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Protocol Introduces Amends to DTT with Switzerland
As of 1 January 2013, the provisions of the Protocol between Romania and Switzerland will become applicable. Taxand Romania summarises the most relevant amendments to the Double Tax Treaty between the two countries introduced by the Protocol.
Definition of resident
The definition of a "resident of a contracting state" is further completed. For example, it is mentioned that a person who is liable to tax in a state only in respect of income from sources or capital situated in that state is not considered a resident of that state for tax purposes.
Dividends paid by a resident of a contracting state are exempt from tax in that state if the beneficial owner of the dividends is a resident of the other contracting state.
Interest paid by a resident of a contracting state are exempt from tax in that state if:
- The company paying the interest is affiliated with the beneficiary company
- The interest is related to a loan provided, guaranteed or insured by the Government of the other state.
Exchange of information
The exchange of information will be made at the request of one of the contracting states, and not on a automatic or spontaneous basis, and only after the requesting state has exhausted all its normal procedures to obtain the information under domestic law. The requesting state is not permitted to request information which cannot be obtained based on internal legislation or through normal administrative practice.
The amendments the Protocol introduces to the Romanian / Swiss double tax treaty are important for multinationals operating in these jurisdictions, as they may have to change current procedures. It is also important to note that a special arbitration clause could be introduced to the DTT which will apply to cases for which the taxation regime failed to observe the provisions.