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    UAE Switzerland tax treaty

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    16 views27 pages

    UAE Switzerland Tax Treaty

    Uploaded by

    Vivek Srinivasan

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 27
    CONVENTION BETWEEN “THE SWISS CONFEDERATION AND ‘THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME. ‘THE SWISS FEDERAL COUNCIL AND ‘THE GOVERNMENT OP THE UNITED ARAB EMIRATES. DESIRING to conclude « Convention for the avoidance of double taxation wih respect to ‘axes on income HAVE AGREED as follows: Parsons covered ‘This Convention shall apply to persons who are residents of one or bath ofthe Contracting States, Awicle2 “Taxes covered 1, This Convention shall aply to taxes on income imposed on behalf of Contracting State cof its political sbdivsions or local authorities, iespctve ofthe manner in which they sre levied. 2 There shall be regarded as taxes on income al tces imposed on total income or on clements of income, including taxes on guns ftom the slenation of movable or immovable Property, txes on the ftal amounts of wages or salaries paid by eterpriss, a well as taxee ‘oncepital apprecition. 3. The existing txes to which the Convention shall apply are in patcula 8) inSwitzeland the federsl, citonal and communal taxes on income (tla income, cared income, ‘income fom capital, industrial and commercial pros, cepital gin, and ther items of income) (Gereinafer refed to a Swit tax" 1) inthe United Arab Emits: (© income tx nd G3) corporation ax (hereinafter refered to a8 UAE. tx), 4, The Convestion shall apply also to any identical or substantily similar taxes which are imposed after the date of signature of the Convetion in addition to or in place of, the existing ‘tuxes. The competent authorities of the Contracting Statos shall notify esch other of any substantial changes which have been made in thei respective taxation ams. 5. The Convention shall not apply to taxes withheld at the source on prizes na lotey, ‘Ailes ‘General definitions 1. Forthe puposs ofthis Convention, unless the content otherwise requires: ©) © thetern Switzerland means the Swiss Confederation; (@)theteem United Arab Emirstee mesns the United Arab Emirates and when wed in 8 peogrphical sense, means the area in whch the teitory is under ts sovereignty as well asthe territorial ses, iepace and submarine areas over which the United ‘Ani Enirates exercises, in conformity with intematinal law aod the law of United ‘Arb Emirates sovereign rights, ‘the term ,peronincudes an individual, legal ent, a company and any ther body of| persons; ©) the tem ,corpany* means any body corporate or any entity whichis treated ae body corporat fortax purposes; the teams ,cuerprise of « Contracting State" and enterprise of the other Contracting ‘State mean respectively an enterprise cared on bya resident of ¢ Contacting State nd an etormise cried on by a eidetof the other Contracting Sse: ©) the tem ,intemstional traffic" means any transport by a ship or sizer operated by an ‘enterprise tht hs its place of effective management in Contracting State excopt when the ship or eats coeratedsoeiv between paces in the other Contacting State: 1) the tem, competent auborty* means © in the case of Switrerand, the Director ofthe Federal Tax Administration or bis authorbed representative; (im the case ofthe Unite Arab Bniats, the Minister of Finance or his authorised representative; the term ynatona* means: (© anyindvidut possaning the nationality ofa Conteting State; (any leg person, partnership or association diving its talus as sch fom the laws in fore in a Contracting State. 2. Asregards th application of the Convention a anytime by «Contracting State, any tem ‘ot defined theci hall unless the context otherwise requis, have the meaning tha tas at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meacing under the applicable tx laws ofthat State prevailing over a meaning ‘vento the tem under other laws of hat State, Ailes Resident 1, Forthe purposes of this Convention, the tem ,sesiden of a Contracting State means 8) inthe case of Switzlan, any person who, under Swiss aw, is subject to unlimited tax ability in Swetzeland, 1) in thecase ofthe United Arab Emirates, an div who bas his domicile inthe United ‘Ars Emirates, provided tis individual has substatil presence therein, and a company ‘or legal entity which s incorporated inthe United Arab Emirates or hit place of effective management therein, 2. Forthe purposes of paragraph | above the term resident” shal include: 8) a Contracting State isl loa! governments and any politcal suivision or local authority threo, +) sny govemmatal institutions created under public law suchas the Central Bank, fonds, ‘corporations, authors, foundations, agecis or any oter smile enties. 