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Swiss, Denmark DTA Amendments In Force

by Ulrika Lomas, Tax-News.com, Brussels

03 December 2010


The Swiss Federal Administration has announced that the protocol amending the double taxation agreement (DTA) between Switzerland and Denmark has now entered into force.

Aside from a provision on the exchange of information in accordance with the Organization for Economic Cooperation and Development standard, the inclusion of an arbitration clause was also agreed with Denmark, the administration notes.

The administration adds: “A new provision on the general right of the source state to levy a 15% tax on dividends has been introduced. However, dividends paid to holders of a capital stake of at least 10% as well as those paid to Pillar 1, 2 and 3a pension institutions will remain exempt. The right to tax pensions from private pension schemes will now lie primarily with the source state.”

The agreement entered into force on November 22, and the extension to the Faroe Islands came into effect on November 29. Application of a DTA's new provisions is always based on the arrangements stipulated in the agreement, the administration points out, explaining that, as a rule, the new provisions are applicable from January 1 of the calendar year following the date of entry into force.

According to the Swiss administration, the provisions of the Protocol of Amendment with Denmark will apply to dividends payable on or after January 1, 2011 and will apply for pensions payable on or after January 1, 2011 (excluding pensions that were already in progress when the protocol was signed and that are paid to recipients who transferred their domicile from one contracting state to the other contracting state before this date). Contributions paid into Swiss pension institutions by Swiss citizens resident in Denmark will be eligible for deduction from their taxable income for tax years that commence on or after January 1, 2011 and the provisions on the exchange of information will also have effect for tax years that commence on or after January 1, 2011.

The protocol with Denmark amending the DTA with respect to taxes on income and capital was signed in Bern on August 21, 2009, and was approved by parliament on June 18, 2010. The referendum deadline expired unused on October 7, 2010.

TAGS: tax | pensions | double tax agreement (DTA) | Denmark | Organisation for Economic Co-operation and Development (OECD) | Faroe Islands | agreements | tax rates | withholding tax | Switzerland | dividends

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