French-Swiss tax impasse shows little progress

The French and Swiss finance ministers were primarily concerned with bilateral tax issues Keystone

In the first visit to Switzerland by a French minister since the February immigration vote, French Finance Minister Pierre Moscovici drew a hard line on inheritance tax questions, but other longstanding sticking points remained largely unresolved.

The main agenda item for the French minister’s visit was a discussion with his Swiss counterpart, Eveline Widmer-Schlumpf, about an agreement on inheritance tax that runs the risk of failing to pass Swiss parliament. Moscovici warned that if it does fail, France would not be willing to re-negotiate the agreement.

The deal on the table has come under heavy criticism from the Swiss side because it would allow France to tax property in Switzerland that had been inherited by French citizens.

The Swiss House of Representatives voted down the agreement in December, and the Senate is set to debate the issue on March 11. If the agreement also fails there, it will be sent back to cabinet for review.

Moscovici emphasised that the inheritance tax agreement had not been forced on Switzerland and that it was incorrect to charge the French with imperialism with regard to the matter.

There is also no solution in sight for how to treat untaxed French money hidden in Swiss banks. The Swiss had long suggested a withholding tax on the funds, but the French delegation continued to show a lack of interest in that option.

France recently launched a voluntary disclosure programme for tax evaders in which more than 16,000 people have participated so far. In 80% of the cases, the funds had been hidden in Swiss banks, according to numbers released by French authorities last month.

Widmer-Schlumpf and Moscovici both underlined that both sides remained committed to finding a solution to the problem.

Moscovici welcomed a decision reached on Thursday in parliament to allow for bank data to be sent to other countries without informing the account holder, if informing them would jeopardise a tax evasion investigation in progress. France had long insisted on such a change in protocol.

Disappointment over vote

Although it did not come up specifically in the negotiations over tax matters, the shadow of the recent Swiss vote on curbing European Union immigration hung over Moscovici’s visit, and he acknowledged being personally affected and disappointed by the outcome.

“There’s no reason to hide that,” he said.

At a lunch for Moscovici attended by cabinet members Johann Schneider-Ammann and Alain Berset, the Swiss reassured the French minister that nothing would change for the 145,000 French cross-border workers.

Moscovici said it was clear the vote to curb EU immigration would have consequences for Switzerland, but that Swiss relations with France continued to be good – otherwise he wouldn’t be in Bern.