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Today’s Top Headlines

Franco-Swiss IHT Deal Blocked By Upper House

by Ulrika Lomas,, Brussels

16 June 2014

The Swiss National Council has voted against the Council of State's decision to return the inheritance tax (IHT) agreement with France to the Federal Council for renegotiation.

Lawmakers in the lower house said they considered the prospect of fresh talks with Paris to be "unrealistic." Swiss Finance Minister Eveline Widmer-Schlumpf has already made clear that France will not review the text. Meanwhile, the Federal Council said it expects France to rescind the existing treaty in the coming days, putting Swiss citizens at risk of double taxation.

The new agreement allows France to levy inheritance tax on heirs and beneficiaries of Swiss citizens residing in France under certain conditions. The text also permits the taxation of assets located in France belonging to a deceased person in Switzerland. A new agreement was requested by Switzerland after France announced in 2011 that it would terminate the original text from 1953 because it no longer corresponded to the nation's treaty policy.

The proposed agreement will now be resubmitted to the Council of States for a second vote. If the upper house continues to block the pact's adoption, the accord will be returned to the Federal Council and further concessions will be sought from France.

Switzerland's lower house approved double taxation agreements with Australia, China, and Hungary, and tax information exchange agreements with Jersey, Guernsey, and the Isle of Man. The new treaties provide for mutual assistance in tax matters in accordance with the Organization for Economic Cooperation and Development standard.

At the same session of the National Council, the upper house also rejected an initiative proposing to exempt child and educational allowances from taxation. Lawmakers argued the measure would benefit "privileged" families, rather than low earners as intended. The proposal would lead to an annual revenue shortfall for the communes and cantons of about CHF760m (USD844m), and a loss of about CHF200m for the Federal Government, lawmakers noted.

TAGS: inheritance tax | Isle of Man | Finance | tax | tax information exchange agreement (TIEA) | double tax agreement (DTA) | Hungary | Organisation for Economic Co-operation and Development (OECD) | Australia | China | Guernsey | Jersey | agreements | education | France | Switzerland | tax breaks | individual income tax | Tax | Tax Evasion

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