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The Government of the United Kingdom of Great Britain and Northern Ireland and
the Swiss Federal Council;
Desiring to conclude a Convention for the avoidance of double taxation with respect
to taxes on income;
Desiring to further develop their economic relationship and to enhance their
cooperation in tax matters;
Intending to eliminate double taxation with respect to taxes on income without
creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance
(including through treaty-shopping arrangements aimed at obtaining reliefs provided in this
Convention for the indirect benefit of residents of third States);
Have agreed as follows:
ARTICLE 1
Personal scope
This Convention shall apply to persons who are residents of one or both of the
Contracting States.
ARTICLE 2
Taxes covered
(1) The taxes which are the subject of this Convention are:
(a) in the United Kingdom of Great Britain and Northern Ireland:
the income tax, the corporation tax, the capital gains tax, the development land
tax and the petroleum revenue tax
(hereinafter referred to as “United Kingdom tax”);
(b) in Switzerland:
the federal, cantonal and communal taxes on income (total income, earned
income, income from capital, industrial and commercial profits, capital gains
and other items of income)
(hereinafter referred to as “Swiss tax”).
(2) The Convention shall also apply to any identical or substantially similar taxes
which are imposed by a Contracting State or a political subdivision or a local authority
thereof after the date of signature of the Convention in addition to, or in place of, the existing
taxes. The competent authorities of the Contracting States shall notify each other of any
substantial changes which have been made in their respective taxation laws.
(3) The Convention shall not apply to the federal anticipatory tax withheld in
Switzerland at source on prizes in a lottery.
ARTICLE 3
General definitions
(1) In this Convention, unless the context otherwise requires:
(a) the term “United Kingdom” means Great Britain and Northern Ireland,
including any area outside the territorial sea of the United Kingdom which in
accordance with international law has been or may hereafter be designated,
under the laws of the United Kingdom concerning the Continental Shelf, as an
area within which the rights of the United Kingdom with respect to the sea-bed
and sub-soil and their natural resources may be exercised;
(b) the term “Switzerland” means the Swiss Confederation;
(c) the terms “a Contracting State” and “the other Contracting State” mean the
United Kingdom or Switzerland, as the context requires;
(d) the term “tax” means United Kingdom tax or Swiss tax, as the context
requires;
(e) the term “person” includes any individual, company, unincorporated body of
persons, and any other entity with or without juridical personality;
(f) the term “company” means any body corporate or any entity which is treated
as a body corporate for tax purposes;
(g) the terms “enterprise of a Contracting State” and “enterprise of the other
Contracting State” mean respectively an enterprise carried on by a resident of
a Contracting State and an enterprise carried on by a resident of the other
Contracting State;
(h) the term “national” means:
(i) in relation to the United Kingdom, any citizen of the United Kingdom
and Colonies, or any British subject not possessing that citizenship or
the citizenship of any other Commonwealth country or territory,
provided in either case he has the right of abode in the United
Kingdom, and any legal person, partnership, association or other entity
deriving its status as such from the law in force in the United Kingdom;
(ii) in relation to Switzerland, any Swiss citizen and any legal person,
partnership, association or other entity deriving its status as such from
the law in force in Switzerland;
(i) the term “international traffic” means any transport by a ship or aircraft
operated by an enterprise which has its place of effective management in a
Contracting State, except when the ship or aircraft is operated solely between
places in the other Contracting State;
(j) the term “competent authority” means in the United Kingdom, the
Commissioners of Inland Revenue or their authorised representative and in
Switzerland, the Director of the Federal Tax Administration or his authorised
representative;
(k) the term “political subdivision”, in relation to the United Kingdom, includes
Northern Ireland.
(2) As regards the application of the Convention by a Contracting State any term
not defined therein shall, unless the context otherwise requires, have the meaning which it has
under the law of that State concerning the taxes which are the subject of the Convention.
ARTICLE 4
Residence
(1) For the purposes of this Convention, the term “resident of a Contracting State”
means any person who, under the laws of that State, is liable to tax therein by reason of his
domicile, residence, place of management or any other criterion of a similar nature. But this
term does not include any person who is liable to tax in that State in respect only of income
from sources in that State. In the case of Switzerland, the term includes a partnership created
or organised under Swiss law.
(2) Where by reason of the provisions of paragraph (1) an individual is a resident
of both Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident of the State in which he has a permanent
home available to him; if he has a permanent home available to him in both
States, he shall be deemed to be a resident of the State with which his personal
and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot be determined,
or if he has not a permanent home available to him in either State, he shall be
deemed to be a resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither of them, he shall be
deemed to be a resident of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.
(3) Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be a resident of
the State in which its place of effective management is situated. In cases of doubt, the
competent authorities of the Contracting States shall endeavour to determine by mutual
agreement the State in which the person’s place of effective management is exercised, and in
doing so shall take into account all relevant factors. In the absence of such agreement, that
person shall not be entitled to claim any benefits provided by this Convention except those
provided by paragraph 1 of Article 22 (Elimination of double taxation), Article 23 (Nondiscrimination) and Article 24 (Mutual agreement procedure).
