Residing in Switzerland with assets in France, receiving income from foreign sources, preparing a cross-border transfer of assets between generations… Structuring your assets between France and Switzerland is never a matter of standard logic. Each choice, whether it concerns the form of ownership, place of residence, matrimonial property regime or investment vehicle, has tax, civil and inheritance consequences. To ensure that these choices are secure and form part of a coherent wealth strategy, a few structuring principles need to be taken into account from the outset.
Integrated approach to Franco-Swiss heritage
In an international context, wealth structuring cannot be limited to an isolated tax or legal approach. It must be based on a cross-reading of domestic law rules, bilateral tax treaties, civil law (inheritance and matrimonial law) and personal and family objectives.
The place of tax residence, which largely determines the taxation of income and capital gains, is one of the key points to anticipate. But simply changing your address is not enough to change your tax domicile. The Franco-Swiss tax treaty of September 9, 1966, interpreted in the light of administrative doctrine, requires a concrete analysis of the center of vital interests, the location of assets, the household and the professional activity.
Securing asset ownership: choice of vehicle and terms and conditions
Poorly structured cross-border assets can quickly generate tax friction, conflicts of classification (professional or private assets, income from movable or immovable property), and even cases of double taxation.
It is important to structure the process in advance:
- Ownership of real estate assets (directly, via a non-trading company, or through a holding company);
- Consolidation of shareholdings in operating or family-owned entities;
- The geographical and legal allocation of movable assets, in particular securities accounts, investments, valuables and works of art.
For example, a limited liability company (SAS for example) set up in France by a Swiss resident may pose difficulties if it is effectively managed from Switzerland, entailing a risk of reclassification as a permanent establishment in Switzerland.
Anticipating future mobility and transmissions
Efficient wealth structuring is based on one principle: never think in silos, nor in the short term. A planned move to Switzerland, a temporary expatriation, the return of a child to France or a transfer to heirs who are fiscally dispersed are all events that call for an architecture capable of evolving over time.
This means integrating the rules applicable to matrimonial property regimes and their recognition on both sides of the border right from the outset. The choice of law applicable to succession, within the meaning of European Regulation no. 650/2012, also plays a central role in the future distribution of assets. It may be advisable to consider the use of intergenerational planning instruments, such as a family pact, a mandate for future protection, a trust or a family holding company with appropriate governance.
A change of residence or the transfer of an asset to another state, if not anticipated from a legal and tax point of view, can sometimes lead to immediate taxation of unrealized capital gains, as is the case with the “exit tax” in France or certain Swiss cantonal rules. These impacts need to be assessed sufficiently in advance to avoid any stumbling blocks or unexpected costs.
Double taxation and tax grey areas
One of the most sensitive issues in Franco-Swiss structuring is the coexistence of two tax systems with sometimes divergent rationales. Even in the presence of a bilateral tax treaty, certain income or transactions may be subject to asymmetrical treatment.
This is particularly true of income from property held in France, which is taxed locally but must also be declared in Switzerland, or of gifts between parents and children in two different countries, which may be subject to double taxation if the treaty is not correctly applied.
These situations call for rigorous documentation, consistent reporting in both countries, and close attention to changes in national tax doctrines.
Tailor-made support based on trust
BERGEOT PAOLI Associés assists entrepreneurs, executives and wealthy families in the cross-border structuring of their assets, combining tax expertise, mastery of comparative civil law and international coordination capabilities.
We are involved at every stage: wealth audit, risk mapping, selection of suitable vehicles, setting up governance and monitoring the evolution of your situation. Our approach aims to align your wealth strategy with your life projects, with a view to anticipation, confidentiality and continuity.
To design an architecture adapted to your situation between France and Switzerland, discover our support in wealth structuring and planning.