On 20 December 2017, the Federal Council opened the consultation procedure on the multilateral agreement on the implementation of tax treaty related measures to prevent the reduction and transfer of profits (BEPS Agreement).
According to the Federal Council's press release of 20 December 2017, some measures of the OECD's Base Erosion and Profit Shifting (BEPS) project require the adaptation of double taxation agreements (DTAs). The DTAs can be adapted to the agreement-related results of the BEPS project either bilaterally or through the BEPS Agreement. The multilateral agreement serves to efficiently align DTAs with the minimum standards agreed under the BEPS project.
The BEPS Convention was signed on 7 June 2017 by almost 70 states and territories, including Switzerland (see our contribution of 7 June 2017).
Within the framework of the BEPS Agreement, Switzerland has so far announced the adaptation of DTAs with the following states: Argentina, Austria, Chile, Czech Republic, Hungary, Iceland, India, Italy, Liechtenstein, Lithuania, Luxembourg, Poland, Portugal, South Africa and Turkey.
On the other hand, an adaptation to the BEPS minimum standards with regard to the DTA with Great Britain is to be agreed through a bilateral amendment of the existing DTA. Accordingly, Switzerland and the UK are adapting the existing DTA to the BEPS minimum standards with a bilateral amendment protocol which they signed on 30 November 2017. The Protocol of Amendment still has to be approved by the parliaments of both countries and is also the subject of the present consultation draft.
According to the press release, the main purpose of the BEPS Convention is to implement the BEPS minimum standards with a reference to DTAs as follows:
- Adaptation of the preamble.
- Inclusion of a clause on abuse of agreement.
- Adaptation of the provisions on dispute settlement under mutual agreement arrangements (adoption of the arbitration clause).
The consultation period will last until 9 April 2018.
Among other things, the following consultation documents were published:
The complete documents and further information are available here.