Article 5
Permanent establishment
(1) For the purposes of this Convention, the term “permanent
establishment” means a fixed place of business through which the business of an
enterprise is wholly or partly carried on.
(2) The term “permanent establishment” includes especially:
(a) a place of management,
(b) a branch,
(c) an office,
(d) a factory,
(e) a workshop and
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural
resources.
(3) A building site or construction or installation project constitutes a permanent
establishment only if it lasts more than twelve months.
(4) Notwithstanding the preceding provisions of this Article, the term “permanent
establishment” shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of
goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise or of collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying
on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of
activities mentioned in subparagraphs (a) to (e), provided that the overall
activity of the fixed place of business resulting from this combination is of a
preparatory or auxiliary character.
(5) Notwithstanding the provisions of paragraphs (1) and (2), where a person –
other than an agent of an independent status to whom paragraph 6 applies – is acting on
behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority
to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a
permanent establishment in that State in respect of any activities which that person
undertakes for the enterprise, unless the activities of such a person are limited to those
mentioned in paragraph (4) which, if exercised through a fixed place of business, would not
make this fixed place of business a permanent establishment under the provisions of that
paragraph.
(6) An enterprise shall not be deemed to have a permanent establishment in a
Contracting State merely because it carries on business in that State through a broker, general
commission agent or any other agent of an independent status, provided that such persons are
acting in the ordinary course of their business.
(7) The fact that a company which is a resident of a Contracting State controls or
is controlled by a company which is a resident of the other Contracting State or which carries
on business in that other State (whether through a permanent establishment or otherwise),
shall not of itself constitute either company a permanent establishment of the other.
Article 6
Income from immovable property
(1) Income derived by a resident of a Contracting State from immovable property
(including income from agriculture of forestry) situated in the other Contracting State may be
taxed in that other State.
(2) The term “immovable property” shall have the meaning which it has under the
law of the Contracting State in which the property in question is situated. The term shall in
any case include property accessory to immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed payments as
consideration for the working of, or the right to work, mineral deposits, sources and other
natural resources; ships, boats and aircraft shall not be regarded as immovable property.
(3) The provisions of paragraph (1) shall apply to income derived from the direct
use, letting, or use in any other form of immovable property.
(4) The provisions of paragraphs (1) and (3) shall also apply to the income from
immovable property of an enterprise and to income from immovable property used for the
performance of independent personal services.
Article 7
Business profits
(1) The profits of an enterprise of a Contracting State shall be taxable only in that
State unless the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business as aforesaid,
the profits of the enterprise may be taxed in the other State but only so much of them as is
attributable to that permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of a
Contracting State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be attributable to that
permanent establishment the profits which it might be expected to make if it were a distinct
and separate enterprise engaged in the same or similar activities under the same or similar
conditions and dealing wholly independently with the enterprise of which it is a permanent
establishment.
(3) In determining the profits of a permanent establishment, there shall be allowed
as deductions expenses which are incurred for the purposes of the permanent establishment,
including executive and general administrative expenses so incurred, whether in the State in
which the permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the enterprise.
(5) Where profits include items of income which are dealt with separately in other
Articles of this Convention, then the provisions of those Articles shall not be affected by the
provisions of this Article.
Article 8
Shipping, inland waterways transport and air transport
(1) Profits from the operation of ships or aircraft in international traffic shall be
taxable only in the Contracting State in which the place of effective management of the
enterprise is situated.
(2) Profits from the operation of boats engaged in inland waterways transport
shall be taxable only in the Contracting State in which the place of effective management of
the enterprise is situated.
(3) If the place of effective management of a shipping enterprise or of an inland
waterways transport enterprise is aboard a ship or boat, then it shall be deemed to be situated
in the Contracting State in which the home harbour of the ship or boat is situated, or, if there
is no such home harbour, in the Contracting State of which the operator of the ship or boat is
a resident.
(4) The provisions of paragraph (1) shall also apply to profits from the
participation in a pool, a joint business or an international operating agency.
Article 9
Associated enterprises
(1) Where
(a) an enterprise of a Contracting State participates directly or indirectly in the
management, control or capital of an enterprise of the other Contracting State,
or
(b) the same persons participate directly or indirectly in the management, control
or capital of an enterprise of a Contracting State and an enterprise of the other
Contracting State,
and in either case conditions made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made between
independent enterprises, then any income, deductions, receipts or outgoings which would, but
for those conditions, have been attributed to one of the enterprises, but, by reason of those
conditions, have not been so attributed, may be included in the profits or losses of that
enterprise and taxed accordingly.
(2) Where a Contracting State includes in the profits of an enterprise of that State
– and taxes accordingly – profits on which an enterprise of the other Contracting State has
been charged to tax in that other State and the profits so included are profits which would
have accrued to the enterprise of the first-mentioned State if the conditions made between the
two enterprises had been those which would have been made between independent
enterprises, then that other State shall make an appropriate adjustment to the amount of the
tax charged therein on those profits. In determining such adjustment, due regard shall be had
to the other provisions of this Convention and the competent authorities of the Contracting
States shall if necessary consult each other.
Article 10
Dividends
(1) Dividends paid by a company which is a resident of a Contracting
State to a resident of the other Contracting State may be taxed in that other State.
