France-Switzerland tax treaty: residence, permanent establishment and pensions

The rules that come up in our files

• Residence (Article 4, paragraph 2). A person resident in both States is treated as resident of the State where they have a permanent home, understood as the centre of vital interests, then, failing that, where they habitually stay, then of their nationality; as a last resort, the competent authorities decide. The courts assess the home on personal and family factors, wealth being only secondary, and the criteria are examined in order: a court that, having examined the home and the centre of vital interests without being able to link them to either State, moves straight to nationality without examining habitual abode commits an error of law (CE 29 October 2012, no. 346641). Habitual abode decides only if the person habitually stays in just one of the two States; otherwise, nationality decides.
• Change of domicile (Article 4, paragraph 4). On a definitive move, liability in the first State ends at the close of the day of the transfer and begins in the other State on the same day. Under the former exit tax, the Conseil d'État inferred that Article 15 did not prevent France from taxing gains recorded on departure, the taxpayer remaining a French resident until the end of that day (CE 21 November 2012, no. 347223). A move to Switzerland does not give rise to an automatic deferral of the exit tax (Montreuil Administrative Court, 19 October 2023, no. 2115054).
• Lump-sum taxpayers excluded (Article 4, paragraph 6, b). An individual taxable in a State only on a lump-sum basis determined by the rental value of their residences is not a resident for treaty purposes. The Conseil d'État applied this to a taxpayer assessed on the expenditure basis in Switzerland, who could not claim Swiss residence under the treaty (CE 18 September 2023, no. 469789); the 1972 administrative tolerance that admitted such taxpayers under conditions ended with 2012 income. We cover the regime in our comparison of the Swiss and Italian lump-sum regimes.
• Second home in France (protocol, point X). A Swiss resident who has a home in France cannot be taxed there on a lump-sum basis determined by its rental value: France taxes them only on French-source income that the treaty allocates to it.
• Real estate income (Article 6). Taxable in the State where the property is located, including shares in a company, trust or comparable institution that give their holder the use of the property. A Swiss company owning real estate in France may be liable to French corporate income tax there, taxation of real estate income not requiring a permanent establishment, and its waiver of rent from its shareholder may lead to rent being added back to its French taxable profit (CE 22 July 2022, no. 444942). The protocol (point VIII) confirms that Swiss companies may benefit, subject to the reporting conditions of the French Tax Code, from the exemption from the annual 3% tax on the market value of real estate.
• Dividends, interest, royalties (Articles 11 to 13). The State of the paying company may levy at most 15% of the gross dividends; dividends paid to a company that is the beneficial owner and holds at least 10% of the capital are taxable only in that company's State of residence; where it is controlled by persons resident in neither State, it must show that the chain of shareholdings does not have obtaining this exemption as its main purpose. Interest is taxable only in the beneficial owner's State of residence. Royalties bear at most 5% in the source State. On the Swiss side, the 35% withholding tax is reduced to 15% by refund, on form 83 certified by the French tax office and sent to Bern within three years after the end of the calendar year in which the dividend fell due.
• Capital gains (Article 15). Gains on real estate and on shares in real estate rich companies are taxable in the State where the property is located; property a company uses in its own business is disregarded. Other gains, including on shares, are taxable only in the seller's State of residence. In an unusual clause, paragraph 4 requires the gain and any final withholding to be computed in the same way for a resident of either State; the Conseil d'État limited its scope to income tax and corporate income tax, excluding social contributions (CE 20 November 2013, no. 361167).
• Salaries and directors (Articles 17 and 18). Salaries are taxable in the State where the employment is exercised, except for short assignments meeting three conditions: presence not exceeding 183 days in total in the tax year, an employer not resident in the State of work, and pay not borne by a permanent establishment there. Directors' fees and the remuneration of majority managers of SARLs that have not opted for partnership tax treatment are taxable in the company's State. For a stock option gain of an executive who moved to Switzerland, the Conseil d'État follows the domestic law characterisation and assesses residence on the date the income is realised (CE 4 June 2019, no. 415959).
• Permanent establishment (Articles 5 and 7). A Swiss business is taxable in France only on the profits of a permanent establishment it operates there.

Six decisions on permanent establishment and residence

Between France and Switzerland, the tax authority mostly challenges two things: whether a Swiss company is present in France, and where an individual is resident. These decisions set the criteria. The diagrams on our page permanent establishment in France show the fixed place of business, the dependent agent and the consequences of a requalification for corporate income tax and VAT.

