Holding assets in several countries raises complex and sometimes sensitive issues when it comes to preserving them over the long term. Entrepreneurs, managers and families whose assets are split between France, Switzerland and other jurisdictions are exposed to the risk of recharacterization, conflict of laws and blockage in the event of death or changes in their situation. Wealth protection cannot be approached in a one-size-fits-all manner. It is based on arbitrations adapted to the nature of the assets, their location, local rules of civil and tax law, and the long-term strategy adopted.
Anticipating the tax risks of cross-border ownership
Cross-border wealth is often exposed to a double constraint: on the one hand, excessive tax optimization can lead to contestation or recharacterization; on the other, a lack of structuring can increase taxation or render certain transfers inapplicable.
Certain forms of ownership, which are tolerated in France, can produce very different tax effects in Switzerland, and vice versa. This is particularly the case with non-resident non-trading property companies or family holding companies. When poorly managed or inadequately justified, these structures can be assimilated to structures set up primarily for tax purposes, exposing their holders to potential reassessments, the questioning of exemptions or taxation in several states.
Conversely, direct ownership of assets without an appropriate legal shield can lead to excessive exposure to inheritance or property risk, particularly in the event of separation, litigation or transfer of residence.
Combining governance, detention and mobility
Protecting an estate means adapting the legal ownership of assets to the life situation of the beneficiary or beneficiaries. The needs of an active entrepreneur are not the same as those of a non-executive partner or a passive member of a family company. Governance that is too rigid hinders future adaptations, while governance that does not exist makes the organization unstable.
In the case of family groups or complex estates, the creation of a holding company, the adoption of appropriate articles of association or the setting up of a governance board help to maintain consistency in the management and transfer of assets. The aim is not to set the structure in stone, but to make it evolve while preserving the balance.
The management of voting rights, approval or pre-emption clauses, or income-sharing arrangements can thus be organized in such a way as to preserve control and continuity, whatever the personal or geographical evolution of family members.
Securing sensitive assets
Some assets require extra vigilance. This is particularly true of works of art, valuables, private collections, shares in unlisted companies and precious metals. The physical location of these assets, their registration, insurance and valuation can have unanticipated tax consequences in the event of control, transfer or inheritance.
A painting kept in Switzerland by a French resident may thus be subject to divergent tax regimes in terms of IFI, inheritance tax or capital gains tax. A classic car used occasionally in a country other than the one in which it is legally owned may give rise to ambiguity as to whether it is for private or professional use.
Documentation, traceability of flows, and the existence of contracts governing loans or the safekeeping of goods are all parameters to be taken into account to avoid any unfavorable interpretation by the tax authorities.
A discreet, legal and operational framework
BERGEOT PAOLI Associés assists its clients in implementing wealth protection strategies in an international environment. Our approach integrates legal, tax and operational aspects, in order to align holding methods with the objectives of preservation, transmission and confidentiality.
We work in a number of areas: asset mapping, analysis of requalification risks, formalization of structures, family governance and the link between personal mobility and asset stability. For an in-depth look at how to protect assets in a cross-border context, discover our expertise in legal and asset structuring.