French Swiss Border Property
Investors and commuters can capitalise on high Swiss property prices by buying over the border in France, says David Anderson
The Swiss property market is one of the few which has continued to enjoy price growth over the past year, with house prices in Switzerland 4.3% higher than a year earlier, helped by demand from foreign residents. This looks set to continue for some time.
The difficulty for investors is that property purchases in Switzerland for non-residents are notoriously difficult, with ownership of residential property usually only possible in designated tourist areas, making a buy-to-let in, say, the centre of Geneva impossible. However, one way to get exposure to the Swiss market is by buying in France within commuting distance of Geneva.
High-earning entrepreneurs moving to Geneva are likely to relocate their companies and staff, increasing demand for accommodation. The introduction in 2010 of the 50% UK income tax will encourage many high-earners in the UK to move to lower tax jurisdictions.
Close to home Rental prices in the centre of Geneva are high so many people live in France, on the south side of Lake Geneva, and commute over the border to work.
The closest town which has good access is Douvaine, which is relatively built up. Apartments start at around €200,000 and this will probably be the first stop for buyers seeking the shortest commute. It’s not as pretty as other towns, and if you are looking for something which could also be used as a holiday home, you’ll have to look further afield for a property close to Lake Geneva. Towns such as Bons en Chablais, Anthy sur Leman, Thonon les Bains, Sciez and Evian les Bains are all within an hour-and-a-half drive of Geneva, some with ferry access to Lausanne and Geneva.
Evian, for instance, is a popular summer destination, with many second homes. Prices for houses start at €350,000 with lakeside homes from around €800,000. Wendy Bull of Wendys Houses reports that prices in these French areas have been stable for the last year, with vendors willing to negotiate and good opportunities for buyers.
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The daily commute For those considering a move to France, French residents working in Geneva need to obtain a Frontalier permit. This allows you to travel to and from Geneva for the purpose of employment. It is also possible to stay in Geneva during the week and return home for the weekend.
For tax purposes, your position depends on which canton you work in and whether you return to France each night or only at weekends. Geneva taxes a French resident worker at source on his Swiss salary. This is calculated on the basis of the Geneva tax rates, which takes into account the salary level and family position of the taxpayer. The French resident is taxed in France but is given a credit for the tax paid in Geneva.
For most other cantons (Vaud, Valais, Berne, Soleure, B�le Neuch�tel and Jura), tax is paid in France on the basis of the Swiss salary with an exchange rate fixed annually by the French resident, provided the taxpayer returns to France broadly speaking each night. You will be taxed as a person returning to France provided you do not spend more than 45 nights a year in Switzerland and not more than one night per week. The tax return is just like the return for someone working in France. If the taxpayer only returns to France at the weekend, he has to register and pay tax in Switzerland.
If you are taxed in Switzerland, your employer deducts the tax and pays it to the Swiss authorities. Even if you work in a canton other than Geneva, your employer still has to deduct tax and you need to fill in a declaration that you are a French resident so you are not taxed twice. This does not alter the position, it is simply a collection mechanism to prevent tax evasion.
An independent worker – effectively self-employed – working in any Swiss canton but resident in France is taxable in Switzerland. Insofar as social security is concerned, the principle is that you make your contributions where you work in Switzerland. You can, however, opt out of this and into the French system.
David Anderson, solicitor and chartered tax adviser, Sykes Anderson LLP Tel: 020 3178 3770 [email protected]