tax applies in principle, subject to application of the bilateral tax treaty. Conversely, Switzerland applies a 35% withholding tax, but this may be limited to 15% or 0% in certain cases, notably if the recipient company has a sufficient shareholding. To benefit from these reduced rates, strict formalities must be complied with. In France, form 5000 is used to apply for an exemption or a reduced rate of withholding tax. In Switzerland, a request for partial reimbursement must be submitted to the Swiss tax authorities. These steps should be taken well in advance, as failure to do so may result in definitive taxation at the full rate. What are the formalities for benefiting from reduced withholding rates? The application of reduced rates or withholding tax exemptions to dividend flows between France and Switzerland is conditional on the filing of specific forms within the prescribed deadlines. On the French side, the distributing company must submit forms 5000 (tax residence certificate) and 5001 (statement of beneficial owners) to the tax authorities, together with supporting documents. These documents make it possible to claim the exemption provided for

Taxation of atypical assets held between France and Switzerland

BERGEOT PAOLI ASSOCIÉS

Works of art, gold, collector’s watches, NFTs or classic cars: these so-called atypical assets do not always generate income, but their ownership, sale or transfer raises complex tax issues between France and Switzerland. In the case of cross-border non-property assets, it is essential to anticipate reporting obligations, applicable tax regimes and risks of requalification. Assets subject to specific tax regimes Works of art, precious metals, collector’s watches, racehorses, digital objects (NFT) or exceptional vehicles: these valuable movable assets raise sensitive tax issues, particularly for taxpayers residing between France and Switzerland. Although they do not generate regular income, their ownership, transfer or sale can entail substantial tax liabilities.In France, certain categories are excluded from the real estate wealth tax (IFI), notably works of art, provided they are not held through a structure with a preponderance of real estate assets. Conversely, precious metals, jewelry, collectors’ items and old vehicles may be taxed on disposal, or as part of certain wealth management schemes.In Switzerland, wealth tax is cantonal. Valuables are subject to compulsory declaration, and are valued according to their official estimate or market value by certain cantons. Failure to declare may result in tax adjustments, particularly in the event of transfer or inheritance. Sale, inheritance, gift: the main cases of taxation The applicable tax regime varies according to the nature of the atypical asset and the transaction involved. In France, the sale of a movable asset (painting, jewel, investment gold, collector’s vehicle, etc.) may give rise to : a flat-rate tax on

Changing your tax residence between France and Switzerland: what you need to know

BERGEOT PAOLI ASSOCIÉS

Settling in Switzerland as a tax resident, or returning to live in France after expatriation: in both cases, transferring tax residence is more than just moving house. The legal criteria are precise, the tax risks numerous, and the process is strictly governed by international treaties. Here are the essential rules you need to know to secure this change of status. What is a change of tax residence? A taxpayer is considered to be a tax resident of a country according to a set of criteria defined by national legislation and tax treaties. In France, the criteria are as follows: – home or main place of residence,– place of gainful employment,– center of economic interests. In Switzerland, tax residence depends on the place of residence or stay of more than 30 days with gainful employment, or of more than 90 days without gainful employment. Changing tax residence means no longer fulfilling the residence criteria in the country of departure, and fulfilling them exclusively in the host country. The main risk is that of dual tax residence, and therefore double taxation. The role of the Franco-Swiss tax treaty The September 9, 1966 tax treaty between France and Switzerland helps avoid double taxation. In the case of dual residence, it establishes a hierarchy of residence criteria: 1. Permanent place of residence,2. Center of vital interests,3. Place of habitual residence,4. Nationality. It can also be used to allocate tax rights according to type of income (property income, dividends, salaries, pensions, etc.) and to provide

Tax audits in France or Switzerland: reacting with method and strategy

BERGEOT PAOLI ASSOCIÉS

Documentary inspection, accounting audit, request for information, examination of personal situation… Tax audits can take many forms, in France as in Switzerland. In both cases, the aim is to strike a balance between the rights of the taxpayer and the powers of the tax authorities. In a cross-border context, vigilance is all the more essential, as misrepresentations, recharacterizations or legal inaccuracies can lead to substantial and lasting reassessments. Different types of control: France vs. Switzerland In France, tax audits are governed by the Book of Tax Procedures. They may concern private individuals (examination of their personal tax situation, ESFP) or companies (audit of accounts, documentary inspection). Each stage is formalized: notice of audit, request for documents, adversarial dialogue, rectification proposal.In Switzerland, the procedure is largely cantonal. The tax authorities can intervene in a targeted manner, particularly when filing a tax return or in the event of a change in situation. Control methods are sometimes more flexible in form, but just as rigorous in substance. The taxpayer is required to produce the requested supporting documents within a short timeframe, failing which an ex officio tax assessment may be applied.In both countries, an audit may be triggered by an alert, a cross-referencing of files or an apparent inconsistency in declarations. Increased vigilance in cross-border situations Certain situations attract particular attention from tax authorities: income received in one country but not declared in the other, holding of foreign bank accounts, presence of real estate in France by non-residents, opaque non-trading companies or holding

Domiciliation and fiscal representation: obligations for non-residents

BERGEOT PAOLI ASSOCIÉS

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

Franco-Swiss tax returns: avoid mistakes and secure your situation

BERGEOT PAOLI ASSOCIÉS

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

All files