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Switzerland Pressured To Approve French Tax Pact

by Ulrika Lomas, Tax-News.com, Brussels

10 March 2014


French Finance Minister Pierre Moscovici has told his Swiss counterpart, Eveline Widmer-Schlumpf, that Paris will not renegotiate the revised inheritance tax (IHT) agreement the two countries have drafted, even if it is rejected by Swiss lawmakers.

The revised Franco-Swiss IHT accord was signed in July 2013 to replace the existing text from 1953. Controversially, the agreement allows France to tax heirs and beneficiaries of Swiss citizens residing in France under certain conditions. There are grave doubts as to whether the Swiss Council of States will wave through the agreement on March 18. The text was firmly rejected by the National Council in December last year.

If the Council of States blocks the treaty, France will have no other choice than to denounce the 1953 agreement, Moscovici warned. France will not renegotiate the deal, which will result in a treaty vacuum, he said.

Moscovici argued the revised agreement is fair for Switzerland; improving the existing situation and bilateral relations, while at the same time facilitating information exchange upon request.

France has sought to revise the 1953 agreement with the Confederation for two years. The nation has made the resolution of other outstanding tax disputes conditional on the adoption of the treaty. These include the taxation of cross-border commuters, lump sum taxation, the issue of the undeclared assets of French residents held in Swiss banks, and unresolved tax issues relating to the bi-national airport Basel-Mulhouse.

Despite Moscovici's tough stance, he issued a joint statement with Widmer-Schlumpf welcoming the continuation of dialogue between the two territories. Both reiterated their commitment to the new inheritance tax agreement as "preferable to an unregulated situation." They stated that international progress on the development of a global standard for the automatic exchange of information in tax matters could support a new relationship between the countries, and pledged to cooperate on "making arrangements for any previously untaxed assets."

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

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