3. Where by reson ofthe provisions of paragraph 1 an individual is a resident of both (Contracting tates, then his stats shall be determined as follows: 8) he shall be deemed to be a resident only ofthe Stt in which he has a pemanent home ‘silble to im; ihe has a permanent home available to hi in both Stats, he shall he Anema resident only ofthe State with which hi prroal and econo lations are closer ceteof vt intrest); ') ifthe State in which he has his cent of vil interests cannot be determined o if be has ‘ota permanet ome availble to him in eer State, be shall be deemed tobe aresident cnly ofthe Stein which he hat an habitual abode; ©) ie has an hibits abode in both States o in nether of them, he shall be dered to be @ ‘siden only ofthe Stat of which heise national; 4) ithe is « national of both States or of neither of them, the competet authorities ofthe (Contacting Sates shal sete the question by muta sgrement 4. Where by reason ofthe provisions of paragraph 1 person other than an individu isa ‘siden of both Canractng tates, then it shall be doomed tobe a retident only ofthe State ia “hich its place of fective management is stated. Aisles Permanent establishment 1. Fee the purposes ofthis Convention, the tem ,permanent establishment" means @Gxed place of busines tough which the business ofan eterpite is whelly partly cated on 2, The tem ,penmanent establishment incudes especialy: 2) aan of mangement; ») abraneh; ©) snofoe; @) afactory ©) a workshop, and 1 amine an of or gas well a quarry or any other lace of extraction of natural resources 3. A building site or sonstrustion or insllation project conaintes « pamanent establishment onl iit ats more shan twelve months 4, Notwithtandng the preceding. provisions of this Anicle, the tem ,pemaneat ‘stablishment™ shal be dened not to ince: 4) the use of fcitis solely for the purpose of storage, dipiy or delivery of goods or merchandise belonging to the enterprise; ‘by the maimenarce ofa stock of goods or merchandise belonging to the enterprise solely for ‘he purpose o! rage, diplay or delivery, ©) the msintenance ofa stock of goods or merchandise belonging to the enterprize solely for the purpose of processing by another eaterprise, 8) themaintenane of fte place of business solely fo the purpose of purchasing goods ot ‘merchandise cr of collecting infomation, fo he enterpit; ©) the maintenance ofa fixed place of business solely forthe pupose of advertising, forthe supply of infomation, for scientific research or similar scivties which have a Preparatory orauxilary character forthe enterpse, {sn insalationor assembly project cried on by an enterprise ofa Contracting Satin the other Contracing State in connection with the delivery of machinery or equipment produced by tat entrpese; 2) the maintenuce of a fixed place of busines solely fr any combination of atvites ‘mentioned in subpergrephs a) tf), provided thatthe veal vty uf Uc ne ple of ‘business resulting from this combination i ofa preparatory or auxiliary character, 5. Notwithstanding the provisions of paragraphs 1 and 2, where « pein - other tan an agent of an inépendent status to whom paragraph 6 applies - i acting on behalf of an cxterpise and has, and habitually exercises, in a Contacting State sn authority to conclude contracts in the re ofthe enterpris, tat enterprize shall be deemed to have a pemanent establishment in tat State in respect of any actives which that person undertakes for the centerpic, nes hn acts of auch perton are limited to thooe mentioned i paepraph + hich, if exercied through «fixed place of busines, would not make this fxed place of| ‘osines a permarent establishment under the provisions of tat paegraph. 