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Switzerland UK Double Taxation Treaty

Switzerland-UK Double Taxation Treaty

Updated on Thursday 12th November 2015

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Switzerland-UK-Double-Taxation-TreatySwitzerland-United Kingdom double tax agreement

Switzerland and the United Kingdom have signed a double taxation treaty in 1977. The agreement underwent several amendments throughout the years, the last one being registered in 2012 and enforced in 2013 by both countries. The last amendment to the Switzerland-UK double tax agreement refers to the intensification of economic relations between the two contracting states and the taxation of cross-border financial services.

Definitions in the Switzerland-UK double tax treaty

The double taxation agreement between Switzerland and UK covers the income taxes and other elements that are part of the income tax in both countries. The agreement applies to both individuals and corporate entities in Switzerland and the UK. The following taxes fall under the regulations of the Switzerland-UK double taxation treaty:

  • -          the federal, cantonal and municipal income taxes, the corporate tax and the capital gains tax in Switzerland,
  • -          the income, the corporate, the capital gains, the development land and petroleum revenue taxes in the United Kingdom.

The agreement also provides for any similar taxes applied in both signatory states. If you need more information related to the Swiss taxation system you can refer to our lawyers.

Avoidance of double taxation under the Switzerland-UK agreement

Under the new Switzerland-UK double tax treaty, holders of banking assets in one of the two contracting states will be granted a tax deduction. The double tax agreement between Switzerland and the United Kingdom provides for the following reduced rates:

  • -          a 15% tax rate for dividends paid by a Swiss company to an UK recipient,
  • -          a 5% tax rate for dividends paid by a Swiss company to an UK company owning at least 25% of the voting shares in the Swiss entity.

 The double tax agreement also specifies that an UK or a Swiss company carrying out business operations in the other state will be taxed in that state alone. The elimination of double taxation in Switzerland will occur by granting a credit against the tax paid in the UK. The elimination of double taxation in the UK will occur by granting a tax exemption against the tax paid in Switzerland.

If you need more information about the new provisions of the double taxation treaty with the United Kingdom you can contact our law firm in Switzerland.

 

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