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Revised Swiss, Luxembourg DTA In Force

by Ulrika Lomas, Tax-News.com, Brussels

02 December 2010


The Swiss Federal Administration has announced that the additional agreement amending the bilateral double taxation agreement (DTA) in place between Switzerland and Luxembourg has now entered into force.

Aside from a provision on the exchange of information in accordance with the Organization for Economic Cooperation and Development’s (OECD) standard, the inclusion of an arbitration clause was also agreed with Luxembourg, the Swiss administration notes, adding that the minimum stake for withholding tax exemption for dividend payments made to parent companies was also reduced from 25% to 10%. Withholding tax exemption will also be extended to dividends paid to pension funds or to occupational benefits schemes, the administration points out.

The agreement entered into force on November 19, 2010, and application of the new provision will be based on arrangements stipulated in the agreement. As a rule, the new provisions are applicable from January 1 of the calendar year following the date of entry into force. Therefore, the provisions of the additional agreement with Luxembourg will apply to the taxes withheld at source on income credited or paid out to non-residents on or after January 1, 2011.

Regarding other taxes on income or assets, the provisions will apply for the 2011 calendar year (including the corresponding 2011 financial year). The provisions on the exchange of information will have effect for tax years that commence on or after January 1, 2011.

The additional agreement with Luxembourg amending the DTA with respect to taxes on income and capital was signed in Bern on August 25, 2009, and was approved by parliament on June 18, 2010. The referendum deadline expired unused on October 7.

TAGS: tax | offshore confidentiality | double tax agreement (DTA) | Organisation for Economic Co-operation and Development (OECD) | Luxembourg | offshore | agreements | withholding tax | Switzerland | dividends

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