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Double Taxation Agreement Between Germany And Switzerland

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In a new consultation agreement, the Swiss and German tax authorities have redefined the “border worker”. 1 In particular, a new method of “daily counting” will apply in all cases from 1 January 2019. The protocol also provides that the herendation will be included in the agreement. Recipients of an undisclosed Swiss bank account must either pay inheritance tax or give their consent to the dive permit to be disclosed to the British authorities. This agreement largely follows the OECD`s model of agreement and Swiss policy in this regard. Thus, double taxation conventions can be defined in such a way as to constitute the desire of states to clarify, normalize and validate the tax situation of taxpayers engaged in commercial, industrial, financial or other activities in other countries, by applying a uniform solution in identical cases of double taxation in states that are signatories to double taxation agreements. From a legal point of view, double taxation is achieved when the same income of a taxpayer is taxed by two states. In order to combat the harmful effects of international double taxation on the free movement of goods and services, as well as on capital, technology and people, States around the world have concluded bilateral or multilateral conventions that consistently address the most common problems of international double taxation. The protocol became necessary to appease the European Commission, which had considered that the agreement could be contrary to the European Treaty. By threatening to refer the matter to the European Court of Justice, the United Kingdom and Switzerland have agreed that account holders who have already paid the 35% withholding tax due under the European Savings Tax will be subject to a final withholding tax of 13% in order to reduce the tax debt on interest payments. Bern, 27.10.2010 – Federal Councillor Hans-Rudolf Merz and Federal Finance Minister Wolfgang Schauble today signed a joint declaration on the opening of tax negotiations between Switzerland and Germany.

In addition, at the Bern meeting, the two ministers signed the revised DBA according to OECD standards. In signing, Mr. Merz and Mr. Schauble reaffirmed their commitment to strengthening financial and fiscal cooperation and strengthening long-term legal security. On 13 March 2009, the Federal Council announced that Switzerland intends to adopt OECD standards for mutual tax assistance, in accordance with Article 26 of the OECD Model Tax Convention. The decision allows the exchange of information with other countries in individual cases where a concrete and reasoned request has been made. The Federal Council has decided to withdraw the reserve for the OECD`s model tax treaty and to begin negotiations on the revision of double taxation conventions. However, Swiss banking secrecy remains intact. One of the main changes to the double taxation agreement between Germany and Switzerland relates to the taxation of dividends paid. The new agreement provides for a new threshold for free dividend distribution, which is now 10% compared to the previous 20%.

The new agreement stipulates that an economic beneficiary must now hold at least 10% of the capital within the Swiss or German company that distributes the dividends. Effective beneficiaries must hold 10% for at least one full calendar year to qualify for the tax exemption. If the beneficiary does not have a 10% stake for the minimum period of 12 months, the tax on dividends is 15% in Germany and Switzerland.

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