On September 20, 2019, Switzerland and the United States of America exchanged the instruments of ratification of the protocol of amendment to their double taxation agreement in the area of taxes on income (DTA) in Bern. The protocol, which entered into force on the same day, represents a milestone in tax relations between Switzerland and the USA.
The core element of this revision is the exchange of information. There is no longer a distinction between tax evasion and tax fraud, either in individual or group requests. This is in line with the international standard on the exchange of information upon request, which Switzerland applies with over 100 states and territories, but not yet with the USA.
Requests for information may be submitted from the date of entry into force of the Protocol, i.e. 20 September 2019, and requests concerning financial accounts must relate to situations that arose from the date of signature of the amending Protocol, i.e. 23 September 2009. Under the FATCA Agreement, group requests are admissible for situations occurring after 30 June 2014.
Further provisions are: Dividends paid to individual pension funds - in Switzerland the pillar 3a - will be exempt from withholding tax from 1 January 2020. A mandatory arbitration clause ensures that double taxation is avoided even in cases where the competent authorities cannot reach agreement by mutual agreement.
The entry into force of the Protocol paves the way for a further revision of the DTA. The aim of such a revision is to make further improvements which take account of developments since the signing of the DTA in 1996.
The Protocol of Amendment to the DTA between Switzerland and the United States is available here.
The press release of the Federal Department of Finance is available here.
