Avoidance of double taxation in Switzerland and Japan
The Japanese and Swiss government have both signed and agreed to a Swiss-Japan double tax treaty. This treaty allows for companies and individuals to avoid double taxes on income when they are working or undertaking business operations in either Japan or Switzerland, or both.
The treaty is also a perk for branches as well as individuals who are residing in Japan but are employed or run a business in Switzerland. This treaty will allow for tax exemptions for those Japanese residents.
We have consultants in Switzerland who are able to assist with these treaties and further taxation assistance.
The treaty signed by Switzerland and Japan allows for avoidance of double taxes in both countries. The treaty was revised in 2012 to further extend the benefits for dividend payments, interest payments and other types of payments like royalties.
The clauses in the agreement state that businesses conducting their operations in both Japan and Switzerland automatically qualify for withholding tax reductions. A business which is holding 25% of voting power in another business and is required, or chooses, to pay dividends to that company, will receive a 0% withholding tax on those dividends. The general withholding tax was updated to be 10% in the new treaty agreement. There is also a 0% rate which applies to some financial companies and pension systems.
In order to benefit from these rates, a Swiss or Japanese company will need to fill out documents and apply for these taxation exemptions with either a Swiss or Japanese taxation body. Swiss companies operating in Japan will also be required to lodge a document for the release of Japan income tax. There are also certain applications required of Japanese companies in Switzerland, some of which are a Swiss tax residency certificate. 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 Japan.