And you think our inheritance tax is punitive?

[Clitheroekid]

This is an entertaining story of a couple of brothers in France who inherited €125,000, and ended up owing the tax authorities €144,000! https://www.tdg.ch/des-heritiers-plumes ... w_user=yes

As the original article is paywalled I'm posting the (amusingly eccentric) translation:

Cross-border succession Heirs plucked by French and Swiss taxes

Instead of receiving 125,000 francs from their Swiss cousin, two Lyonnais must pay nearly 20,000.

Switzerland and France are throwing the ball back.

Published: 21.10.2022, 06:32

LAURENT GUIRAUD

This is the story of the uncle of America who puts you on his will. Miracle? Yes, but there are differences: the uncle is a distant cousin who dies in Geneva while his heirs are Lyonnais. And above all, the gift turns into a pumpkin. Taxed twice, the heirs do not receive a round. Even better: they are required to pay more than they received!

Let's go back. Joel Roux is now 67 years old and his brother Patrick 72. Four years ago, their Swiss cousin died in an EMS in Geneva. Having some savings in France, he bequeathed 125,000 euros to the two brothers. Since the cousin is domiciled in Switzerland, a notary is seized, who proceeds to the succession.

But now, "after paying the Geneva tax authorities 68,831 euros (55%)," explains Joel Roux, the French tax authorities claimed 75,088 euros (60%), a total of 143,919 euros, or 115% tax. In summary, we did not get a single penny, but in addition we had to pay 18,919 euros." Adding the insult to the contempt, the French tax authorities also increased the bill with a fine of 600 euros in 2020, estimating that the succession should have been settled faster.

To understand, we must go back to 2011. That year, France informed Switzerland that it intends to denounce the 1953 Convention against Double Taxation on Inheritance Taxes. "Switzerland has proposed to France a revision of the text, rather than letting a conventional vacuum settle," summarizes the Federal Department of Foreign Affairs.

An agreement was signed in 2013 by governments, but the Federal Chambers and the French-speaking cantons are opposed, "reeming it too unfavorable". Everything falls into the water. "Since 2015, the FDFA concludes, Switzerland and France have each applied their domestic law. In the absence of a bilateral agreement, cases of Swiss nationals residing in France, who inherit deceased domiciled in Switzerland, now also fall under French law." And the same is obviously true for French nationals domiciled in France. In fact, normally, the French tax authorities deduct inheritance tax paid in Switzerland from its inheritance tax. Except when it comes to bank assets held in France, which is the case here.

"This is a question that is little talked about in Switzerland," laments Stéphane Tanner, a tax advisor in Geneva, " because most of the time taxpayers reside in Switzerland and direct estate taxation is limited in France and often non-existent in Switzerland."

When questioned, the cantonal tax administration confirms the existence of this type of situation. "It is not uncommon," explains his spokesman Dejan Nicolic, "that the heirs and heirs of a person whose estate opens in Geneva are domiciled in France."

On the French side, the Directorate General of Public Finance (DGFIP) hides behind tax secrecy to say nothing about the subject. Too bad, because we understand by reading a letter from the DGFIP addressed to Joel Roux last September that France does not officially consider itself at all responsible for the situation. On the contrary, it would be Switzerland that should have taken into account French taxation by adopting a particular mechanism, for example by deducting from Swiss inheritance tax the one already paid in France. "But France cannot interfere" in its choice, concludes the document with a blessed manner.

We are here and our taxpayer stays in the cabbages. "The Swiss tax authorities do not want to take into account the amount paid in France and the French tax authorities do not want to take into account the amount paid in Switzerland," summarizes Joel Roux. Our situation is unfair and unbearable, thunders the taxpayer. We suffer the disagreements between France and Switzerland, yet our two countries are so close and friends."

Will a solution be found? The Lyon taxpayer is shooting at all the bells in France and Navarre. He wrote a letter to the 577 deputies of the National Assembly. "Four answered me," explains Joel Roux. Carine Frappa-Rousse, deputy of Rhône MP Cyrille Isaac-Sibille, reportedly contacted the Minister of Public Accounts, Gabriel Attal." We'll see, but to find a fundamental solution, Switzerland and France would do well to talk to each other.

[DrFfybes]

Seems odd.

If Switzerland taked 55%, then only 45% actually crosses over into France, so surely they can only take 60% of that?

I wonder if the same thing applies to UK inheritances - if I won the lottery I could leave it all to Marine Le Pen:)

Paul

[stevensfo]

Seems odd.

If Switzerland taked 55%, then only 45% actually crosses over into France, so surely they can only take 60% of that?

I wonder if the same thing applies to UK inheritances - if I won the lottery I could leave it all to Marine Le Pen:)

Paul

My understanding is that the money was already in France, as were the two brothers. The cousin who died was resident in Switzerland. So the Swiss demanded their 55% and the brothers paid it via the solicitor. Then the French authorities demanded their 60%, and since there was no double taxation agreement in place, the brothers were legally obliged to pay.

A truly absurd situation. The irony is that although a good lawyer could probably have made the authorities see sense, his fees would have probably matched that extra 15%!

Steve