Switzerland and Estonia change the treaty on the double tax avoidance

01.09.2014

Swiss Federal Council and Estonian Government signed the agreement amending the treaty of double taxation avoidance, which was concluded between states on the 11th of June, 2002.

The new agreement changed the rate of income tax on dividends, which will now be 10%. The rate of dividend tax of 0% will be applied if dividends will be paid to the company, that holds 10% of capital of the company, which is paying the dividends, for 1 year.

The income tax on interest was canceled as well as income tax on royalties.

New agreement added into the treaty the provision on the exchange of tax information in accordance with international standards.

Source: http://www.news.admin.ch/NSBSubscriber/message/attachments/36260.pdf

Expert’s opinion

Ratification of the agreement between two countries added up to the work perspectives for businessmen.
Provided the correct building of the corporate structure the tax on the passive income – dividends, interest, royalties, - may be lowered down to zero.
In developed and civilized countries it is understood, that by the increase of taxes and by tightening of the tax regimes only the reverse effect may be achieved and not the revenue to the country’s budget.

Moreover, especially Estonian companies allow to apply tax rate of 0% in the case of non-distribution of profits. Thus, Estonian companies can be considered as an effective instrument for international economic activities.

Irina Lomakina ( Director of Moscow Office, Honest & Bright)