My French husband inherits in Switzerland

My French husband inherits in Switzerland
Written byFabrizio Genini

"My husband, who is French and lives in France, inherited the estate of his Swiss aunt, who lives in Switzerland. Swiss inheritance tax of 25% has been paid. Given the absence of a treaty between Switzerland and France, will he pay inheritance tax in France? And if so, will it be possible to deduct what has already been paid in Switzerland?

Carole

As you rightly pointed out in your question, the 1953 Franco-Swiss Convention against double taxation in matters of succession is no longer in force. As a result, since 1 January 2015, Switzerland and France have each applied their domestic law in cases of inheritance.

In France, heirs are taxed not on the basis of nationality but solely on the basis of place of residence. Under art. 750 ter of the French General Tax Code (CGI), heirs to an estate are taxed if they have been resident in France for tax purposes for at least six of the last ten years prior to receiving the assets. They are then considered to be French taxpayers. This tax will apply to all assets (wherever they may be) received by the heir, including those located outside France.

When an inheritance is created, the heir resident in France is entitled to an allowance of €100,000 on his taxable share (art. 779 CGI). This reduction also includes any gifts made in the fifteen years preceding the death (art. 784 CGI). That said, French inheritance tax is significant, progressive and dependent on the degree of relationship of the heir to the deceased. For an heir in the direct line, the maximum tax is 45%, but this can rise to 60% for an heir with no family ties to the deceased. On a positive note, however, France, in application of its domestic law, deducts a posteriori the tax levied by another State. This principle of deduction limits double taxation by providing for exemptions in various cases, reducing the above-mentioned tax rates. It is therefore likely that your husband will be able to deduct inheritance tax paid in Switzerland, on presentation of a specific form issued by the French government, bearing the number 2740. As taxation is a complex matter, especially in international matters, it is advisable to seek specialist advice to ensure that these formalities are carried out correctly.