Swiss family foundation: the Cour de cassation treated it as a trust

A family foundation, a voluntary disclosure file, a reassessment over eight years

• Foundation. The foundation has its seat in Switzerland. It is a family foundation governed by Swiss law whose beneficiary is the taxpayer, husband of the second appellant.
• 20 March 2015: the couple file a regularisation request with the tax authorities, covering in particular the ISF for 2007 to 2014 and the exceptional wealth levy for 2012.
• 26 December 2018: the tax authorities serve a reassessment proposal on the taxable base, adding back assets held in Switzerland, for the same taxes.
• 17 August 2020: after their claim is rejected, the couple bring the matter before a tribunal judiciaire.
• 6 January 2025: the Paris court of appeal dismisses their claims. It finds that the couple had used funds from the foundation, since November 2005, for cash-flow purposes, with no evidence that those uses fell within the foundation's purposes.
• 28 May 2026: the Cour de cassation dismisses the appeal.

What the Cour de cassation holds, in five steps

The appellants argued that assets in a trust are included in the estate of the settlor or beneficiary only where they confer full contributive capacity, and that the foundation's statutes allowed funds to be allocated to the beneficiary only in strictly listed cases of need. In the alternative, they asked that the base be limited to a value obtained by capitalising only the income they had actually received.

The reasoning of the ruling has five steps:

• The text. Under article 885 G ter CGI, then applicable, assets and rights placed in a trust as defined in article 792-0 bis, together with the income capitalised in it, are included at their net market value on 1 January of the tax year in the estate of the settlor or of the beneficiary deemed to be the settlor under II of article 792-0 bis.
• The definition. Article 792-0 bis defines a trust as the whole of the legal relationships created under the law of a State other than France by a settlor, in order to place assets or rights under the control of an administrator, in the interest of one or more beneficiaries or for a specified purpose.
• The purpose of the tax. In establishing the ISF, the legislature intended to tax the contributive capacity conferred by holding a set of assets and rights (Conseil constitutionnel, decision no. 2017-679 QPC of 15 December 2017).
• The facts. The court of appeal could infer from the funds the couple had used since November 2005 for cash-flow purposes, with no evidence that they fell within the foundation's purposes, that the foundation's assets had given them contributive capacity. They had to be included at their market value on 1 January of each tax year in the ISF base for 2012 to 2014 and in the 2012 exceptional levy.
• The rule. The ISF and the exceptional wealth levy are assessed on all the assets of the trust where they confer contributive capacity on the taxpayers, whether or not they disposed of them. The ground arguing the contrary is unfounded.

The ruling applies article 792-0 bis to the foundation in issue without independently developing the criteria of its classification under the statutory definition of a trust: the ground assumed it by referring to Swiss family foundations "assimilated to trusts", and the Court answers on the tax base. It rules neither on transfer duties, nor on the levy of article 990 J, nor on the IFI.

Two decisions to read the rule

The 2026 ruling rests on a decision of the Conseil constitutionnel that sets the limit of the rule. We retain these two decisions.

• Cour de cassation, commercial chamber, 28 May 2026, no. 25-12.326 (FS-B, appeal dismissed). The wealth tax and the exceptional wealth levy are assessed on all the assets of the trust, including those of a family foundation governed by Swiss law, where they confer contributive capacity, whether or not the taxpayer disposed of them (Cour de cassation, published in the Bulletin; in French).
• Conseil constitutionnel, decision no. 2017-679 QPC of 15 December 2017. Article 885 G ter is consistent with the Constitution subject to one reservation: the settlor, or the beneficiary deemed to be the settlor, must be able to show that the assets, rights and income placed in the trust give him no contributive capacity, having regard in particular to the direct or indirect benefits he draws from them, and that proof cannot result from the irrevocable nature of the trust alone (Conseil constitutionnel; in French).

The two decisions are read together. Proof of the absence of contributive capacity remains open to the beneficiary, but it turns on the facts: in 2026, it was the use the couple had made of the foundation's funds that decided the case, not the wording of the statutes. The ruling does not hold that a foundation whose beneficiary never received anything would be taxed in the same way; it holds that, where contributive capacity exists, the base covers all the assets.

The family foundation under Swiss law: what article 335 allows

The Swiss Civil Code defines a foundation as the dedication of assets to a special purpose (art. 80). Article 335, paragraph 1, allows family foundations to be created, intended to pay for the education, establishment and support of family members or for similar purposes. Paragraph 2 prohibits family entails (art. 335). Family foundations are not subject to supervision by the supervisory authority and are released from the obligation to appoint an auditor; private-law disputes are decided by the court (art. 87).

