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Revised double taxation agreements - Federal Council adopts initial dispatches

Bern, 27.11.2009 - Today the Federal Council adopted five dispatches on the revised double taxation agreements (DTAs). It will request parliament to approve these dispatches. The revised DTAs meet international standards relating to administrative assistance in tax matters. They provide numerous benefits for the Swiss economy. The Federal Council is of the opinion that they should all be made subject to an optional referendum.

The Federal Council adopted the dispatches on the revised DTAs with the USA, Denmark, France, Mexico and the UK in an initial batch. The revised DTAs contain an extended administrative assistance clause in accordance with Art. 26 of the OECD Model Convention and consistently implement the Federal Council decision of 13 March 2009 on the new agreements policy. The Federal Council will submit a second batch of five further agreements to parliament for approval by the end of January 2010.

There is no need for a dispatch on the DTA with Spain which counts as a signed agreement. The current agreement contains a most-favoured-nation clause which   will be applied as soon as Switzerland agrees a more far-reaching provision on the exchange of information with another EU country. This clause was activated when the DTA with Denmark was signed. The dispatch on the revised DTA with Denmark also covers the inclusion of the Faroe Islands. This is why there are only ten dispatches for the twelve DTAs signed up to now with the OECD standard on administrative assistance.

Economic benefits

Double taxation agreements facilitate the activities of the export sector. They promote investment in Switzerland and thereby contribute to prosperity in Switzerland and in partner countries. Reductions in withholding tax and zero rates 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 are amongst the negotiated economic benefits of the revised DTAs. In addition. sanctions and fiscal discrimination are avoided. The cantons and the business associations concerned have welcomed the completion of the DTAs which have been revised up to now.

Optional referendum for all DTAs

The Federal Council has come to the conclusion that all new DTAs should be subject to an optional referendum. It thereby wants to take account of political concerns. In line with the view of the Federal Council, the newly-signed agreements should be able to be considered by the first chamber in spring 2010.

Stages of the dispatch before entry into force

After a DTA has been signed, the Federal Council approves the dispatch for the attention of parliament which is responsible for ratifying the DTA. Under the current practice, DTAs that provide for significant additional obligations are subject to an optional referendum. As was the case up to now, the 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 upon the agreement reached. As a rule the agreements enter into force from the 1 January of the calendar year following the date of entry into force but the text of the agreement in question is decisive.

Address for enquiries:

Tanja Kocher, Head of FDF Communications, tel. 031 322 63 01


Federal Department of Finance
Internet: http://www.efd.admin.ch