• Dependent agent: facts count as much as written powers. A French company that habitually decides the transactions which the foreign company merely endorses is a dependent agent, even without power to sign; the OECD commentaries of 2003 and 2005 carry persuasive weight. The ruling was made under the France-Ireland treaty, but the Conseil d'État already read Article 5, paragraph 4, of the France-Switzerland treaty in law and in fact (CE, 3rd, 8th, 9th and 10th chambers sitting together, 11 December 2020, no. 420174, Conversant International). Our commentary is on the page permanent establishment and corporate tax.
• The French subsidiary of a Swiss company is not, as such, its permanent establishment. The Conseil d'État rejects the dependent agent, since the subsidiary did not bind the Swiss company in its own operations, and the fixed place of business that the rented residences were said to create; the court does not stop at written delegations (CE, section, 20 June 2003, no. 224407, Interhome AG).
• Premises and staff in France are enough. A Swiss airline that provides aircraft maintenance and pilot training for third parties in France, with premises, equipment and staff assigned at Basel-Mulhouse airport, has a fixed place of business there. The Conseil d'État did not need the dependent-agent route, and the exclusion for preparatory or auxiliary activities did not apply (CE, 31 July 2009, no. 297933, Swiss International Air Lines AG).
• A Swiss company managed from France. A company whose Swiss seat is a mere domiciliation address, with no demonstrated permanent activity, and whose manager spends 75% of his time in France, where its corporate, accounting and banking records are also kept, has a permanent establishment at Prades-le-Lez; the ruling upholds corporate income tax, the CVAE and the 80% surcharge for hidden activity. The ten-year reassessment period of Article L. 169 of the French tax procedure code may follow where hidden activity is found (CAA Toulouse, 1st ch., 25 June 2026, no. 24TL01882, Ceremed Swiss, unpublished). Our commentary, in French, is on the page affaire Ceremed.
• Residence: the Article 4 tests apply in order. A court that, having examined the home and the centre of vital interests without being able to link them to either State, moves straight to nationality without examining habitual abode commits an error of law (CE, 29 October 2012, no. 346641). Habitual abode decides only if the person habitually stays in just one of the two States; otherwise, nationality decides. Our page on tax residence details these tests.
• Lump-sum taxation: no treaty residence, and no tolerance to invoke. A taxpayer assessed on the expenditure basis in Switzerland is not a Swiss resident for treaty purposes. He cannot rely on the administrative interpretation that admitted such taxpayers on conditions (the 1972 tolerance): neither under the first paragraph of Article L. 80 A of the Tax Procedure Code, having failed to declare his capital gain, nor under the second, having filed his return as a French resident (CE, 18 September 2023, no. 469789).

The same Swiss career is not taxed the same way depending on the benefit

• Private pensions (Article 20, paragraph 1). Pensions paid in respect of past employment are taxable only in the beneficiary's State of residence. For a retiree living in France, an annuity from a Swiss pension fund is taxed in France.
• AVS benefits. The French administration places them under this article: old-age and survivors' insurance pensions, including survivors' pensions, are taxable in the beneficiary's State of residence (ministerial answer Guinchard-Kunstler, National Assembly, 2 August 1999, no. 28844), subject to the catch-up clause below if France did not tax them. Swiss tax levied contrary to the treaty calls for a refund claim, and the mutual agreement procedure may be opened independently of domestic remedies.
• Catch-up clause (Article 20, paragraph 2). Since the 2009 protocol, the State from which the pensions arise may tax them, up to the untaxed portion, if the State of residence does not tax them under its domestic law. The rule is designed to prevent double non-taxation, notably of lump sums.
• Second pillar capital. By an exchange of letters of 14 February and 2 June 2006, the two administrations agreed that retirement lump sums of private and public sector employees are pensions (Articles 20 and 21), those of the self-employed falling under Article 23. For lump sums falling due since 1 January 2011, a refund of the Swiss withholding tax requires proof that they were actually taxed in France. How the Swiss withholding tax deducted on payment will be handled should be prepared before the withdrawal.
• Public pensions (Article 21). Paid by a State, a local authority or a public law entity to a person who is a national of that State, they are taxable only in that State. A French national living in Switzerland who retired from the French civil service remains taxed in France; a Swiss public pension paid to a Swiss national resident in France is taxed in Switzerland and counts in France for the rate. This regime does not apply to the industrial or commercial activities of a public body.

What a French resident's return must show

• Two separate calculations (Article 25, A, 1). For income under the second subparagraph of Article 6, paragraph 2, dividends, royalties, real estate gains, directors' fees and artistes' income, the credit equals the tax paid in Switzerland in accordance with the treaty, capped at the corresponding French tax. For other income, it equals the corresponding French tax, provided the French resident is subject to Swiss tax on that income.
• Swiss tax definitively borne (protocol, point VI). Tax paid in Switzerland means tax actually and definitively borne. Regarding a pilot's salary, the Conseil d'État held that, even assuming Article 17, paragraph 3, applied, Article 25 also allowed taxation in France, with a credit equal to the Swiss tax actually paid, which the taxpayer did not show had been paid (CE 27 July 2009, no. 301266): keep proof of payment.
• Switzerland exempts with progression (Article 25, B). For a Swiss resident, income taxable in France is exempt in Switzerland, except dividends, interest and royalties, but counts for the rate. For gains on shares in real estate rich companies, income from shares giving the use of real estate and the corresponding wealth, the exemption requires proof of taxation in France.
• Equal treatment (Article 26). It protects against discrimination based on nationality, not residence (protocol, point VII). The Conseil d'État held that the non-discrimination clause of Article 26, paragraph 5, does not entitle a group to the horizontal tax consolidation available to groups whose parent is resident in the European Union or the European Economic Area (CE 20 January 2026, no. 493939).
• Mutual agreement procedure (Article 27). Where taxation is not in accordance with the treaty, the case must be presented within three years of the first notification of the action, independently of domestic remedies. Only for transfer pricing, the existence of a permanent establishment or the attribution of profits to it may a business request arbitration if no agreement is reached within three years, unless a person directly concerned may still obtain, or has already obtained, a court decision on the same questions (Article 27, paragraph 5).
• Exchange of information (Article 28). Since the protocol of 27 August 2009, in force on 4 November 2010 and applicable to requests concerning years beginning on or after 1 January 2010, Swiss banking secrecy can no longer be set against French requests; the protocol of 25 June 2014, published in 2016, allows group requests. The treaty does not, however, cover the penalty for failing to report a foreign account (Paris Administrative Court of Appeal, 30 October 2025, no. 25PA00721).