(2) However, such dividends:
(a) shall be exempt from tax in the Contracting State of which the company
paying the dividends is a resident if the beneficial owner of the dividends is:
(i) a company which is a resident of the other Contracting State and
controls, directly or indirectly, at least 10 per cent of the capital in the
company paying the dividends; or
(ii) a pension scheme;
(b) except as provided in sub-paragraph (a), may also be taxed in the Contracting
State of which the company paying the dividends is a resident and according
to the laws of that State, but if the beneficial owner of the dividends is a
resident of the other Contracting State, the tax so charged shall not exceed 15
per cent of the gross amount of the dividends.
This paragraph shall not affect the taxation of the company in respect of the profits out of
which the dividends are paid.
The competent authorities of the Contracting States shall by mutual agreement settle the
mode of application of these limitations.
(3) The term “dividends” as used in this Article means income from shares,
jouissance shares or jouissance rights, founders’ shares or other rights, not being debt-claims,
participating in profits, as well as income from other corporate rights assimilated to income
from shares by the taxation laws of the State of which the company making the distribution is
a resident and, in the case of the United Kingdom, includes any item which under the laws of
the United Kingdom is treated as a distribution of a company.
(4) The provisions of paragraphs (1) and (2) shall not apply if the beneficial
owner of the dividends, being a resident of a Contracting State, carries on business in the
other Contracting State of which the company paying the dividends is a resident, through a
permanent establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent establishment or fixed base.
In that case the provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) Where a company which is a resident of a Contracting State derives profits or
income from the other Contracting State, that other State may not impose any tax on the
dividends paid by the company, except insofar as such dividends are paid to a resident of that
other State or insofar as the holding in respect of which the dividends are paid is effectively
connected with a permanent establishment or a fixed base situated in that other State, nor
subject the company’s undistributed profits to a tax on the company’s undistributed profits,
even if the dividends paid or the undistributed profits consist wholly or partly of profits or
income arising in such other State.
Article 11
Interest
(1) Interest arising in a Contracting State and paid to a resident of the other
Contracting State shall be taxable only in that other State if that resident is the beneficial
owner of the interest.
(2) The term “interest” as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage, and whether or not carrying a right to
participate in the debtor’s profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to such
securities, bonds or debentures.
(3) The provisions of paragraph (1) shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the other Contracting
State in which the interest arises, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base situated therein,
and the debt-claims in respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In that case the provisions of Article 7 or Article 14,
as the case may be, shall apply.
(4) Where, by reason of a special relationship between the payer and the
beneficial owner, or between both of them and some other person, the amount of the interest
paid exceeds the amount which would have been agreed upon by the payer and the beneficial
owner in the absence of such relationship, the provisions of this Article shall apply only to
the last-mentioned amount. In that case, the excess part of the payments, if treated as a
dividend or distribution of a company, shall be taxed in accordance with Article 10.
(5) Interest exempted from tax under the provisions of this Article shall not be
treated as a distribution of a company paying such interest by reason of any provisions in the
law of either Contracting State which relate only to interest paid to a non- resident, with or
without any further requirement, or which relate only to interest payments between
interconnected companies, with or without any further requirements.
(6) The provisions of paragraph (5) of this Article shall not apply to interest paid
to a company which is a resident of a Contracting State where:
(a) the same persons participate directly or indirectly in the management or
control of the company paying the interest and the company receiving the
interest; and
(b) more than 50% of the voting power in the company receiving the interest is
controlled, directly or indirectly, by a person or persons resident in the other
Contracting State.
Article 12
Royalties
(1) Royalties arising in a Contracting State and paid to a resident of the other
Contracting State shall be taxable only in that other State if that resident is the beneficial
owner of the royalties.
(2) The term “royalties” as used in this Article means payments of any kind
received as a consideration for the use of, or the right to use, any copyright of literary, artistic
or scientific work (including cinematograph films and films or tapes for radio or television
broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for
information concerning industrial, commercial or scientific experience.
(3) The provisions of paragraph (1) shall not apply if the beneficial owner of the
royalties, being a resident of a Contracting State, carries on business in the other Contracting
State in which the royalties arise, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base situated therein,
and the right or property in respect of which the royalties are paid is effectively connected
with such permanent establishment or fixed base. In that case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
(4) Where, by reason of a special relationship between the payer and the
beneficial owner, or between both of them and some other person, the amount of royalties
paid exceeds the amount which would have been agreed upon by the payer and the beneficial
owner in the absence of such relationship, the provisions of this Article shall apply only to
the last mentioned amount. In that case, the excess part of the payments shall remain taxable
according to the laws of each Contracting State, due regard being had to the other provisions
of this Convention.
Article 13
Capital gains
(1) Gains derived by a resident of a Contracting State from the alienation of
immovable property referred to in Article 6 and situated in the other Contracting State may
be taxed in that other State.
(2) Gains from the alienation of movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has in the
other Contracting State or of movable property pertaining to a fixed base available to a
resident of a Contracting State in the other Contracting State for the purpose of performing
independent personal services, including such gains from the alienation of such permanent
establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that
other State.
