Double taxation agreements - Federal Council adopts more dispatches

Bern, 25.08.2010 - Today the Federal Council adopted the dispatches on six double taxation agreements (DTAs). It will request parliament to approve these DTAs. Four of the six DTAs are in line with the OECD standard regarding administrative assistance.

All the DTAs contain provisions on avoiding double taxation; they promote the development of bilateral economic ties and provide numerous benefits for the Swiss economy.

Today the Federal Council adopted the dispatches on the revised DTAs with the Netherlands, Poland and Japan. These DTAs contain an extended administrative assistance clause in accordance with Art. 26 of the OECD Model Convention and meet the international standards relating to administrative assistance in tax matters. It also forwarded the dispatch on the DTA with Turkey to parliament. This DTA was signed on 18 June 2010 and now also contains the administrative clause in accordance with the OECD standard. The DTA signed with Turkey on 22 May 2008, which did not contain this clause, has not yet been approved by parliament and has therefore also not entered into force.

Dispatches on DTAs without extended administrative assistance adopted
In addition, the Federal Council approved the dispatches on the DTAs with Georgia and the Republic of Tajikistan. Up to now, there have been no DTAs between Switzerland and these countries. The agreements largely follow the OECD Model Convention and Switzerland's agreements policy at the time of the negotiations. Because a speedy entry into force of the DTAs was sought, Switzerland, Georgia and the Republic of Tajikistan agreed to waive the extended administrative assistance clause in accordance with the OECD standard for the time being.

Economic benefits of the DTAs
The double taxation agreements facilitate the activities of the export sector, promote investment in Switzerland and thereby contribute to prosperity in Switzerland and in the partner countries. The negotiated economic benefits of the DTAs include reductions in withholding tax, or even withholding tax exemption, for dividends, interest and royalty payments to avoid double taxation, as well as the introduction of arbitration clauses within the scope of mutual agreement procedures. In addition, sanctions and fiscal discrimination are avoided. The cantons and the business associations concerned have welcomed the conclusion of the six DTAs.

Optional referendum
According to the Federal Council, double taxation agreements should be subject to an optional referendum if they contain significant, additional obligations for Switzerland. The Federal Council will thus request that the four agreements with the extended administrative assistance clause be subject to an optional referendum. The first ten DTAs with an extended administrative assistance clause were approved by parliament on 18 June 2010. The deadline for the optional referendum expires on 7 October 2010.

Stages from dispatch to entry into force

After a DTA has been signed, the Federal Council approves a dispatch for the attention of parliament, which is responsible for ratifying the DTA. As has been the case to date, the final decision as to whether or not a double taxation agreement should be subject to an optional referendum rests with parliament.

The agreement can enter into force once the partner state has provided its approval. The point in time of entry into force depends on the agreement reached. As a rule, the agreements enter into force from 1 January of the calendar year following the date of entry into force, but the text of the agreement in question is decisive.


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