Swiss parliament´s Economic Commission recommends adoption of BEPS-Agreement

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting

According to the parliamentary services, the Economic Commission of the National Council yesterday voted 15 to 7 in favour of the approval of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the so-called BEPS Agreement). The agreement is part of the OECD's Base Erosion and Profit Shifting project (BEPS-project) and contains provisions on the efficient adaptation of existing double taxation agreements (DTAs) to the BEPS minimum standards. The minority of the National Council´s Economic Commission, which voted against the adoption of the agreement, argues it´s rejection inter alia with the increased administrative burden for companies.

The agreement has already been signed by Switzerland. However, ratification can only take place after the Swiss Parliament has given its assent. The National Council will decide on this topic in its spring session.

If the decision in the National Council is a positive one, the DTAs will be amended with those states whose view "matches" that of Switzerland. The main changes can be summarized as follows:

  • The preambles to the DTAs will explicitly state that the agreement should not provide an opportunity for double non-taxation or reduced taxation through tax evasion or avoidance.
  • A general abuse clause is added to the DTAs.
  • Provided that the respective DTA partner state is prepared to apply the part of the agreement on dispute settlement, the mutual agreement procedures already included in the Swiss DTAs will be extended for arbitration proceedings.

If the BEPS-agreement is rejected by the National Council, Switzerland still has the option to agree on the BEPS minimum standards through bilateral amendments of the individual DTAs.

January 2019 | Authors: Dr. Samuel Bussmann, Daniela Arth

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