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely becase it cares on busines inthe State though a broker, general commission ‘agent or ny other agent ofan independect statu, provide that such persons are acting inthe ordinary couse oftheir business, 7. The fact thal a company which is a resident of a Contracting State contois or is controlled by a company which is a resideat of the ther Contacting Sat, or which carrie on busines in that ober State (whether trough a permanent establishment or otherwise) ball not oitslf consti citer company a permanent establishment ofthe ober Aisle Income from immovable property 1, Income devel by resident of Contacting Sat rom immovable property (acluding ‘income ftom agricture or fresty) situated inthe other Contracting Sate may be taxed in that other State, 2, The tem ,imnovable property" shall have the meaning which thas under the lw ofthe Contacting Sate in which the property in question is situated. The term shall in eny case ‘include property accesory to immovable propery, livestock and equipment sed in ‘agrcuture and forestry, rights to which the provisions of general law respecing landed operty aly, vstict of immovable property sad rights to vavable ux aed payne consideration forthe working of, or the right to work, mineral deposits, sources and ther ‘natural resoures ships andrea shall not be regarded as immovable property. 3. The provisions of paragreph 1 shall aply to income derived from the direst use, leting, ‘or use in any othe form of immovable propery. 4. The provisions of paragraphs 1 and 3 stall also apply to the income from immovable roperty ofan enerpeseand to income fom immovable propet wed fo he performance of independent personal services, Asie? Business posits 1. The profits cf an eaterprise of 2 Contacting State shall be taxable only in that State vunles the enterprise cares on business inthe other Contacting State though a permanent ‘tablishment sited therein. IF the enterprise carries on business at aoressid, the profit of ‘he enterprise maybe te inthe other Stat bot only so much of them as is atibutable to ‘hat permanent eabishment. 2 Subject to the provisions of paragraph 3, where an enterpeise of « Contacting State cues cn busines in the other Contacting State through a permanent exablisment situated ‘herein, there shall in each Contracting tate be tibet that paranentetablishment the Profits which it might be expected to make fit were a distinct and sepamte caterprise engaged ‘nthe same or sinilaracivitis under the same or similar conditions and dealing wholly independently withthe enterprise of which itis a permanent esteblishreat. 3, In deteminiog the profits of a permanent establishment, tere shall be allowed as odvetions expenses which are incured for the purposes of the permanent establishment, incloding executive and general administrative expenes so incamed, whether in the State in ‘hich the permanent establishments situated or elsewhere. 4. Insofir as it as been customary in « Contacting State to dstemine the profits to be tributed toa pemnanent establishment onthe basis of an apportionment ofthe total profits of (he enterprise to ts various parts, nothing in paragraph 2 shall precode tht Contracting State fom determining the preite to be tanod by auch en epportionneit es may be easiest, he ‘method of apportonment adopted shall, however, be such thit the result shall be ia ‘secordance withthe principles contained in this Article ‘5. No profits call be attibuled to permanent establishment by reason of the mere _parchaseby tht pecnanent establishment of goods or merchandise fr the enterprise 6. Forthe purposes ofthe preceding paragraphs, the profits tobe atbuted othe permanent ‘stublshment sll be detemnined by the same method year by year unless thee is good and suficient reason othe contrary. 7. Where profits include items of income which ae dealt with seperately in other Articles of this Convention inthe provisions af hnen Articles hall ant he ffitnt hy the poise of tis Artle Ale ‘Shipping ands transport 1. Profits fom the operation of ships or strat in international trafic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2. Ifthe place of effective management of shipping enterprise i aboard a sip, hen itshall, ‘be deemed tobe situated in the Contracting State in which the home harbour ofthe sip is situated rif ther is no such home harbour, nthe Contracting Ste of whic the operator of the ship aa resident 3. The provision of paragraph | shall also sppy to profits from the pastcpation in pool Joint busines ora international operating agency. Associated enterprises 1 Where 2) an entervie of Contacting Ste patie dies or indirectly in the menagerie, control or capil ofan enterprize of the other Contracting Stats ot 2) the same perions participate directly or ndirety inthe management, contro or capital of ‘an enterprise of Contracting State and an enterprise ofthe other Contracting State, and in ether cave