Selling property in France or Switzerland as a non-resident raises complex tax issues. Every cross-border real estate sale needs to be secured, as it is subject to the rules of one or more states, cross-border declarations and bilateral treaties. Here are the main mechanisms to be aware of in order to anticipate the risks of double taxation or requalification.
Cross-border sale of real estate: who collects the tax?
When it comes to cross-border capital gains on real estate, the fundamental principle is that taxation is the responsibility of the state in which the property is located. For example, a Swiss resident selling a property in France is subject to French taxation. Conversely, a French resident selling a property in Switzerland will be taxed in the canton concerned.
On the French side, Article 150 U of the French General Tax Code provides for taxation at 19%, plus 17.2% social security contributions for non-residents (unless they are covered by a European social security system). From year 6ᵉ onwards, deductions for length of ownership progressively reduce this tax base. Total exemption occurs after 22 years for income tax, and after 30 years for social security levies. An additional levy may apply if the capital gain exceeds €50,000.
In Switzerland, taxation is decided at cantonal level. Some cantons apply a high rate on short-term sales, then a decreasing rate according to the length of ownership (up to 25 or 30 years). The method of calculation differs: some cantons apply a marginal rate based on income tax, while others use an autonomous system.
Formalities, tax treaties and cross-reporting
Under the Franco-Swiss tax treaty of September 9, 1966, taxation is the responsibility of the state in which the property is located. However, the taxpayer’s state of residence retains a right. He must declare the capital gain there, with a tax credit to avoid any double taxation.
This mechanism presupposes full documentation: deed of sale, proof of expenses, detailed calculation of the capital gain, details of the length of ownership.
Common errors concern the classification of the property (principal residence, secondary residence or business premises), omission of the declaration in the country of residence or absence of supporting documents. Any irregularity may result in an adjustment, automatic taxation or penalties.
Principal residence, joint ownership, companies
Certain cases require specific analysis. A principal residence located in France, sold by a Swiss resident, only benefits from the exemption if the seller is a European Union national, has lived in the property for at least two years, and has not already made use of this regime.
When the property is held in joint ownership or via a company, taxation becomes more complex. The capital gain may be divided pro rata to the shares held, or reintegrated into the taxable income of a single entity. Asset holding companies, non-trading companies and foreign structures (notably in Luxembourg) are often the subject of detailed analysis by tax authorities in France and Switzerland.
Summary: what you need to know
- Taxation of capital gains always depends on the location of the property.
- France applies a tax rate of 19% + C.S., with progressive exemptions depending on the length of ownership.
- In Switzerland, taxation is cantonal, often degressive, but can be high in the short term.
- The Franco-Swiss tax treaty allows double taxation to be avoided through a tax credit in the country of residence.
- Documentation is essential: any shortcoming (failure to declare, incorrect qualification, lack of supporting documents) can have serious consequences.
International real estate taxation: our expertise
Cross-border property sales require a thorough understanding of tax, declaration and treaty rules. BERGEOT PAOLI Associés can assist you at every stage: checking the applicable tax regime, simulating the capital gain, preparing the file, declaring the sale in both countries, coordinating with notaries.
Thanks to our expertise in Franco-Swiss asset taxation, we can help you secure your transactions and avoid the risks of double taxation, requalification or litigation. For comprehensive, confidential and personalized support
, visit our page dedicated to the tax aspects
of investments and real estate.