UK-Switzerland Double Taxation Convention

31st January 2006

A protocol amending the 1977 UK-Switzerland double taxation convention was recently agreed at official level. The main amendments are the elimination of taxation at source on dividends where the beneficial owner of the dividends has a substantial participation in the payer or is a pension scheme. The protocol also amends the exchange of information article. It provides that, in future, information will be exchanged in cases of tax fraud or the like, and in cases involving holding companies.

The protocol also contains measures relating to pensions. In future, lump sum payments may be taxed only by the state in which they arise. Also, pension contributions paid to a scheme recognised for tax purposes in one country may, under certain conditions, be deductible in the other country.

At the same time, the Competent Authorities signed a Memorandum of Understanding about a simplified procedure for the refund of withholding taxes to collective investment vehicles including Authorised Unit Trusts, Unauthorised Unit Trusts and Open Ended Investment Companies. Please see Memorandum of Understanding re. investment vehicles.