The signed new protocol between UK and Switzerland to their existing double taxation convention, was published on 18 January 2018.
In the new protocol:
- the definition of conduit arrangements, and the provisions excluding the application of articles 10 (Dividends), 11 (Interest), 12 (Royalties) and 21 (Other income) to conduit arrangements have been deleted.
- Articles 9 (associated enterprises) and 24 (mutual agreement procedure) have been amended to reflect those set out in the OECD Model Tax Convention, which has recently been updated (see Legal update, 2017 edition of the OECD Model Tax Convention published).
The protocol also inserts a principal purpose test that follows the OECD Model as part of a new entitlement to benefits article (article 27A).
The protocol will enter into force once both countries have completed the necessary procedures and exchanged diplomatic notes, and will take effect:
- For amounts paid or credited on or after 1 January in the year following entry into force for withholding tax in both countries.
- In Switzerland, for other taxes, for fiscal years beginning on or after 1 January in the year following entry into force.
- In the UK, for income tax and capital gains tax, for any year of assessment beginning on or after 6 April in the year following entry into force and, for corporation tax, for any financial year beginning on or after 1 April in the year following entry into force.