French inheritance tax deal gets new lease of life

The cemetery might be the last stop for many people, but it can signal trouble for their heirs Keystone

The Senate has asked cabinet to renegotiate a controversial tax deal with France, a few months after the House of Representatives rejected it outright as an attack on Swiss sovereignty.

The accord, under which inheritances would be taxed based on where the recipient resides and not where the deceased person lived, as used to be the case, has been under attack since it was announced last year.

The agreement, if adopted, would see French citizens living in Switzerland taxed by their government, while Swiss residents in France would also be taxed on their assets back home. It would replace the current double taxation accord signed in 1953.

The Senate voted on Tuesday to send the text back to the cabinet, stating that it was preferable to have an agreement rather than none at all. If this were the case, Paris would set its own rules and Switzerland would have nothing to say or not be able to protect its own citizens. 

The Senate also agreed that it was impossible to ignore the concerns of French-speaking cantons which are worried they will be deprived of some of their prerogatives in tax matters.

Finance Minister Eveline Widmer-Schlumpf warned though that France would probably not be receptive to renegotiating the deal since it was Switzerland that had asked for a new accord after Paris said it no longer wanted to apply the 1953 agreement.

Hard line

Earlier this month, French Finance Minister Pierre Moscovici drew a hard line on the inheritance tax issue, warning that if it was not ratified by Switzerland, France would not be willing to renegotiate the agreement.

Moscovici emphasised that the inheritance tax agreement had not been forced on Switzerland and that it was incorrect to charge the French with imperialism with regard to the matter.

The Organisation of the Swiss Abroad has criticised the agreement in the past, saying it failed to take into account the interests of the nearly 190,000 Swiss nationals in France. They make up the largest Swiss expat community in another country.