Switzerland Concludes Twelfth DTA, Promoted To OECD 'White List'

by Ulrika Lomas, Tax-News.com, Brussels

30 September 2009

It has emerged recently that Switzerland and Qatar have signed a new bilateral double taxation agreement (DTA) with respect to taxes on income, containing a provision on the exchange of information in accordance with the OECD standard.

In addition to the clause on administrative assistance in tax matters, a comprehensive DTA between the two countries was negotiated. Agreement was reached on a so-called 'zero rate' on dividend payments of a Swiss company made to the state or state institutions and pension funds, meaning that the source country does not have the right to levy taxes on dividends. A withholding tax of 5% was also agreed for significant participations, that is for levels of participation above 10%. Furthermore the zero rate was also negotiated for withholding tax on interest payments and royalties.

The recent conclusion of the new DTA with Qatar brings to twelve the number of OECD-compliant tax agreements signed by Switzerland. Consequently, Switzerland will now be removed from the OECD’s “grey list” of countries deemed uncooperative in international tax matters, and will be placed on the OECD’s much-coveted “white list” of countries that have fulfilled the OECD’s requirement to conclude twelve tax information exchange agreements, providing for administrative assistance in tax matters under Article 26 of the OECD Model Convention.

Switzerland has also announced its intention to conclude further OECD-compliant tax agreements.

In a further demonstration of its commitment to complying fully in international tax matters, the Swiss Federal Department of Finance acknowledged the recent decisions taken at the G20 summit meeting in Pittsburgh, expressing particular support for measures designed to strengthen the stability of the financial markets, and to impose tighter regulations on capital and on the compensation practices of banks.

Determined to highlight the country’s own active involvement in ongoing reforms designed to stabilise the financial system, the Swiss government has made known that it is a member of the Financial Stability Board, its steering committee and working groups that coordinate and supervise the financial market reforms sought by the G20 states in Pittsburgh, and that it is also actively involved in the drafting of international standards in the area of financial markets as envisaged by the Global Forum and Financial Action Task Force on Money Laundering.

According to the government, the Swiss Financial Market Supervisory Authority (FINMA) has already implemented specific measures aimed at strengthening the stability of the Swiss financial centre. It has stipulated higher capital requirements, laid down maximum capitalisation ratios and drafted a circular on remuneration policy from 2010. In addition, FINMA is currently working alongside the Swiss National Bank to revise liquidity regulations pertaining to the major banks and intends to implement them in 2010.

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