Federal Council initiates consultation on BEPS convention

Bern, 20.12.2017 - On 20 December 2017, the Federal Council initiated the consultation on the multilateral convention to implement tax-treaty-related measures to prevent base erosion and profit shifting (BEPS convention). This will enable Switzerland to adapt existing double taxation agreements to the minimum standards agreed within the framework of the BEPS project. The proposal also includes the protocol of amendment to the double taxation agreement (DTA) between Switzerland and the United Kingdom. The consultation will last until 9 April 2018.

In October 2015, the OECD adopted the final outcomes of the base erosion and profit shifting (BEPS) project. Some BEPS project actions require the adjustment of DTAs, which may be adapted either bilaterally or through the BEPS convention to the agreement-related results of the BEPS project.

On 7 June 2017, almost 70 states and territories, including Switzerland, signed the BEPS convention in Paris. At the time of signing, Switzerland initially announced the adjustment of the DTAs with Argentina, Chile, India, Iceland, Italy, Liechtenstein, Lithuania, Luxembourg, Austria, Poland, Portugal, South Africa, the Czech Republic and Turkey. These states are prepared to agree with Switzerland on the precise wording of the DTAs to be adapted via the BEPS convention.

The BEPS minimum standards can also be agreed through bilateral amendments to DTAs. Switzerland and the United Kingdom, for example, are adapting the existing DTA to the BEPS minimum standards by means of a bilateral protocol of amendment that they signed on 30 November 2017. The protocol of amendment still has to be approved by parliament in both countries.

At a material level, primarily the BEPS minimum standards related to DTAs are to be implemented. These make provision for supplementing the preamble of DTAs in terms of purpose, including an agreement abuse clause in DTAs and adjusting the dispute settlement provisions within the framework of memoranda of understanding. In keeping with its DTA policy, Switzerland additionally advocates including the arbitration clause provided for in the BEPS convention.

Address for enquiries

Anne Césard, Communications, State Secretariat for International Financial Matters SIF
Tel. 058 462 62 91, anne.cesard@sif.admin.ch