In order to avoid the income and assets of an individual living in Switzerland but having income or assets in another country, Switzerland has concluded double taxation agreements with many countries.
What are DTAs
Double taxation agreements (DTAs) avoid the double taxation of individuals and legal entities with international connecting factors in the area of taxes on income and wealth. They are therefore an important element in promoting international economic activities. Switzerland currently has DTAs with over 100 countries and is striving to further expand its network of agreements.
Double taxation typically arises when two states tax the same income or assets of a taxpayer. Most provisions of a DTA are dedicated to the avoidance of double taxation by allocating the right to tax each type of income or asset to the contracting states. However, they merely limit the right of the contracting states to tax. The basis for taxation lies in the domestic law of the Contracting States.
The list of persons who can benefit from a DTA is long and varied, e.g.:
- Individuals who have a permanent residence in two states at the same time;
- Exporting companies and corporations with foreign subsidiaries that are protected from double taxation by a DTA;
- Employed persons with temporary work assignments abroad.
Taxation of income and assets
Double tax treaties are mostly aimed at taxing income. However, there are also treaties that take into account the assets as well. Double tax treaties are complex and are concluded individually between the two contracting states, so that usually no treaty is 100% similar to the other.
Therefore, it is always advisable to seek the advice of a tax expert when it comes to questions regarding the taxation of income and assets abroad.
Double taxation in the case of gifts or inheritances
Switzerland’s double taxation agreement does not cover gifts. However, there is an agreement with some countries regarding the taxation of inheritances. This is usually very limited in scope, so that double taxation can often not be avoided entirely.
Countries with which Switzerland has a double taxation agreement
The following list concludes all countries between which and Switzerland a double taxation agreement exists:
- Chinese Taipei (Taiwan)
- Czech republic
- Dominican Republic
- Faroe Islands
- Hong Kong
- Ivory Coast
- New Zealand
- North Macedonia
- South Africa
- South Korea
- St. Christophe
- Sri Lanka
- St. Lucia
- St. Vincent
- Trinidad and Tobago
- United Arab Emirates
- United Kingdom
- United States of America
- Virgin Islands
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