conditions are made or imposed between the two enterprises in thet ‘commercial or fhancial relations which differ ffom those which would be made between independent entriss, then any profits which woul, but fr those conditions, have accrued 10 one ofthe entries, hut, hy renton af thoes conitinne, have nt en arcmin, may he included inthe profits ofthat eaterpise and taxol accordingly 2. Where profs on which an enters of « Contracting Stato has been charged to tax in that State are aio included in the profits of an enterprise ofthe other Contracting State aad ‘twxed cordingly, and the pros so included are profits which would have acrued to that ‘xterprise ofthe other State, ifthe conditions made between the entprses had been those ‘hich would have boen made between independent enterprises, the te competent authorities ‘of the Contracting States may consult together with 2 view to reach an agreement on the adjustments of prefs in bh Contracting States, 3. A Contracting State shall not ctange the profits of an enterprise inthe cicumstances refered to in paragraph 1 afer the expiry ofthe time limits provided ins national laws and, in any cas, afer ive years fom the end ofthe year in which the profits which would be subject to such change would have acrued to an enterprise ofthat Stat. This paragraph shal ‘not apply in the eae of fr or willful defal. Adie 10 Dividends 1. Dividends pai by «company which is resident of a Contracting State to a resident of| the other Contracting tate may be taxed in that other State, 2. However, such dividends may also be taxed in the Contracting State of wihich the company paying he dividends is a resdent and acocting to the Las of that State but if the heneficil aumer af tho dividends ie a rerdent of th other Conrsting State, the tax co ‘charged shall not exoed: 4) 5 per cant ofthe gross amount ofthe dividends ifthe beneficial owner is company ‘hich holds diecly at least 10 per cent of the capital of the company paying the dividends, 1) 15 per cant othe pros amoust ofthe dividends in ll other cases ‘The competent athortes ofthe Contacting States shall by mutual agreement se the mode ‘of application of these Kimiations This paragraph stall not affect the taxation of the company in respect of the profits out of hich the divdenis are pid 3. Notwittandng the provisions of paragraphs 1 sod 2, dividends paid by a company ‘Which isa reside: of Contacting State shal be table oly in the other Contracting Siateif the beneficial ovner of the dividends is tat other State isl, politcal subdivisions, local ‘governments, or the Cental Bank threo, pension fads, investment autores ot any other {institutions created by the Goverment of, politcal subdivisions of, o local governments of that other State which i recognized as on integral part of that government as shall be agreed ‘by mutual agreement of the competent authorities ofthe Contracting States, 4, The term dividends" as sed in this Article moans income from shares, ,joussance™ stares or ,jovissance" right, mining sace, founder! shares or other ight, not being debt- claims, participating in profits, as well as income from ether corporat rights which is subjected tothe sume taxation treatment as income fom shares by the laws of the State of ‘hich the company making the distribution fa resident. ‘5. The provisions of paragraphs 1, 2 and 3 shall not apply ifthe beneficial owner of the dividends, being a esident of a Contracting State, cates on business in he other Contacting State of which te company paying the dividends ie a resident, through = permanent ‘xtublishment sted therein, or performs in tet other State independent petonal services ‘fom a fixed base tute therein, and the holding in respect of which the dividends are pid is effectively consctd with such permanent establishment or fixed base. Ia such case the provisions of Artie 7 or Artie 1, as the case may be, shall apply 6. Where @ comany whichis a resident of « Coatractine State derives profits o income fiom the other Contracting Stat, that other Site may not impose any ta on the dividends id by the company, excep insofar as such dividends are pid to a resident of that other State or insofar asthe holding in respect of which the dividends are pid is effectively connected With a permanent establishment ora fixed base itusted in tat other State, nor subject the " company's undistributed profits to a tax on the companys undistributed profits, even ifthe

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