The Protocol [PDF 1.05 MB] amending the Income Tax Agreement between Switzerland and the United States was signed in September 2009. The Protocol provides: Bern, 20.09.2019 – On 20 September 2019, Switzerland and the United States of America exchanged in Bern the instruments of ratification of the Protocol amending their Double Taxation Convention in the field of taxes on income (DBA). The protocol, which entered into force on the same day, marks an important milestone in tax relations between Switzerland and the United States. Switzerland has a network of social security agreements which currently have more than 30 lawyers. Switzerland also has a bilateral agreement with the European Union that covers all 27 EU countries and more or less adapts the rules already in force within the European Union. A similar agreement exists with the EFTA countries. Whether or not a social security contract is applicable often depends on the nationality of the individual. Where appropriate, affected workers may remain (for a limited period of time) in the social security scheme of the country of origin and are exempted from submitting to the scheme of the host country. While the agreement allows the Social Security administration to qualify for retirement, disability, or survivors` benefits in the United States, the agreement does not cover Medicare benefits. The Federal Council`s decision is implemented in bilateral double taxation agreements. The greater scope for the exchange of information will only have practical effect when the renegotiated agreements enter into force.
It is also necessary to adapt the agreement with the EU on the taxation of savings. A separate agreement, called a totalization agreement, helps U.S. expatriates in Switzerland not pay social security taxes to U.S. and Swiss authorities. The contributions of expatriates abroad in Switzerland can be charged to both systems. The country they pay depends on the length of their life in Switzerland. In addition to this impressive list, treaties between Switzerland and Pending are awaiting ratification: Costa Rica, Oman and Zimbabwe. Among other provisions, dividends paid to individual pension funds – Pillar 3a in Switzerland – are exempt from transfer tax from 1 January 2020. A mandatory arbitration clause ensures that double taxation is avoided even if the competent authorities fail to reach an agreement in the cartel procedure. Withholding tax – the maximum rates of withholding tax are subject to the anti-abuse rules for certain types of capital income found in tax treaties and agreements with other U.S. countries.
On 13 March 2009, the Federal Council announced Switzerland`s intention to adopt the OECD standards on administrative assistance in tax matters, in accordance with Article 26 of the OECD Model Convention. The Decision authorises the exchange of information with other countries in specific cases where a concrete and reasoned request has been made. The Federal Council has decided to withdraw the corresponding reservation to the OECD Model Convention and to start negotiations on the revision of the double taxation conventions. . . .