Switzerland signs BEPS Convention
Bern, 07.06.2017 - On 7 June 2017, Switzerland signed in Paris the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. The Convention will serve to efficiently amend double taxation agreements in line with the minimum standards agreed upon in the BEPS project. Switzerland will implement these minimum standards either within the framework of the Multilateral Convention or by means of the bilateral negotiation of double taxation agreements.
In October 2015, the OECD adopted the final outcomes of the base erosion and profit shifting (BEPS) project. Some actions require the adjustment of double taxation agreements (DTAs). A group of over 100 states and territories – including Switzerland – developed a multilateral convention (BEPS Convention) which serves to align existing DTAs efficiently. Over 3,500 DTAs exist worldwide. The BEPS Convention was formally adopted and published on 24 November 2016.
Initially, the Swiss DTAs with Argentina, Chile, India, Iceland, Italy, Liechtenstein, Lithuania, Luxembourg, Austria, Poland, Portugal, South Africa, the Czech Republic and Turkey will be amended by the BEPS Convention. These partner states are prepared to agree with Switzerland the precise wording on how the provisions of the existing DTAs will be amended through the BEPS Convention. If agreements on the technical implementation of the BEPS Convention can be obtained with further partner states, the corresponding DTAs will equally be amended by the BEPS Convention at a later stage. Alternatively, the BEPS minimum standards can also be agreed by means of a bilateral DTA amendment.
Materially, the new treaty provisions resulting from the BEPS minimum standards modify the description of purpose in the preamble, include a standard anti-abuse clause and adjust the provisions governing dispute resolution within the framework of mutual agreement procedures. In keeping with its treaty policy, Switzerland opts for the inclusion of the mandatory and binding arbitration clause provided for in the BEPS Convention.
The Federal Council will submit the BEPS Convention for public consultation towards the end of 2017. It will undergo the standard parliamentary approval process before entering into force.
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Federal Department of Finance