(3) Gains from the alienation of ships or aircraft operated in international traffic,
boats engaged in inland waterways transport or movable property pertaining to the operation
of such ships, aircraft or boats, shall be taxable only in the Contracting State in which the
place of effective management of the enterprise is situated.
(4) Gains from the alienation of shares of a company, the property of which
consists principally of immovable property situated in a Contracting State, may be taxed in
that State.
(5) Gains from the alienation of any property other than that referred to in
paragraphs (1), (2), (3) and (4) shall be taxable only in the Contracting State of which the
alienator is a resident.
(6) The provisions of paragraph 5 shall not affect the right of the United Kingdom
to levy according to its law a tax chargeable in respect of gains from the alienation of any
property on a person who is, and has been at any time during the previous six fiscal years, a
resident of the United Kingdom or on a person who is a resident of the United Kingdom at
any time during the fiscal year in which the property is alienated.
Article 14
Independent personal services
(1) Income derived by a resident of a Contracting State in respect of professional
services or other activities of an independent character shall be taxable only in that State
unless he has a fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income may be taxed in
the other State but only so much of it as is attributable to that fixed base.
(2) The term “professional services” includes, especially, independent scientific,
literary, artistic, educational or teaching activities as well as the independent activities of
physicians, lawyers, engineers, architects, dentists and accountants.
Article 15
Dependent personal services
(1) Subject to the provisions of Article 16, 18 and 19, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is exercised in the
other Contracting State. If the employment is so exercised, such remuneration as is derived
therefrom may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding
in the aggregate 183 days in the fiscal year concerned of that State, and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident
of the other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base
which the employer has in the other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration
derived in respect of an employment exercised aboard a ship or aircraft operated in
international traffic, or aboard a boat engaged in inland waterways transport, may be taxed in
the Contracting State in which the place of effective management of the enterprise is situated.
Article 16
Directors’ fees
Directors’ fees and other similar payments derived by a resident of a Contracting State
in his capacity as a member of the board of directors of a company which is a resident of the
other Contracting State may be taxed in that other State.
Article 17
Artistes and athletes
(1) Notwithstanding the provisions of Articles 14 and 15, income derived by a
resident of a Contracting State as an entertainer, such as theatre, motion picture, radio or
television artiste, or a musician, or as an athlete, from his personal activities as such exercised
in the other Contracting State, may be taxed in that other State.
(2) Where income in respect of personal activities exercised by an entertainer or
an athlete in his capacity as such accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be
taxed in the Contracting State in which the activities of the entertainer or athlete are
exercised.
(3) The provisions of paragraphs (1) and (2) shall not apply to remuneration or
profits, salaries, wages and similar income derived from activities performed in a Contracting
State by entertainers if the visit to that State is substantially supported by public funds of the
other Contracting State or a political subdivision or a local authority thereof.
Article 18
Pensions
(1) Subject to the provisions of paragraph 2 of Article 19, pensions and other
similar remuneration paid to an individual who is a resident of a Contracting State, shall be
taxable only in that State.
(2) Notwithstanding the provisions of paragraph 1, a lump sum payment derived
from a pension scheme established in a Contracting State and beneficially owned by a
resident of the other Contracting State shall be taxable only in the first-mentioned State.
(3) Contributions made by or on behalf of an individual who exercises
employment or self-employment in a Contracting State (‘the host state’) to a pension scheme
that is recognised for tax purposes in the other Contracting State (‘the home state’) shall, for
the purposes of:
(a) determining the individual’s tax payable in the host state; and
(b) determining the profits of his employer which may be taxed in the host state;
be treated in that State in the same way and subject to the same conditions and limitations as
contributions made to a pension scheme that is recognised for tax purposes in the host state,
to the extent that they are not so treated by the home state.
(4) Paragraph 3 applies only if the following conditions are met:
(a) the individual is subject to the legislation of the home state in accordance with
the Agreement on the Free Movement of Persons signed on 21 June 1999,
between the Swiss Confederation on one side and the European Community
and its Member States on the other side; and
(b) the individual was not a resident of the host state, and was participating in the
pension scheme (or in another similar pension scheme for which the firstmentioned pension scheme was substituted), immediately before he began to
exercise employment or self-employment in the host state; and
(c) the pension scheme is accepted by the competent authority of the host state as
generally corresponding to a pension scheme recognised as such for tax
purposes by that State.
(5) For the purposes of paragraphs 2, 3 and 4:
(a) the term ‘a pension scheme’ means an arrangement in which the individual
participates in order to secure retirement benefits payable in respect of the
employment or self-employment referred to in paragraph 3;
(b) a pension scheme is recognised for tax purposes in a Contracting State if the
contributions to the scheme would qualify for tax relief in that State and if
payments made to the scheme by the individual’s employer are not deemed in
that State to be taxable income of the individual.
Article 19
Government service
(1) (a) Remuneration, other than a pension, paid by a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services rendered
to that State or subdivision or authority shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the other
Contracting State if the services are rendered in that State and the
individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
rendering services.
(2) (a) Any pension paid by, or out of funds created by, a Contracting State or a
political subdivision or a local authority thereof to an individual in respect of services
rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting
State if the individual is a resident of, and a national of, that State.