These features explain the argument in the ruling. Under Swiss law, the statutes limit the cases in which the foundation may pay funds to a family member, which the appellants invoked to argue that the assets gave them no contributive capacity. Article 792-0 bis reasons differently: it defines the trust by its function, assets placed under the control of an administrator in the interest of beneficiaries, not by its legal form. A foundation with legal personality is not a trust in civil law; for the purposes of the CGI, the Court applied the trust regime without pausing on the point.

The French tax regime in force for a trust, applied to a foundation

The ISF is gone, but the provisions that refer to the trust of article 792-0 bis remain. If the foundation meets the definition in article 792-0 bis, which is decided case by case, four regimes must be examined, texts re-read on 12 October 2026.

• IFI (CGI, art. 970). The real estate assets referred to in article 965 placed in a trust are included, at their net market value on 1 January, in the estate of the settlor or of the beneficiary deemed to be the settlor. Excluded are irrevocable trusts whose exclusive beneficiaries fall within article 795 (bodies of general interest) or are of the same nature, where the administrator is governed by the law of a State bound to France by an administrative assistance convention: a family foundation does not benefit from that exception merely by being one, its conditions (classification as a trust, exclusive beneficiaries falling within articles 795 or 795-0 A, administrator governed by the law of a State bound by an administrative assistance convention) being cumulative.
• 1.5% levy (CGI, art. 990 J). Since 2018, individual settlors and beneficiaries are subject to a levy at the highest marginal rate of the scale in article 977, namely 1.5%, on the assets referred to in article 965, located in France or abroad, for residents of France, and on the assets of 2° of article 964 only for non-residents, unless those assets have been included in the IFI base and properly declared or declared under article 1649 AB in the estate of the settlor or deemed settlor where he is not liable to the IFI having regard to the net taxable value of his estate, the trust's assets included. Where the administrator is governed by the law of a State bound to France by an administrative assistance convention, part II excludes certain irrevocable trusts whose exclusive beneficiaries are exempt (arts. 795 and 795-0 A) and occupational pension trusts. The administrator pays the levy by 15 June at the latest; failing that, the settlor and the beneficiaries other than those who properly declared to the IFI or filed the return under article 1649 AB, or their heirs, are jointly liable.
• Transfer duties (CGI, art. 792-0 bis, II). A transfer by gift or inheritance is taxed according to the family relationship between settlor and beneficiary. Where neither the gift nor the inheritance characterisation applies, on death the share due globally to descendants is taxed at the rate of the last bracket of table I of article 777, 45%, and the balance at the rate of the last bracket of table III, 60%, a rate that also applies where the administrator is subject to the law of a non-cooperative State other than those listed in 2° of 2 bis of article 238-0 A, or where the trust was settled after 11 May 2011 by a settlor then domiciled in France.
• Reporting (CGI, art. 1649 AB). The administrator of a trust whose settlor or at least one beneficiary is domiciled in France, or which includes an asset located there, reports its creation, amendment and termination, the content of its terms, the beneficial owners and the market value of the assets at 1 January. The duty also covers an administrator domiciled in France and, outside the European Union, one who acquires real estate or enters into a business relationship in France. Assets that should have been declared attract an 80% surcharge on the duties assessed (CGI, art. 1729-0 A), which cannot be less than the fine in IV bis of article 1736.

Law no. 2026-534 of 25 June 2026 (art. 84) amended article 792-0 bis and article 1729-0 A. In the version of article 792-0 bis in force since 27 June 2026, the duties due under points b and c of 2 of II are paid by the administrator, with a detailed estimated return naming the beneficiaries. Failing payment, where the administrator is governed by the law of a non-cooperative State or of a State with no mutual assistance convention on recovery, the beneficiaries are jointly liable and must file the return. The council of a Swiss family foundation is not always a trust administrator in the French sense: who reports, and in what capacity, is decided case by case.

What to do if you are a beneficiary of a Swiss family foundation and resident in France

The firm proceeds by a four-question review, before any decision on the structure.

• What do the statutes say, and what happened? Article 335 of the Swiss Civil Code limits the purposes of a family foundation; the 2026 ruling shows that what counts is the actual payments, compared with those purposes. A statement of sums received, lent or advanced over several years is the first document in the file.
• Since when have you been connected to France? Liability to the IFI, to the levy of article 990 J and to transfer duties depends on the tax domicile of the settlor and the beneficiary, to be read with the date of arrival and the applicable treaties.
• Have the returns been filed? Failure to report under article 1649 AB attracts the surcharge of article 1729-0 A; a voluntary regularisation is prepared before any request from the tax authorities, as the couple in the case did in 2015.
• Should the structure be kept? Depending on the situation, dissolution, an organised distribution or a reorganisation around an instrument of French law, such as the fiducie, is compared with keeping the foundation.

For a French-Swiss matter, these questions are handled under both laws at once: the firm acts in Paris and in Geneva. See also our page on the tax lawyer in Geneva.