Tax Treaty Case Law around the Globe 2014
1. Aufl. 2015
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S. 121Chapter 12 France: When Does a French Taxpayer Who Transfers Tax Residence to Switzerland Become a Swiss Resident under the Treaty?
Alexandre Maitrot de la Motte
12.1. Introduction
At the end of the last century, there was no taxation of capital gains on shares realized by individuals in Switzerland (and in Belgium). At the same time, the taxation rate of those capital gains in France was 16% (plus an additional 10% of social taxes). Under article 15(5) of the France-Switzerland Convention of , the right to tax the capital gains on shares and securities was given to the State of residence. This provision is similar to that of the OECD Model.
Some French taxpayers (whatever their nationality) therefore decided to transfer their tax residence from France to Switzerland (or to Belgium) before selling their shares or securities and realizing capital gains. As a reaction against something that could sometimes be considered as an abuse, France decided in 1998 to create an exit tax: the law that was then adopted had been codified under articles 167 and 167 bis of the General Tax Code. The event generating the tax was the fact, for an individual, to transfer its tax residence o...