CROSS-BORDER AND INTERNATIONAL TAXATION

International taxation is a relatively complex subject, the implementation of which requires a deep knowledge of internal taxation laws, international agreements and conventions, as well as an analysis of the domestic law of different States.

 

In the border region, it is common to encounter situations in which recourse to this discipline is essential.

Without this list being exhaustive, whether it is a question of determining the optimisation paths, the taxation methods or the reporting obligations applicable to :

• Cross-border workers receiving salaries and more generally any other income from abroad, benefiting from employee profit-sharing plans

• Employees who are impatriated, expatriates or seconded to foreign companies

• Donees or heirs who have received by way of gift or inheritance assets located abroad or belonging to a deceased person or donor domiciled abroad

• Individuals wishing to leave the national territory to take up residence in Switzerland and more generally abroad

• Companies carrying out international operations, having subsidiaries or wishing to set up abroad

• International civil servants with assets or income from one or more countries

These situations can only be resolved from a tax point of view by analyzing the provisions of the domestic law of the various States concerned and the implementation of international agreements and treaties.

 

Given their close economic and political relations, tax relations between France and Switzerland are governed by numerous treaties, including:

• A convention for the elimination of double taxation on income and wealth and the prevention of fiscal fraud and evasion signed on September 9, 1966 amended by the addenda of December 3, 1969, July 22, 1997 and August 27, 2009

• An agreement signed on April 11, 1983 on the taxation of the remuneration of cross-border workers, applicable on the Swiss side only to the signatory Cantons

• Various agreements concluded between the European Union and Switzerland, as well as certain European texts, including regulations (EC) no. 883/2004 and no. 987/2009 on the coordination of social security systems.

 

The management of tax issues encountered by taxpayers with personal and economic relations simultaneously in France and Switzerland requires a perfect knowledge of these agreements.

The Lake Geneva region is home to many people and companies with economic, business, assets and/or financial interests in various countries.

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Subject to the provisions of international agreements, persons domiciled in France for tax purposes are subject to tax on all their income, regardless of its origin. Persons who are not domiciled in France are only taxed on their French-source income.

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Similar rules apply in Switzerland : if a person is domiciled or resident in Switzerland, he is in principle taxed on his worldwide income. If he only has an economic link with Switzerland, the taxation of his income in that State is limited to that of Swiss source.

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Most OECD member states apply similar rules.

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By only applying the domestic rules of the taxpayer's state of residence and the state of origin of the income, double taxation would be inevitable : all foreign income would be taxed in the state of its source and in the state of residence of its recipient in most cases

 

These situations of double taxation can only be avoided through the application of international tax treaties and certain standards of domestic law.

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For taxpayers domiciled in France and Switzerland, the situation described above can be transposed when they inherit or receive assets located abroad, or when the deceased or the donor is domiciled abroad.

In this regard, it should be recalled that the tax treaty between France and Switzerland on inheritance ceased to have effect as of January 1, 2015.

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Regulations (EC) No. 883/2004 and No. 987/2009 on the coordination of social security systems state that an individual can only be covered by the legislation of one State. In other words, a person working simultaneously in France and Switzerland can and must only contribute to the social security system of one of these two States.

In the context of activities carried out on both sides of the border, we observe in practice that some taxpayers who are not aware of the existence of these provisions contribute to a social security system to which they are not affiliated, or are affiliated to a social security system unsuited to their situation.

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Whether it is a question of determining or optimising the taxation methods of the various economic flows received or paid, assisting you with your reporting obligations or representing you in your relations with the Administration, our law firm will help you to resolve these problems.​