According to the Swiss Federal Department of Finance the additional protocol to the Double Tax Treaty (‘DTT’) between Belgium and Switzerland, that has been signed on April 10, 2014 has entered into force as of July 19, 2017 and will generally apply as from January 2018. In general terms, the protocol brings the current DTT, dating from 1978, up to date to promote investments and economic exchange in the bilateral relations between the countries.
From a corporate income tax (CIT) perspective, the key changes made by the protocol are the following:
- Introduction of a withholding tax exemption on dividends (article 10) (i) between companies if the receiving company owns a participation in the capital of the distributing company of at least 10% held during an uninterrupted period of at least 12 months (instead of a reduction to 10% in case of a 25% participation, or 15% in all other cases), and (ii) dividends paid to pension funds if those are not resulting from a business activity or paid by a related company.
- Introduction of a withholding tax exemption on interest (article 11) (i) paid on loans granted by a company of the other state; (ii) dividends paid to pension funds if those are not resulting from a business activity or paid by a related company, and (iii) interest paid to the other contracting state, to one of its political subdivisions, local authorities or to a statutory body.
- The provision on prevention of abuse of the convention (article 22) has been replaced with a general anti-abuse provision provided for in article 28 (miscellaneous).
Other changes from a CIT perspective a.o. relate to (i) the treatment of capital gains on shares in relation to real estate companies, and (ii) aligning the provisions of the DTT in relation to business profits (article 7), transfer pricing (article 9), elimination of double taxation (new article 23), non-discrimination (new article 24), mutual agreement (new article 25) and exchange of information (new article 26) more to the OECD Model / Belgian Model text (as available in 2014).
For further insights and questions on the implications for your organisation, please contact your local PwC contact or Evi Geerts, Pieter Deré or Maarten Temmerman.