New tax treaty with Switzerland(Taxwatch (Tax news in english))
26-08-2009 14:18
Af
Anders Kiærskou
Denmark and Switzerland have signed a new tax treaty with significant changes especially in the following areas:
Pensions
According to the treaty, private pensions will be taxed in the country of source. So far it has been a pensioner’s country of residence, which has the right of taxation. A transitional rule has been made for Danish pensioners already living in Switzerland and receiving pensions per 21th August 2009. These pensioners will still be taxed in Switzerland.
Exchange of information
Switzerland has agreed to provide Denmark with information in tax matters, even if the Swiss authorities will have to enforce the disclosure of such information from banks etc., or the information is required in a tax matter of non-criminal nature.
As a new provision, the tax treaty provides an opportunity for Denmark to impose a 15 % withholding tax on dividends paid by Danish companies to persons resident in Switzerland. The rule does not apply if the recipient is a company which owns at least 10 % of the capital in the dividend paying company.
Entry into force
The agreement must be approved by the parliaments in the two countries. If this happens before the end of 2009, the agreement will take effect as of 1st January 2010.
BDO’s opinion
The treaty is bad news for Danish pensioners with plans to move to Switzerland as their pensions will be taxed at a higher margin in Denmark compared to Swiss taxation. The agreement improves the Danish Tax Authorities' ability to combat tax havens. Provisions on withholding tax on dividends are known from Denmark’s tax treaties with several other countries.
Questions to this article can be directed to Anders Kiærskou at AEK@bdo.dk
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