Double taxation agreements
Double taxation agreements (DTAs) prevent double taxation and facilitate cross-border economic transactions. In addition, DTAs usually contain certain bans on discrimination, a dispute resolution mechanism and a clause on the exchange of information upon request.
In general
Double taxation agreements (DTAs) prevent the double taxation of private individuals and legal entities with an international nexus in the area of taxes on income and capital. They are therefore an important element in promoting international economic activities. Switzerland currently has DTAs with over 100 countries and is seeking to extend its agreement network further. Switzerland also has eight agreements for the avoidance of double taxation with respect to inheritance and estate taxes.
Country information
(link to the Federal Tax Administration FTA)
Texts of agreements: Classified Compilation of Federal Legislation
(in German)
BEPS
The outcomes of the base erosion and profit shifting (BEPS) project contain recommendations which require existing DTAs to be amended. Existing DTAs can be adapted to the treaty-related solutions developed in the BEPS project by means of the Multilateral Convention to Implement Tax Treaty Related Measures (BEPS Convention).
The BEPS Convention came into force on 1 December 2019. With it, Switzerland intends to adapt the DTAs with Argentina, Austria, Chile, the Czech Republic, Iceland, Italy, Lithuania, Luxembourg, Mexico, Portugal, South Africa and Turkey to the treaty-related BEPS minimum standards.
In order for the amendments introduced by the BEPS Convention to take effect, Switzerland must make an additional notification to the depositary of the BEPS Convention indicating that the necessary procedures have been completed. The first such case concerned Luxembourg. In a Memorandum of Understanding of 12 May 2020, the competent authorities of Switzerland and Luxembourg adopted the exact wording of the amendments provided in the BEPS Convention (see RO 2020 2641 and RO 2020 2715, in German). The procedure has thus been completed and Switzerland has made the aforementioned notification to the depositary of the BEPS Convention. The amendments are reflected in the double taxation agreement between Switzerland and Luxembourg. Further agreements have since been concluded with Lithuania (see RO 2021 28), the Czech Republic (see RO 2021 29) and Iceland (see RO 2023 110).
Switzerland intends to adapt DTAs which will not be amended by the BEPS Convention to the BEPS minimum standards by means of bilateral amendments to the DTAs.
Withholding taxes
DTAs affect withholding taxes worldwide. They limit the maximum amount of withholding tax that can be levied by the contracting states (known as residual tax) or completely exclude taxation in the source state.
The granting of DTA benefits is governed by domestic law. In some cases, DTAs limit taxation at source, while in others, DTA benefits are granted retrospectively through refunds.
Further information on this topic can be found on the corresponding website of the Federal Tax Administration FTA:
Foreign withholding taxes by country (in German and French only)
Mutual agreement procedure
A taxpayer resident in Switzerland may apply to SIF for the initiation of a mutual agreement procedure. Such a procedure is used if double taxation or a corresponding risk exists and Switzerland has concluded a DTA with the state concerned. Certain DTAs also allow taxpayers to choose the competent authority to which they wish to apply for the initiation of mutual agreement procedures.
Application
The application must be made using the appropriate form.