(3) The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in
respect of services rendered in connection with a business carried on by a Contracting
State or a political subdivision or a local authority thereof.
Article 20
Students
Payments which a student or business apprentice who is or was immediately before
visiting a Contracting State a resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of his education or training receives for the
purpose of his maintenance, education or training shall not be taxed in that State, provided
that such payments arise from sources outside that State.
Article 21
Other income
(1) Items of income of a resident of a Contracting State, wherever arising, not
dealt with in the foregoing Articles of this Convention, other than income paid out of trusts,
shall be taxable only in that State.
(2) The provisions of paragraph (1) shall not apply to income other than income
from immovable property as defined in paragraph (2) of Article 6, if the recipient of such
income, being a resident of a Contracting State, carries on business in the other Contracting
State through a permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the right or property in
respect of which the income is paid is effectively connected with such permanent
establishment or fixed base. In that case, the provisions of Article 7 or Article 14, as the case
may be, shall apply.
(3) Where, by reason of a special relationship between the resident referred to in
paragraph 1 and some other person, or between both of them and some third person, the
amount of the income referred to in that paragraph exceeds the amount (if any) which would
have been agreed upon between them in the absence of such a relationship, the provisions of
this Article shall apply only to the last-mentioned amount. In such a case, the excess part of
the income shall remain taxable according to the laws of each Contracting State, due regard
being had to the other applicable provisions of this Convention.
Article 22
Elimination of double taxation
(1) Subject to the provisions of the law of the United Kingdom regarding the
allowance as a credit against United Kingdom tax of tax payable in a territory outside the
United Kingdom (which shall not affect the general principle hereof):
(a) Swiss tax payable under the laws of Switzerland and in accordance with the
provisions of this Convention, whether directly or by deduction, on profits,
income or chargeable gains from sources within Switzerland (excluding, in the
case of a dividend, tax payable in respect of the profits out of which the
dividend is paid) shall be allowed as a credit against any United Kingdom tax
computed by reference to the same profits, income or chargeable gains by
reference to which the Swiss tax is computed;
(b) in the case of a dividend paid by a company which is a resident of Switzerland
to a company which is resident in the United Kingdom and which controls
directly or indirectly at least 10 per cent of the capital or voting power in the
Swiss company, the credit shall take into account (in addition to any Swiss tax
creditable under sub-paragraph (a)) the Swiss tax payable by the company in
respect of the profits out of which such dividend is paid.
(2) Where a resident of Switzerland derives income which, under the laws of the
United Kingdom and in accordance with the provisions of the Convention may be taxed in
the United Kingdom, Switzerland shall, subject to the provisions of paragraphs (3), (4) and
(6), exempt such income from Swiss tax, provided, however, that such exemption shall apply
to gains referred to in paragraph (4) of Article 13 only if taxation of such gains in the United
Kingdom is demonstrated.
(3) Where a resident of Switzerland derives dividends which, in accordance with
the provisions of paragraph 2 of Article 10, may be taxed in the United Kingdom,
Switzerland shall allow, upon request, a relief to that person. The relief may consist of:
(a) a deduction from the Swiss tax on the income of that resident of an amount
equal to the tax levied in the United Kingdom in accordance with the
provisions of paragraph 2 of Article 10; such deduction shall not, however,
exceed that part of the Swiss tax, as computed before the deduction is given,
which is appropriate to the income which may be taxed in the United
Kingdom; or
(b) a lump sum reduction of the Swiss tax; or
(c) a partial exemption of such dividends from Swiss tax, in any case consisting at
least of the deduction of the tax levied in the United Kingdom on the gross
amount of the dividends.
Switzerland shall determine the relief applicable and regulate the procedure in accordance
with the Swiss provisions relating to the carrying out of international conventions of the
Swiss Confederation for the avoidance of double taxation.
(4) A company which is a resident of Switzerland and which derives dividends
from a company which is a resident of the United Kingdom shall be entitled, for the purposes
of Swiss tax with respect to such dividends, to the same relief which would be granted to the
company if the company paying the dividends were a resident of Switzerland.
(5) For the purposes of the preceding paragraphs, profits, income and capital gains
owned by a resident of a Contracting State which may be taxed in the other Contracting State
in accordance with the provisions of the Convention shall be deemed to arise from sources in
that other State.
(6) Where any income is exempted from tax by any provision of the Convention,
it may nevertheless be taken into account in computing the tax on other income or in
determining the rate of such tax.
(7) The provisions of paragraph 2 shall not apply to income derived by a resident
of Switzerland where the United Kingdom applies the provisions of this Convention to
exempt such income from tax or applies the provisions of paragraph 2 of Article 10 to such
income.
Article 23
Non-discrimination
(1) Nationals of a Contracting State shall not be subjected in the other Contracting
State to any taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of that other
State in the same circumstances are or may be subjected.
(2) The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably levied in that
other State than the taxation levied on enterprises of that other State carrying on the same
activities.
(3) Nothing contained in this Article shall be construed as obliging a Contracting
State to grant to individuals not resident in that State any of the personal allowances and
reliefs which are granted to individuals so resident.
