In a recent development on 14 June 2024, the Federal Council made a significant stride by adopting the dispatch concerning the protocol of amendment to the double taxation agreement (DTA) with Germany. This protocol brings about crucial adjustments to the DTA, aligning it with the evolving needs of both nations and incorporating essential standards from the base erosion and profit shifting project related to DTAs.
Within the context of Swiss practices, the protocol of amendment introduces enhancements that do not fundamentally alter the allocation of taxing rights between Switzerland and Germany. Instead, it focuses on enhancing legal certainty and fostering cooperation between the two contracting parties. Notable inclusions are clarifications concerning cross-border employment subject to salary and new provisions governing the mutual agreement procedure. Additionally, the protocol embraces the Organization for Economic Co-operation and Development guidelines for attributing corporate profits to permanent establishments.
Moreover, the protocol enforces the minimum standards outlined in the BEPS project concerning DTAs. Notably, an anti-abuse clause aims to prevent individuals not residing in either Switzerland or Germany from exploiting benefits outlined in the DTA. Furthermore, it incorporates minimum standards pertaining to mutual agreement procedures, ensuring a fair and transparent resolution process.
The conclusion of the protocol of amendment has garnered positive responses from the cantons and various business sectors. However, before it can be implemented, it necessitates approval from the legislatures of both countries.
