Switzerland and Turkey initial new double taxation agreement
Bern, 04.11.2009 - Switzerland and Turkey have concluded negotiations on extending administrative assistance in tax matters in accordance with the OECD standard and on other points. A new double taxation agreement (DTA) was initialled today in Bern. The DTA is in line with the parameters decided by the Federal Council.
Since the Federal Council decision of 13 March 2009 on extending administrative assistance in tax matters in accordance with Article 26 of the OECD Model Convention, Switzerland has already negotiated and initialled fifteen DTAs with the extended administrative assistance clause. The agreements with Denmark, Luxembourg, France, Norway, Austria, the United Kingdom, Mexico, Finland, the Faeroe Islands, the USA and Qatar have already been signed. The agreement with Spain also counts as an agreement which has been signed. The current DTA with Spain contains an automatic most-favoured nation clause, in case Switzerland should agree to more extensive provisions on the exchange of information with another EU member state. This clause was activated with the signing of the DTA with Denmark in August 2009. Switzerland has been on the ‘White List' of the OECD since 25 September 2009 and thereby avoids fiscal discrimination and being subjected to disadvantages from the community of states.
The Federal Council will shortly submit a series of individual dispatches to the National Council and the Council of States, in which the Federal Council requests approval from parliament of the DTAs which were signed first. The signing of the renegotiated and initialled agreements with the Netherlands, Poland and Japan is envisaged in the next few weeks.
The renegotiation of the DTAs in part goes far beyond extending administrative assistance in tax matters. Switzerland not only conducted negotiations on adapting administrative assistance but also obtained numerous advantages for the economy. These include reductions in withholding tax and zero rates for dividends, interest and royalty payments and arbitration clauses to avoid double taxation. In addition it was achieved that discrimination due to administrative assistance policies up to now was stopped. This policy will be pursued. Further negotiations have already been arranged with other countries.
Initialling and ensuing stages before entry into force
Initialling is defined as the approval of a contractual text by appending initials. Negotiators can in this way provisionally draw up the negotiated contractual text of DTAs (and other agreements based on international law). The initialled text is at first confidential. The cantons and the business associations concerned are notified of the content in a summary report for their comments.
The agreement will only be published after being signed. The Federal Council provides authorisation for the agreement to be signed. Subsequently the DTA has to be approved by parliament. Once the partner state has provided its approval of the agreement, then the agreement can be ratified. This is the requirement for entry into force, although the point in time of entry into force depends upon the agreement reached.
Under the current practice, DTAs that provide for significant additional obligations are subject to an optional referendum. The decision as to whether or not a double taxation agreement should be subject to an optional referendum rests with parliament.
Address for enquiries
Beat Furrer, Head of FTA Communications, tel. 031 324 91 29
Publisher
Federal Department of Finance
https://www.efd.admin.ch/efd/en/home.html
