Double Tax Treaty Uk Switzerland

28.10.2019 Amendments to the double taxation agreement with the United Kingdom in force In order for the amendments introduced by the BEPS Convention to take effect, Switzerland must also notify the DEPOSITARY of the BEPS Convention that the necessary procedures have been completed. The first such case concerned Luxembourg. In a Memorandum of Understanding of 12 May 2020, the competent authorities of Switzerland and Luxembourg adopted the exact wording of the amendments provided for in the BEPS Agreement (see AS 2020 2641 and AS 2020 2715). The procedure has thus been completed and Switzerland has sent the above-mentioned notification to the depositary of the BEPS Convention. These changes are reflected in the double taxation agreement between Switzerland and Luxembourg. Switzerland intends to align DTAs not modified by the BEPS Agreement with the BEPS minimum standards through bilateral amendments to the DTAs. The Federal Council has submitted to the Federal Parliament a request for ratification of the Protocol to the Swiss Income Tax Convention with the United Kingdom, signed on 26 June 2007. 26.08.2020 The Federal Council adopts dispatches on the new double taxation agreement with Bahrain and amendments to the DTA with Kuwait On 30 November 2017, Switzerland and the United Kingdom signed a protocol amending the 1977 income tax convention between the two countries. The Protocol: 30.07.2019 Entry into force of a new double taxation agreement between Switzerland and Zambia In addition to the double taxation aspects that may arise from ongoing residency disputes or tax duties, estate planning instruments such as trusts generally used in the United Kingdom should also be examined from a Swiss tax perspective before settling in Switzerland. 10, 11, 12 and art. 21 para. 4 on dividends, interest, royalties and other income contain a beneficial ownership clause. Payments made within abusive structures set up exclusively for tax purposes are excluded from the advantages granted by the above-mentioned contractual provisions.

The BEPS Convention entered into force on 1 December 2019. Switzerland wants to align the DTAs with Argentina, Austria, Chile, Iceland, Italy, Lithuania, Luxembourg, Mexico, Portugal, Portugal, South Africa and Turkey. The UK has one of the largest tax treaty networks with over 100 countries. These agreements aim to eliminate double taxation of income or profits generated in one territory and paid to residents of another territory. They work by dividing the tax rights that each country claims through its national laws between the same income and profits. Most agreements are based on the Organisation for Economic Co-operation and Development (OECD) Model Agreement. Inheritance and gift tax pitfalls – despite the Swiss-UK double taxation treaty, UK residents can generally claim a credit for foreign taxes levied on foreign income or profits taxable in the UK. This is done either under an applicable tax treaty or under a unilateral exemption for the United Kingdom. In certain circumstances, the taxpayer may choose to deduct foreign tax from the UK tax base as an alternative to a credit for the foreign tax incurred.

While cantonal and communal legislation on inheritance and gift tax is very different, an essential feature common to inheritance and gift tax in most cantons is that the tax is payable to the beneficiary (i.e. .dem beneficiary, heir or legatee). The applicable tax rates and tax-exempt amounts vary from canton to canton and depend on the relationship between the deceased/donor and the heir/beneficiary, which must be taken into account in the planning phase. The progressive nature of tax rates must also be taken into account. While transfers to one of the spouses are exempt from inheritance and gift tax in almost all cantons, in some cantons (e.B. canton of Vaud), transfers to direct descendants are taxable. There is a realistic risk that taxpayers will be taxed more than once for inheritances and gifts, as Switzerland has concluded only a handful of double taxation treaties in the area of inheritance tax (e.g. B with Great Britain, Germany and the United States). To the extent that this has been done, the contracts are in any case not complete and do not cover gift tax. For example, the Swiss-United Kingdom Inheritance Tax Convention contains a termination of link clause to determine the last residence of a deceased person between Switzerland and the United Kingdom if the United Kingdom and a Swiss canton consider that a deceased person is resident/resident in the United Kingdom and attach their respective inheritance tax consequences to it, thus creating a situation of double taxation.

However, it is important to check each case specifically, as UK inheritance tax may continue to apply.B for a period of time, even after a person has moved to Switzerland. Given that, in such a scenario, the Swiss rules on compulsory heiress would in principle apply from the date of relocation and that those rules provide for a compulsory share of the heiress in favour of the children of a deceased person, the taxation of UK inheritances can still be triggered even after a person leaves the UK. Such a risk can be mitigated, for example, through.B Swiss estate planning tools such as a formal waiver of the children`s compulsory inheritance or a choice of law applicable to UK inheritance law, but it is crucial to address these issues early in the process as part of a process to resettle HNWI or wealthy family members. Double taxation refers to the fact that two countries simultaneously levy taxes on the same article. This situation can occur if companies or individuals are based in different countries or if they receive income from another country. The agreements reduce double taxation and thus help to overcome obstacles to cross-border economic transactions. In addition, they regulate administrative assistance in tax matters. The OECD Multilateral Convention on the Implementation of Measures Related to the Tax Convention for the Prevention of Profit Erosion and Profit Shifting (BePS) (the “Multilateral Instrument” or “MLI”) entered into force in the United Kingdom on 1 October 2018 and will have a fundamental impact on how taxpayers have access to the double taxation treaties (DTAs) to which it applies. It applies (e.B. as regards WHT) from 1 January 2019 to UK DTAs with territories that were also merged before 1 January 2019. October 2018, to the extent that they are covered by tax treaties. The exact dates on which the MLI will enter into force for other purposes or in relation to other DTAs will depend on when other Parties submit their instruments of ratification to the OECD and the options and reservations they have submitted.

The results of the Base Erosion and Profit Shifting (BePS) project include recommendations that require changes to existing DTAs. Existing DTAs can be adapted to the contractual solutions developed under the BEPS project through the Multilateral Convention for the Implementation of Tax Treaty-Related Measures (BEPS Convention). DTAs also have an important function for investments of all kinds abroad, as they avoid double taxation of foreign investment profits and income. In addition, a DTA generally contains certain prohibitions of discrimination, a dispute settlement mechanism and a clause on the exchange of information upon request. In order to avoid double taxation in which a person has a link with Switzerland and the United Kingdom, the Swiss-United Kingdom Income Tax Convention, like the vast majority of double taxation treaties concluded by Switzerland, provides for a so-called equality clause, which attributes the tax residence of a natural person to the jurisdiction by which that person, by virtue of its centre of vital interests, is assigned to the narrower jurisdiction. Nexus. Given the usually intense travel activities of HNWI and HNW family members, and also with a growing appetite on the part of the tax authorities to negotiate cases of tax residency, it is not only recommended to carefully consider with a local UK advisor what criteria must be met to successfully leave the UK, but it is generally recommended to be ready for: the object of a person`s vital interest, at least for a few years after moving to Switzerland, by means of a journal and underlying documentation on expenses. 25.11.2019 Switzerland and Bahrain sign double taxation convention Double taxation usually occurs when two states tax the same income or assets of a taxpayer. Most of the provisions of a DTA are aimed at avoiding double taxation by giving States parties the right to tax each type of income and asset. .