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.

Background

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.

Resources

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.

Category:

CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Disclaimer
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

Copying
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

Leave a Reply

Your email address will not be published. Required fields are marked *