Swiss residents may claim reduced withholding tax rates on gains from the sales of French property

January 1, 2012

It was recently held that Swiss tax residents may claim the 19% withholding tax rate on gains arising on the disposal of French property and that they are not subject to the 33.33% rate.


Under French domestic tax legislation the tax treatment of real property gains depends on whether or not the seller is resident in a country of the European Economic Area (“EEA”).  The capital gains taxation rate for individuals resident in an EEA country is 19% whereas the rate is 33.33% for residents of non EEA countries.

Swiss tax residents challenged the application of the 33.33% withholding tax and claimed the application of the reduced withholding tax before French courts on the basis of the French Swiss Tax treaty in its Article 15 §4.  The French tax administration defended the position that the application of a different tax rate was based on the residence of the taxpayer and did not violate the non-discrimination clause which prohibits discrimination based on nationality.

This decision temporarily closes an ongoing dispute between the French tax administration and Swiss taxpayers on the tax treatment of capital gains.

Based on this decision, Swiss tax resident individuals who have been subject to the higher capital gain tax rate of 33.33% (in lieu of 19% or 16%) may file a claim to obtain a refund of the difference.


CAA Versailles 21 July 2011 no.10VE04101 Wolf von Guggenberger.

For further information or to discuss any of the issues raised, please contact Pascal Ngatsing on +33 (0)1 43 59 43 12.


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