Switzerland and the USA today signed a protocol in Washington amending the double taxation agreement (DTA) in the area of taxes on income. In addition to other changes, the Protocol of Amendment also contains provisions on the exchange of information in accordance with the OECD standard.

The Swiss Federal Department of Finance says these provisions were negotiated in line with parameters defined by the Federal Council. Any request for administrative assistance must clearly identify the taxable person concerned and, in the case of banking information, the bank concerned. As has been the case with past DTAs, so-called `fishing expeditions’ are not permissible. These provisions are not applicable retroactively: In terms of the exchange of banking information, the effective date is today, the day of the signing.

In addition to the extension of administrative assistance, the negotiations with the USA were also used as an opportunity to amend the arbitration board clause in the existing DTA and replace it with a formulation that corresponds in substance to that in the OECD model convention. It was also agreed to exempt dividends from taxation paid out by restricted pension organisations (in Switzerland: pillar 3A) in the source country. To date only dividends paid to occupational pension organisations (pension funds) have been exempted from withholding tax. In a separate agreement to the Protocol of Amendment, Switzerland and the USA agreed to conduct further negotiations within the next two years on the revision of the existing DTA, particularly on the reduction of withholding tax on certain equity dividends to zero percent. (introduction of zero rate).

A report on the Protocol of Amendment has been submitted to the cantons and the business associations concerned for comments. The Federal Department of Finance reports that the Conference of Cantonal Directors of Finance welcomed the signing of the revised agreement.

In addition to the agreement with the USA, Switzerland has signed a DTA containing the extended administrative assistance clause in accordance with Art. 26 of the OECD Model Convention with Denmark, Luxembourg, France, Norway, Austria, the UK, Mexico and Finland – all since the Federal Council decision of 13 March 2009. An agreement has also been signed on the extension of the DTA with Denmark to include the Faroe Islands. The agreement with Spain is also considered to have been signed. The DTA with Spain contains an automatic most-favoured nation clause which is activated if Switzerland agrees a further reaching provision with another EU state. This clause was activated with the signing of the DTA with Denmark on 21 August 2009.

To date, Switzerland has negotiated DTAs containing an extended administrative assistance clause in accordance with Art. 26 of the OECD Model Convention with fifteen states and territories. Along with the agreements already signed, there are agreements with Japan, the Netherlands, Poland, Qatar and Singapore. These DTAs have been initialled, but not yet signed. The Federal Council has also given the go-ahead for the signing of the DTA with Qatar. The remaining initialled DTAs will shortly be submitted to the Federal Council to be approved for signing.