Switzerland – Germany Double Tax Treaty
There have been over 80 double taxation treaties signed by Switzerland with nations all around the world. This network of treaties has created an entire framework for which the Swiss taxation laws and regulations for foreign investors are built on. Most of the treaties put in place by Switzerland follow regulations set out by the OECD.
It is important to note that German business developers and investors who are planning to open a business in Switzerland can heavily benefit from the double taxation exemption treaties which have been put in place, as these are also approved and followed by the German tax authorities.
The original treaty was first drafted and implemented in 1972 and further revised and refined in 2011 to be more in keeping with modern companies and their needs.
We have further information on business formation in Switzerland as well as information on specific German-Swiss taxation treaties on our website. You can also contact one of our consultants for more information regarding this.
Updated provisions of the Swiss-German DTT
Germany and Switzerland’s double taxation treaty, since inception in 1972, has featured a number of changes particularly regarding shareholder ownership information and regulations which effectively alter a number of regulations about the benefits a shareholder can receive before taxes increased or dividend taxes increase.
Following the latest revisions, the treaty changes allow for dividend tax exemptions if an individual or business owns a 10% stake in a business, including voting rights, for at least one year, there can be tax exemptions for the owner of those shares. In the original 1972 treaty, a 20% stake was required.
There is additional information that investors should know before establishing a Swiss company. The regulation that is implemented and allows for a tax exemption on dividends is only applicable in the event that the body or individual is, or will, own 10% in a company for at least one year, otherwise, normal taxation stands. We have a team of agents available to assist with this.
Provisions concerning the German citizens
Important information for German investors to know is that all investments and business profits will have a tax deduction of 19% to 34%. The rate, however, will differ depending on the field where the business is conducting operations and is also subject to change depending on where the company is headquartered.
The main revision to the treaty that should be remembered is that the change in tax rates for withholding taxes, in which the required stake in the company offering the dividends was lowered from 20% to 10%.
We have a number of business agents and consultants who are able to help assist business owners or investors with understanding and capitalising on the double tax treaty between Switzerland and Germany.