Double taxation typically occurs when two states tax the same income or assets of a taxpayer. Most of the provisions of a DTA are dedicated to avoiding double taxation by giving the contracting states the right to tax the individual types of income and assets. However, they merely restrict the contracting states' taxation right. The basis for taxation lies in the contracting states' domestic law.
DTAs additionally have an important function for investments of all kinds abroad, as they avoid double taxation on profits and revenue from foreign investments. Moreover, a DTA generally contains certain bans on discrimination, a dispute resolution mechanism and a clause on the exchange of information upon request.
Further information on the topic can be found on the website of the State Secretariat for International Finance SIF:
