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Swiss Parliament Vetoes French IHT Accord

by Ulrika Lomas, Tax-News.com, Brussels

24 March 2014


The Swiss Council of States has overwhelmingly rejected the revised inheritance tax (IHT) agreement with France, calling for the text to be renegotiated.

The upper house blocked the deal by 35 votes to 4, with lawmakers insisting that they could not ignore opposition from the French-speaking cantons, which consider the treaty to be an act of "capitulation." They also said that France and Switzerland should engage in new dialogue to find a solution to the impasse, requiring concessions from France.

Swiss Finance Minister Eveline Widmer-Schlumpf made clear that the agreement was negotiated at Switzerland's request, after Paris announced its intention in 2011 to rescind the original text from 1953, as it no longer corresponds to the nation's treaty policy. The accord was not revised following pressure from France, she corrected.

She warned that the alternative to the revised agreement is not another convention but simply no treaty at all, as France has categorically refused fresh talks. A treaty vacuum will put the 180,000 Swiss nationals domiciled in France at risk of double taxation, she noted. Furthermore, France is now likely to block discussions aimed at resolving other outstanding tax disputes, including the taxation of cross-border commuters and lump sum taxation, she added.

The revised IHT agreement allows France to tax heirs and beneficiaries of Swiss citizens residing in France under certain conditions. The text also permits Paris to tax assets located in France belonging to a deceased person in Switzerland, including furniture, paintings, and, newly, gold bullion and jewellery.

TAGS: inheritance tax | Finance | tax | double tax agreement (DTA) | law | agreements | France | Switzerland

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