Switzerland, Iran Sign DTA Protocol

by Ulrika Lomas, Tax-News.com, Brussels

13 June 2019

Switzerland and Iran have signed a protocol to their double tax agreement that will bring it into line with international standards.

The protocol was signed on June 3 in Tehran.

The protocol contains an abuse clause relating to the primary purpose of an arrangement or transaction.

The Principal Purposes Test is an anti-abuse rule, intended to tackle treaty abuse, including treaty shopping. The PPT applies to the treaty in its entirety. If one of the principal purposes of transactions or arrangements is to obtain treaty benefits (for example a lower withholding tax in the case of a treaty shopping scheme), these benefits will be denied unless it is established that granting the benefits would be in accordance with the object and purpose of the provisions of the treaty.

The revised treaty also includes a provision on the exchange of information upon request.

The Swiss Federal Council said that the cantons and relevant business circles have welcomed the protocol. It must now be ratified by both countries before it can enter into force.

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