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Switzerland, Bulgaria Sign Revised DTA

by Ulrika Lomas, Tax-News.com, Brussels

25 September 2012


Switzerland and Bulgaria have recently signed in Sofia a new bilateral double taxation agreement (DTA) in the area of taxes on income and capital.

The accord replaces the agreement of October 28, 1991, and contains provisions on the exchange of information in accordance with the international standard applicable at present.

According to the Swiss Federal Department of Finance, the treaty is largely in line with Switzerland's agreements policy and will serve to contribute to the further positive development of bilateral economic relations.

Aside from an OECD administrative assistance clause, Switzerland and Bulgaria have agreed that both countries may levy withholding tax of no more than 10% on gross dividend amounts. If, however, a company holds a stake of at least 10% in the capital of the distributing company for at least a year, the dividends will be exempt from withholding tax. Moreover, there will be no withholding taxes on dividends paid to the national banks of the two countries or to pension funds.

Regarding interest, both countries may levy withholding tax not exceeding 5%. However, interest payments between associated enterprises with a stake of 10% for at least one year, for example, will not be subject to any withholding tax. There also will be no withholding tax on royalty payments.

Following the negotiations, a report on the new DTA with Bulgaria was submitted to the Swiss cantons and the business associations concerned for their comments. They approved the signing.

The new agreement still has to be approved by parliament in both countries before it can come into force.

TAGS: Finance | tax | business | double tax agreement (DTA) | interest | royalties | Organisation for Economic Co-operation and Development (OECD) | Bulgaria | agreements | withholding tax | Switzerland | dividends

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