In Bern today the Federal Department of Finance announced that Switzerland and Finland signed a Protocol amending the double taxation agreement (DTA) in the area of taxes on income and assets. The Protocol of Amendment also contains a provision on the exchange of information in accordance with the OECD standard.
In addition to the extension of administrative assistance, the negotiations with Finland were also used as an opportunity to introduce a tax exemption (or zero rate) on dividends in the source country in the case of participations over 10% (previously 20%). This enables companies based in Switzerland with significant participations in Finnish companies to collect dividends without Finnish tax deductions.
Also today, Switzerland and Denmark signed an exchange of notes in Copenhagen in which the revised double taxation agreement (DTA) with Denmark has been extended to the Faroe Islands. The revised agreement also contains a provision on the exchange of information in accordance with the OECD standard.
It was announced yesterday that the Swiss Federal Council has approved a revised DTA with Qatar. Following the initialling of the document, this is the final stage before an agreement between Switzerland and Qatar is signed.
All DTAs signed by the Swiss include the administrative assistance clause, providing co-signatories with administrative assistance in tax matters, with what has been referred to as “justified requests in individual cases”. However, so-called “fishing expeditions” will not be permitted.
And, on Friday in Mexico City, Switzerland and Mexico signed a Protocol to amend the double taxation agreement (DTA) in the area of taxes on income. In addition to the extension of administrative assistance, the Protocol of Amendment also contains further provisions of benefit to Swiss businesses. Dividends on participations over 10% will only be taxed in the state of residence. And under certain conditions, withholding tax on interest will be lowered to 5% and 10%. Furthermore it has been possible to agree most favoured nation treatment with regard to interest payments and licence fees. This clause guarantees Switzerland equal treatment with all other OECD countries with which Mexico agrees a more advantageous arrangement in relation to the taxation of these revenues.
Switzerland has to date negotiated DTAs with an extended administrative assistance clause in accordance with Art. 26 of the OECD Model Convention with fifteen states and territories.