Switzerland and European Union - tax treatment of intra-group cross-border dividends

The Swiss-EU Agreement on the taxation of savings entered into force on 1 July 2005 and applies to all dividends that fall due after that date. The purpose of the Agreement is to eliminate the withholding tax on intra-group cross-border dividend payments between Switzerland and the EU Member States. The Agreement includes Art. 15, which, among other things, grants Switzerland measures equivalent to those in the EC Parent-Subsidiary Directive. At the time of the author's earlier article on the Agreement (in the February 2005 issue of the Bulletin), questions concerning the method of applying the Agreement remained largely unanswered. Since then, Switzerland has issued various guidelines to facilitate the implementation of the Agreement. This article provides an update on the developments over the last 12 months.