(4) Except where the provisions of paragraph 1 of Article 9, paragraphs 4 or 7 of
Article 11, paragraphs 4 or 5 of Article 12, or paragraphs 3 or 4 of Article 21 apply, interest,
royalties and other disbursements paid by an enterprise of a Contracting State shall, for the
purpose of determining the taxable profits of such enterprise, be deductible under the same
conditions as if they had been paid to a resident of the first-mentioned State.
(5) Enterprises of a Contracting State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and connected
requirements to which other similar enterprises of the first-mentioned State are or may be
subjected.
(6) The provisions of this Article shall apply to taxes of every kind and
description.
Article 24
Mutual agreement procedure
1. Where a person considers that the actions of one or both of the Contracting States
result or will result for him in taxation not in accordance with the provisions of this
Convention, he may, irrespective of the remedies provided by the domestic law of those
States, present his case to the competent authority of either Contracting State. The case must
be presented within three years from the first notification of the action resulting in taxation
not in accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by
mutual agreement with the competent authority of the other Contracting State, with a view to
the avoidance of taxation which is not in accordance with the Convention.
3. The competent authorities of the Contracting States shall endeavour to resolve
by mutual agreement any difficulties or doubts arising as to the interpretation or application
of the Convention. They may also consult together for the elimination of double taxation in
cases not provided for in the Convention.
4. The competent authorities of the Contracting States may communicate with
each other directly for the purpose of reaching an agreement in the sense of the preceding
paragraphs.
5. Where,
a) under paragraph 1, a person has presented a case to the competent authority of
a Contracting State on the basis that the actions of one or both of the
Contracting States have resulted for that person in taxation not in accordance
with the provisions of this Convention, and
b) the competent authorities are unable to reach an agreement to resolve that case
pursuant to paragraph 2 within three years from the presentation of the case to
the competent authority of the other Contracting State,
any unresolved issues arising from the case shall be submitted to arbitration if the person so
requests. These unresolved issues shall not, however, be submitted to arbitration if a decision
on these issues has already been rendered by a court or administrative tribunal of either State.
Unless a person directly affected by the case does not accept the mutual agreement that
implements the arbitration decision, that decision shall be binding on both States and shall be
implemented notwithstanding any time limits in the domestic laws of these States. The
competent authorities of the Contracting States shall by mutual agreement settle the mode of
application of this paragraph.
Article 25
Exchange of information
1. The competent authorities of the Contracting States shall exchange such
information as is foreseeably relevant for carrying out the provisions of this Convention or to
the administration or enforcement of the domestic laws concerning taxes of every kind and
description imposed on behalf of the Contracting States, or of their political subdivisions or
local authorities, insofar as the taxation thereunder is not contrary to the Convention. The
exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic laws of that
State and shall be disclosed only to persons or authorities (including courts and
administrative bodies) concerned with the assessment or collection of, the enforcement or
prosecution in respect of, the determination of appeals in relation to the taxes referred to in
paragraph 1, or the oversight of the above. Such persons or authorities shall use the
information only for such purposes. They may disclose the information in public court
proceedings or in judicial decisions. Notwithstanding the foregoing, information received by
a Contracting State may be used for other purposes when such information may be used for
such other purposes under the laws of both States and the competent authority of the
supplying State authorises such use.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to
impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the laws or in the normal
course of the administration of that or of the other Contracting State;
c) to supply information which would disclose any trade, business, industrial,
commercial or professional secret or trade process, or information, the
disclosure of which would be contrary to public policy (ordre public).
4. If information is requested by a Contracting State in accordance with this
Article, the other Contracting State shall use its information gathering measures to obtain the
requested information, even though that other State may not need such information for its
own tax purposes. The obligation contained in the preceding sentence is subject to the
limitations of paragraph 3 but in no case shall such limitations be construed to permit a
Contracting State to decline to supply information solely because it has no domestic interest
in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a
Contracting State to decline to supply information solely because the information is held by a
bank, other financial institution, nominee or person acting in an agency or a fiduciary
capacity or because it relates to ownership interests in a person. In order to obtain such
information, the tax authorities of the requested Contracting State shall have the power to
enforce the disclosure of information covered by this paragraph, notwithstanding paragraph 3
or any contrary provisions in its domestic laws.
Article 26
Diplomatic agents and consular officers
(1) Nothing in this Convention shall affect the fiscal privileges of diplomatic
agents or consular officers under the general rules of international law or under the provisions
of special agreements.
(2) Notwithstanding the provisions of Article 4 an individual who is a member of
a diplomatic mission, consular post or permanent mission of a Contracting State which is
situated in the other Contracting State or in a third State may be deemed for the purpose of
the Convention to be a resident of the sending State if:
(a) in accordance with international law he is not liable to tax in the receiving
State in respect of income from sources outside that State; and
(b) he is liable in the sending State to the same obligations in relation to tax on his
total income as are residents of that State.
(3) The Convention shall not apply to international organisations, to organs or
officials thereof and to persons who are members of a diplomatic mission, consular post or
permanent mission of a third State, being present in a Contracting State and not treated in
either Contracting State as residents in respect of taxes on income.
