Switzerland-Italy Double Taxation Treaty

Switzerland-Italy double taxation agreement

Switzerland has signed its first double taxation agreement with Italy in 1979. At the beginning of the year, the double taxation treaty between the two countries was reviewed and new protocols were included in the convention. Among these, the protocol on the exchange of tax information which was drafted according to the latest standards issued by the Organization for Economic Co-operation and Development. The Switzerland-Italy double tax treaty covers the following taxes:

• -          the personal and the local income taxes and the corporate tax in Italy,
• -          the federal, cantonal and local taxes on income and the capital gains tax in Switzerland.

For detailed information about the contents of the double taxation treaty with Italy you can refer to our Swiss lawyers.

The new Switzerland-Italy double tax treaty

Apart from the reduced tax rates which maintained, the new double taxation treaty Switzerland signed with Italy contain additional clauses referring to reduced tax rates. Italian and Swiss employees commuting from one country to the other will now benefit from reduced tax rates on their salaries. Italian and Swiss citizens will also have the option to join Italy’s voluntary disclosure program through which they can declare the assets held in Italian and Swiss banks. The new agreement also stipulates the introduction of reduced tax rates for dividend and interest payments, as well as the introduction of a new arbitration clause.

Under the current Switzerland- Italy double taxation agreement dividend and interest payments benefit from a 15% tax rate, respectively 12.5% rate.

The avoidance of double taxation in Switzerland and Italy

The double tax treaty between Switzerland and Italy covers both natural persons and companies with permanent establishments in the contracting states. In order to avoid double taxation in Switzerland and Italy the following system has been put in place:

• -          the Italian tax authorities will credit the taxpayer against the tax paid in Switzerland,
• -          the Swiss tax authorities will grant a tax exemption for the capital gains tax levied in Italy.

 For information related to the enforcement of the new double tax treaty with Italy you can contact our law firm in Switzerland.