22 September 2023
Double Tax Treaties in Switzerland
Learn how Switzerland's double tax treaties help companies avoid being taxed twice, which countries have signed them and how withholding tax relief works.
With one of the most developed economies around the world, Switzerland is attracting thousands of foreign investors every year so the necessity of concluding specific treaties was a priority for the Swiss government.
In order to prevent people who run businesses in various countries from being taxed twice, the Swiss government has taken the effort to enable double tax treaties with a number of countries across the world. It is advised that a business owner uses our accounting services in Switzerland in order to avoid such problems.
Before investing in Switzerland, a businessman should know that this country has double tax treaties with more than 100 states, including: Egypt, Albania, Algeria, Argentina, Armenia, Azerbaijan, Australia, Bangladesh, Belarus, Belgium, Bulgaria, Chile, China, Denmark, Germany, Ecuador, Ivory Coast, Estonia, Finland, France, Ghana, Greece, Great Britain, Honk Kong, India, Indonesia, Iran, Ireland, Ireland, Island, Israel, Italy, Jamaica, Japan, Canada, Kazakhstan, Qatar, Kirgizstan, Columbia, Korea, Croatia, Kuwait, Latvia, Lithuania, Liechtenstein, Luxembourg, Malaysia, Malta, Morocco, Macedonia, Mexico, Moldova, Mongolia, Montenegro, New Zealand, Netherlands, Norway, Austria, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Sweden, Serbia, Singapore, Slovakia, Slovenia, Spain, Sri Lanka, South Africa, Tajikistan, Thailand, Trinidad and Tobago, Czech Republic, Tunisia, Turkey, Ukraine, Hungary, Uzbekistan, United States of America, Venezuela and Vietnam.
Many of these treaties signed by Switerland are elaborated after the OECD model. This model was introduced in Switzerland in 2009 by the decision of the Federal Council which also decided to amend the existing treaties according to the Article 26 of the OECD Model Convention. Companies from the above mentioned countries should also verify the conditions imposed to the import of goods into this country; EORI numbers are not used in Switzerland; Swiss operators are identified by their UID number.
The main regulation of the double tax treaties is that the withholding tax on income and capital can be reduced or exempt for the companies with shareholders with the residency in one of the above countries. The income can be partially withhold in Switzerland and refunded after the special application to the proper Swiss tax administration. Also, the income may not be taxed at all, if the nonresident proves that it is already taxed in the treaty country.
Also, exchange of information between the Swiss authorities and the foreign tax authorities is guaranteed by the double tax treaties. Based on the exchanged annual lists of shareholders, Switzerland and the treaty countries are avoiding the tax frauds.
Banking secrecy no longer protects foreign taxpayers: information is exchanged on request and, since 2017/2018, automatically (AEOI), in particular where a double tax treaty is in force between Switzerlandand one of the above countries.
The withholding taxes on dividends and interest are smaller for a company with foreign capital or if certain conditions are met, can be exempt (for example a 25% owning of the company’s capital).
For other information for opening a Swiss company and how double tax treaties can help your business please contact our company formation specialists.