Article 27
Miscellaneous rules
(1) Where under any provision of this Convention income from a source within
Switzerland is relieved from Swiss tax and, under the laws in force in the United Kingdom,
an individual, in respect of such income, is subject to tax by reference to the amount thereof
which is remitted to or received in the United Kingdom and not by reference to the full
amount thereof, then the relief to be allowed under the Convention in Switzerland shall apply
only to so much of the income as is remitted to or received in the United Kingdom.
(2) Where under any provision of the Convention a partnership is entitled, as a
resident of Switzerland, to exemption from the United Kingdom tax on any income, such
provision shall not be construed as restricting the right of the United Kingdom to charge any
member of the partnership which is a resident of the United Kingdom to tax on its share of
the income of the partnership; but any such income shall be deemed for the purposes of
Article 22 to be income from sources within Switzerland.
(3) Where under any provision of the Convention an estate of a deceased person is
entitled, as a resident of Switzerland, to exemption from United Kingdom tax on any income,
such provision shall not be construed as requiring the United Kingdom to grant exemption
from United Kingdom tax in respect of such part of such income as passes to any heir of such
estate who is not a resident of Switzerland and whose share of such income is not subject to
Swiss tax either in his hands or in the hands of the estate.
(4) Subject to the provisions of paragraph (6), individuals who are residents of
Switzerland shall be entitled to the same personal allowances, reliefs and reductions for the
purposes of United Kingdom taxation as British subjects not resident in the United Kingdom.
(5) Subject to the provisions of paragraph (6), individuals who are residents of the
United Kingdom shall be entitled to the same personal allowances, reliefs and reductions for
the purposes of Swiss tax as Swiss nationals resident in the United Kingdom.
(6) Nothing in the Convention shall entitle an individual who is a resident of a
Contracting State and whose income from the other Contracting State consists solely of
dividends, interest or royalties (or solely of any combination thereof) to the personal
allowances, reliefs and reductions of the kind referred to in paragraphs (4) and (5) for the
purposes of taxation in that other State.
(7) Where it is provided in the Convention that relief from tax in respect of any
kind of income shall be allowed in the Contracting State from which such income is derived,
that provision shall not be construed as requiring that income to be paid without deduction of
tax at source at the full rate. Where tax has been deducted at source from such income the
taxation authorities of the State in which relief from tax is required to be given shall, when
the beneficial owner of the income shows to their satisfaction and within the time limits
prescribed in that State that he is entitled to the relief, arrange for the appropriate repayment
of tax.
(8) For the purpose of determining what reliefs may be due under Article 10, or
paragraphs (4) and (5) of this Article, the income of a partnership shall be regarded as that of
its individual members.
ARTICLE 27A
Entitlement to benefits
Notwithstanding the other provisions of this Convention, a benefit under this
Convention shall not be granted in respect of an item of income or capital gains if it is
reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining
that benefit was one of the principal purposes of any arrangement or transaction that resulted
directly or indirectly in that benefit, unless it is established that granting that benefit in these
circumstances would be in accordance with the object and purpose of the relevant provisions
of this Convention.
Article 28
Entry into force
(1) This Convention shall be ratified and the instruments of ratification shall be
exchanged at Berne as soon as possible.
(2) The Convention shall enter into force immediately after the expiration of thirty
days following the date on which the instruments of ratification are exchanged and shall
thereupon have effect:
(a) in the United Kingdom:
(i) in respect of income tax and capital gains tax, for any year of
assessment beginning on or after 6 April 1978;
(ii) in respect of corporation tax, for any financial year beginning on or
after 1 April 1978;
(iii) in respect of development land tax, for any realised development value
accruing on or after 1 April 1978; and
(iv) in respect of petroleum revenue tax, for any chargeable period
beginning on or after 1 January 1978;
(b) in Switzerland:
for any taxable year beginning on or after 1 January 1978.
(3) Notwithstanding the provisions of paragraph (2), the Convention shall have
effect in respect of any dividend paid on or after 6 April 1975 to which paragraph (3) of
Article 10 applies.
(4) Subject to the provisions of paragraph (5) the Convention between the United
Kingdom of Great Britain and Northern Ireland and the Swiss Confederation for the
avoidance of double taxation with respect to taxes on income signed at London on 30
September 1954, as amended by the Protocol signed at London on 14 June 1966 and by the
Supplementary Protocol signed at London on 2 August 1974, (hereinafter referred to as “the
1954 Convention”), shall terminate upon the entry into force of this Convention and
thereupon cease to have effect in respect of taxes to which this Convention, in accordance
with the provisions of paragraph (2), applies.
(5) Where any provision of the 1954 Convention would have afforded any greater
relief from tax any such provision as aforesaid shall continue to have effect:
(a) in the United Kingdom, for any year of assessment or financial year; and
(b) in Switzerland, for any taxable year
beginning, in either case, before 1 January 1979.
(6) This Convention shall not affect any Agreement in force extending the 1954
Convention in accordance with Article XXI thereof.
(7) The Agreement of 17 October 1931 between the Government of the United
Kingdom and the Swiss Federal Council for reciprocal exemption from taxation on profits or
gains arising through an agency shall terminate upon the entry into force of this Convention.
