The Swiss government today announced that a protocol to its 2002 tax treaty with Latvia entered into force on September 3. The protocol will take effect January 1, 2019, the government said.
The new Switzerland-Lativia tax treaty protocol adds a principal purpose test to the treaty to prevent tax treaty abuse that conforms with the final agreements under the OECD/G20 base erosion and profit shifting (BEPS) project. It also adds new arbitration provisions.
The government said that under the new Switzerland-Lativia tax treaty protocol, the residual tax of 5% on dividends paid to companies that have stakes of at least 10% is abolished; the 10% residual tax on royalties is reduced to 5%; and royalties paid by companies to other companies are now taxed only in the beneficial owner’s state of domicile.
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