Switzerland, Romania Sign Revised DTA

Switzerland and Romania have recently signed the protocol amending the bilateral double taxation agreement (DTA) in place between the two countries in the area of taxes on income and capital.

According to the Swiss Federal Administration, the revised DTA contains provisions on the exchange of information in line with internationally applicable standards and will serve to contribute to the further positive development of bilateral economic relations.

Aside from the exchange of information, Switzerland and Romania have in particular agreed withholding tax exemption for dividend payments from significant holdings of at least 25% in the capital of the company making the payment, as well as for dividend payments to pension funds.

In future, interest payments will be subject to withholding tax of no more than 5%. In addition most-favoured-nation treatment was agreed for Switzerland in an arbitration clause. Should Romania negotiate an arbitration clause with another country, the clause agreed between Switzerland and Romania would automatically become applicable.

The Swiss administration notes that the revised DTA with Romania contains the rule on interpretation recommended in mid-February by the Federal Council in the case of administrative assistance.

Following the negotiations, a report on the revised agreement was submitted to the Swiss cantons and business associations concerned for their comments. They largely approved the signing of the agreement.

March 2^nd, 2011

Source: tax-news.com