Germany, Switzerland Initial DTA

by Ulrika Lomas, Tax-News.com, Brussels

31 March 2010

Switzerland and Germany have initialled a revised bilateral double taxation agreement (DTA) between the two countries, providing for administrative assistance in tax matters in accordance with the Organization for Economic Cooperation and Development’s (OECD) standard.

On the fringes of a meeting held between Swiss Federal Councillor Hans-Rudolf Merz and German Finance Minister Wolfgang Schäuble in Berlin, the Protocol of Amendment to the existing DTA between the two countries was initialled.

According to Switzerland’s Federal Administration, the agreement with Germany is the twenty-third containing an administrative assistance clause and is in line with the key points agreed by the Swiss Federal Council. Along with extending administrative assistance in tax matters, Switzerland has also been able to negotiate various benefits for the country as a business location, it continued, noting that the text of the DTA is due to be published once the agreement has been signed.

During the meeting, Merz and Schäuble, also discussed the issue of the use of purchased bank client data by the German tax authorities. Following the talks, the ministers mandated a bilateral working group to clarify unresolved financial and tax issues for the signing of the DTA.

According to the Federal Administration, the joint working group, led by their respective State Secretaries, will endeavour to clarify the following issues:

• Possibilities for arranging the taxation of German residents' untaxed assets that are invested in Swiss financial institutions;
• Ensuring the taxation - in the form of a final withholding tax - of the ongoing investment income from assets that are invested in Swiss financial institutions by German residents, as well as the transfer of such assets, particularly by way of inheritance or endowment;
• Market access; based on the solutions proposed by the relevant supervisory authorities, examining extended market access for Swiss banks in Germany;
• Accompanying work associated with the signature of the Protocol of Amendment to the bilateral double taxation agreement, including matters regarding the handling of the purchase of bank data and comprehensive information for Switzerland on this issue.

Germany has acknowledged that Switzerland will not provide administrative assistance on the basis of purchased bank data.

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