Article 29
Termination
(1) This Convention shall remain in force until denounced by a Contracting State.
Either Contracting State may denounce the Convention, through diplomatic channels, by
giving notice of termination at least six months before the end of any calendar year after the
year 1983. In such event, the Convention shall cease to have effect:
(a) in the United Kingdom:
(i) in respect of income tax and capital gains tax, for any year of
assessment beginning on or after 6 April in the calendar year next
following that in which the notice is given;
(ii) in respect of corporation tax and development land tax, for any
financial year beginning on or after 1 April in the calendar year next
following that in which the notice is given;
(iii) in respect of petroleum revenue tax, for any chargeable period
beginning on or after 1 January in the calendar year next following that
in which the notice is given;
(b) in Switzerland:
for any taxable year beginning on or after 1 January of the calendar
year next following that in which such notice is given.
(2) The termination of this Convention shall not have the effect of reviving any
treaty or arrangement abrogated by this Convention or any treaties previously concluded
between the Contracting States.
In witness whereof the undersigned, duly authorised thereto by their respective Governments,
have signed this Convention.
Done in duplicate at London this 8th day of December 1977 in the English and French
languages, both texts being equally authoritative.
For the Government of the United For the Swiss Federal
Council: Kingdom of Great Britain and Northern Ireland:
FRANK JUDD ERNESTO THALMANN
Protocol
ADDITIONAL PROTOCOL BETWEEN THE UNITED KINGDOM OF GREAT
BRITAIN AND NORTHERN IRELAND AND THE SWISS CONFEDERATION
AMENDING THE CONVENTION FOR THE AVOIDANCE OF DOUBLE
TAXATION WITH RESPECT TO TAXES ON INCOME, SIGNED AT LONDON ON
8 DECEMBER 1977, AS AMENDED BY THE PROTOCOLS SIGNED AT LONDON
ON 5 MARCH 1981, AT BERN ON 17 DECEMBER 1993 AND AT LONDON ON 26
JUNE 2007
At the signing of the Protocol amending the Convention for the avoidance of double taxation
with respect to taxes on income, signed at London on 8 December 1977, as amended by the
Protocols signed at London on 5 March 1981, at Bern on 17 December 1993 and at London
on 26 June 2007, the authorised signatories hereto have agreed the following provisions
which shall form an integral part of the Convention:
1. In relation to paragraph 1 of Article 4 (Residence)
It is understood and confirmed that the term “resident of a Contracting State” includes:
(a) a pension scheme established in that State; and
(b) an organisation that is established and is operated exclusively for religious,
charitable, scientific, cultural, or educational purposes (or for more than one of
those purposes) and that is a resident of that State according to its laws,
notwithstanding that all or part of its income or gains may be exempt from tax
under the domestic law of that State.
2. In relation to sub-paragraph (a) (ii) of paragraph 2 of Article 10 (Dividends)
It is understood and confirmed that the term “pension scheme” means any plan, scheme, fund,
trust or other arrangement established in a Contracting State which is:
(a) generally exempt from income taxation in that State; and
(b) operated principally to administer or provide pension or retirement benefits or
to earn income for the benefit of one or more such arrangements.
3. In relation to Article 15 (Dependent personal services)
It is understood that Article 15 applies to the employment benefit derived from stock-options
regardless of when that benefit is taxed.
4. In relation to Article 25 (Exchange of information)
(a) It is understood that an exchange of information will only be requested once
the requesting State has exhausted its normal procedures under domestic law
to obtain the information.
(b) It is understood that the standard of “foreseeable relevance” is intended to
provide for exchange of information in tax matters to the widest possible
extent and, at the same time, to clarify that the Contracting States are not at
liberty to engage in “fishing expeditions” or to request information that is
unlikely to be relevant to the tax affairs of a given taxpayer.
(c) It is understood that the tax authorities of the requesting State shall provide the
following information to the tax authorities of the requested State when
making a request for information under Article 25 of the Convention:
(i) the name and address of the person(s) under examination or
investigation and, if available, other particulars facilitating that
person’s identification, such as date of birth, marital status, tax
identification number;
(ii) the period of time for which the information is requested;
(iii) a statement of the information sought including its nature and the form
in which the requesting State wishes to receive the information from
the requested State;
(iv) the tax purpose for which the information is sought;
(v) the name and address of any person believed to be in possession of the
requested information.
(d) It is understood that Article 25 of the Convention does not require the
Contracting States to exchange information on an automatic or a spontaneous
basis.
(e) It is understood that in case of an exchange of information, the administrative
procedural rules regarding taxpayers’ rights provided for in the requested
Contracting State remain applicable before the information is transmitted to
the requesting Contracting State. It is further understood that this provision
aims at guaranteeing the taxpayer a fair procedure and not at preventing or
unduly delaying the exchange of information process.
In witness whereof the undersigned, duly authorised thereto by their respective Governments,
have signed this Additional Protocol.
Done in duplicate at London this 7th day of September 2009 in the English and French
languages, each text being equally authoritative.
For the Government of the United Kingdom For the Swiss Federal Council: of
Great Britain and Northern Ireland:
STEPHEN TIMMS ALEXIS P LAUTENBURG