Switzerland, Georgia Sign DTA

by Ulrika Lomas, Tax-News.com, Brussels

18 June 2010

The President of the Swiss Confederation, Doris Leuthard, and the Prime Minister of Georgia, Nika Gilauri, have signed a double taxation agreement (DTA) in the field of income tax and assets. The agreement does not contain a provision on the exchange of information in accordance with the Organization for Economic Cooperation and Development’s (OECD) standard.

According to the Swiss Federal Administration, the new DTA will contribute to the further positive development of bilateral economic relations between the two countries. Although the agreement does not contain a specific OECD provision on information exchange, it does largely follow the OECD model convention as well as Switzerland's agreements policy.

Commenting on the agreement, the Federal Administration states that: “In the case of dividend payments to beneficial owner companies which have a stake of at least 10% in the capital of the company making the payment and in the case of all interest and royalty payments, it was possible to agree on taxation exclusively in the contracting state of the recipient of the payment (so-called zero rate). In this way, important objectives of Switzerland’s agreements policy have been achieved.”

It adds: “The conclusion of the DTA with Georgia promotes mutual trade and economic relations. Thanks to the DTA, new markets have been opened up and favourable conditions for future investments have been created.”

Up to now, there had been no DTA between Switzerland and Georgia. The DTA is due to enter into effect as soon as possible. Switzerland and Georgia therefore agreed that the negotiated agreement would not be supplemented with an extended administrative assistance clause in accordance with the OECD standard.

Following the negotiations, a report on the agreement with Georgia was submitted to the Swiss cantons and business associations concerned for their comments. The Conference of Cantonal Finance Directors and the business associations have approved the signing of the agreement.

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