Swiss President Hans-Rudolf Merz and the Prime Minister of Qatar, Sheikh Hamad bin Jassim bin Jabr Al-Thani, today signed a new Double Taxation Agreement (DTA), effectively resulting in the removal of Switzerland from the “grey list: of the OECD Secretariat.
The agreement with Qatar was signed in New York “on the fringes of the UN General Assembly”, and contains a provision on the exchange of information in accordance with the OECD standard. Agreement was also reached on a so-called `zero rate’ on dividend payments of a Swiss company made to the state or state institutions and pension funds (i.e. the source country has no right to levy taxes on dividends) and on a withholding tax of 5 per cent for significant participations (for levels of participation above 10 per cent). Furthermore the zero rate was also agreed for withholding tax on interest payments and royalties. The agreement contributes to the improvement of tax conditions for Qatar’s investors in Switzerland and fosters bilateral economic relations.
A release in Bern today said Switzerland has been swift to implement the OECD criteria; it has now signed twelve agreements containing a clause on extended administrative assistance in tax matters.
Some of the DTA revisions in the interest of the national economy went far beyond the amendment of clauses on administrative assistance in tax matters, with negotiations resulting in numerous advantages for business. The Swiss Federal Department of Finance says these include zero rates, arbitration board clauses and the elimination of existing discrimination due to earlier policy on administrative assistance.
Switzerland reportedly will conclude further agreements in accordance with the OECD Model Convention, and will work towards establishing an efficient monitoring system to ensure worldwide compliance with the international standards. For the first time, Switzerland is now represented in the Bureau of the Committee on Fiscal Affairs and in the Bureau of the Global Forum on Taxation. It can now be involved directly, formally and in a timely manner in the discussions and proposals of the Committee on Fiscal Affairs.
The OECD Secretariat had placed Switzerland on a [list](http://www.oecd.org/dataoecd/50/0/43606256.pdf) of countries which comply with the OECD standards, but which, in its view, do not implement them in substance. The list was adopted by the G-20 states at their summit in London and subsequently published by the OECD on 2 April 2009.
Switzerland has continued to maintain that it not a tax haven; and this has been affirmed by the OECD. It has a well functioning tax system and levies the usual taxes while striving to set these at a competitive level. On 13 March 2009, the Federal Council decided that Switzerland would adopt the OECD standard in international administrative assistance in tax matters in accordance with Art. 26 of the OECD Model Convention and extend the exchange of information in individual cases to specific and justified requests with other countries. The Federal Council subsequently undertook negotiations on the revision of double taxation agreements, particularly with OECD member states.
Since the decision of 13 March 2009, Switzerland has signed a DTA containing an extended administrative assistance clause in accordance with Art. 26 of the OECD Model Convention with Denmark, Luxembourg, France, Norway, Austria, the UK, Mexico, Finland, the Faroe Islands, the USA and Qatar. The agreement with Spain is also considered to have been signed. The DTA with Spain contains an automatic most-favoured nation clause which is activated if Switzerland agrees a further reaching provision with another EU state. This clause was activated with the signing of the DTA with Denmark on 21 August 2009.
**Banking secrecy remains in place at home**
The Federal Council says the adoption of the OECD standard on international administrative assistance in tax matters in accordance with Art. 26 of the OECD Model Convention has no effect on taxable persons resident in Switzerland. The privacy of domestic and foreign bank clients (banking secrecy) in terms of unjustified intrusion by the State remains intact. The possibilities available to Swiss tax authorities to access bank data under national law are not affected by this decision. However, banking secrecy offers no protection in the case of tax offences. As a result of the globalisation of financial markets and particularly against the backdrop of the financial crisis, international cooperation in the area of taxes has grown in importance. The Federal Council will continue to support efforts in this regard.