France has terminated the 1953 inheritance tax (IHT) agreement with Switzerland with effect from 31 December 2014.
From 1 January 2015, domestic inheritance tax rules will apply in the absence of a treaty, according to tax-news.com.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Provisions governing the taxation of persons with dual residence will cease to apply, and a provision providing for arbitration in the case of a dispute will no longer have force.
Commenting on the France’s decision, the Swiss Federal Council said it regrets France’s decision to terminate the deal, insisting that an "imperfect agreement" would have been preferable to a treaty vacuum.
"It would continue to negotiate with France to resolve outstanding tax matters, including the taxation of cross-border commuters," the publication quoted Swiss Federal Council as saying.
Under the terms of the 1953 IHT treaty, inheritances are taxed in the country of residence of the deceased, rather than the beneficiary’s country of residence.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataFrance threatened to annul the accord way back in 2011, arguing that the text no longer fits with the nation’s treaty policy.
At Switzerland’s request, a revised agreement was negotiated. The new deal would allow France to tax heirs and beneficiaries of Swiss citizens resident in France under certain conditions, according to tax-news.com.
The pact also alows France to tax assets located in France belonging to a deceased person who was residing in Switzerland.
