Switzerland-France Double Taxation Treaty

Switzerland’s double taxation treaty with France

Among Switzerland’s double taxation treaties is also the treaty with France which was signed in 1966 and enforced in 1969. In 1998 a new protocol was added to the Swiss-French double taxation agreement which covers the withholding taxes applied to dividends, interests, royalties and capital gains. A new provision with respect to anti avoidance rules was also added. The new provision with respect to the withholding taxes would also clarify the elimination of double taxation with respect to French and Swiss branch offices and it also allows France to apply its Controlled Foreign Companies legislation. The double taxation agreement between France and Switzerland was last amended at the end of 2014.

Withholding taxes according to the Switzerland-France double tax treaty

The double taxation treaty contains provisions about the French and Swiss dividend taxes which establishes the dividends distributed to a corporate shareholder holding at least 10% of the voting power is exempt from the withholding tax if:

• - the shareholder is controlled by  European or Swiss residents,
• - one of the companies is listed on a recognized stock exchange.

The new withholding tax rates have also been reduced from 5% to 0% and apply for investments of at least 10%. For a lower percent of investments, the withholding tax remains 15%. Also, based on certain criteria, Swiss residents may apply for tax credits with French companies.

With respect to the taxation of interests, they are fully exempt from taxation in Switzerland and France, compared to the provisions of the first double taxation agreement. Royalties paid to Swiss residents will, however, be subject to a 5% tax.

The 2014 Swiss-French double taxation treaty

The new double taxation treaty between Switzerland and France contains three major changes with respect to inheritance. According to the new tax agreement, estate beneficiaries of deceased individuals owning a property in Switzerland or France would be taxed in the country the property is located in if the deceased has resided in that country for more than 8 years. The heirs of a property inheriting shares in companies holding real estate will be taxed in the country they reside in and any Swiss resident’s tangible property situated in France will be taxed in France.

For complete details about the new provisions of the double taxation agreement with France, please contact our Swiss attorneys.