Amendment to the Double Taxation Convention between Switzerland and the United Kingdom comes into force

Bern, 23.12.2008 - The Protocol amending the Double Taxation Convention between Switzerland and the United Kingdom for the Avoidance of Double Taxation with respect to Taxes on Income has been ratified and entered into force on 22 December 2008. The most important amendment to the Double Taxation Convention of 8 December 1977 is the full exemption from tax at source on dividends paid to a company with a substantial shareholding in the company paying the dividends, or to a pension scheme.

Full exemption from tax at source will apply to dividend payments between companies where one company holds at least 10% of the capital of the company paying the dividends. Dividend payments to pension schemes will also be exempt from tax. For all other dividend payments the state in which they arise retains a residual tax rate of 15%, i.e. any tax at source may not exceed 15% of the gross amount of the dividends.

The Protocol also contains new measures on the taxation of pensions and deduction of tax on pension contributions. In future, lump sum payments from pension schemes may be taxed only by the state in which they arise. Furthermore, pension contributions paid in one contracting state will, under certain circumstances, be tax-deductible in the other contracting state.

In accordance with Switzerland's commitments within the OECD and towards the EU member states, the Protocol extends administrative assistance to holding companies and cases of tax fraud or similar offences.

The provisions of the Protocol are applicable to Swiss taxes from 1 January 2009 and, concerning British taxes, from 1 April 2009 for corporation tax and from 6 April 2009 for income tax. The entitlement to tax credits in relation to dividends paid by companies resident in the UK to residents in Switzerland will be terminated for dividends paid on or after 6 April 2009.

Address for enquiries

Pierre Nikolic, International Affairs Division, Federal Taxation Administration, tel. ++41 (0)31 323 9404


Federal Department of Finance