In order to avoid double taxation of companies, Switzerland has signed double taxation treaties with most industrialized countries, including the United States and the countries of the European Union. Switzerland applies the Organisation for Economic Co-operation and Development (OECD) standard for its double taxation treaties. Switzerland has concluded double taxation treaties with more than 80 other countries, more than 30 of which are based on the OECD model. As a general rule, contracts have the effect that non-residents of countries under contract benefit from a partial or total refund of the taxes withheld by the Swiss paying agency. Although the total amount of transfer tax is deducted at source, the difference can be reimbursed by the non-resident to the Swiss tax authorities. If there is no double taxation agreement, withholding taxes deducted in the foreign jurisdiction on transfers to a Swiss company create a tax credit in Switzerland. No withholding tax is levied on royalties paid to foreign beneficiaries. Regardless of a double taxation agreement, profits transferred abroad by the Swiss establishment of a foreign company are not subject to withholding tax. For all other income and capital, Switzerland applies the “exemption from progression” method to Contracting States in order to avoid double taxation. Therefore, Switzerland will not grant a credit for foreign taxes. The only exception applies to the contract rate for interest at source, royalties and foreign dividends. Switzerland has a network of social security agreements which currently have more than 30 lawyers. Switzerland also has a bilateral agreement with the European Union that covers all 27 EU countries and more or less adapts the rules already in force within the European Union.
A similar agreement exists with the EFTA countries. Whether or not a social security contract is applicable often depends on the nationality of the individual. Where appropriate, affected workers may remain (for a limited period of time) in the social security scheme of the country of origin and are exempted from submitting to the scheme of the host country. In order for the amendments introduced by the BEPS Convention to take effect, Switzerland must notify the BEPS depositary of an additional notification of the completion of the necessary procedures. The first such case concerned Luxembourg. In a Memorandum of Understanding of 12 On 27 May 2020, the competent authorities of Switzerland and Luxembourg adopted the exact text of the amendments provided for in the BEPS Agreement (cf. AS 2641 and AS 2020 2715). The procedure is thus terminated and Switzerland has made the above-mentioned notification to the depositary of the BEPS Convention. These changes are reflected in the double taxation agreement between Switzerland and Luxembourg. Switzerland intends to adapt the DTAS that are not modified by the BEPS Agreement to the BEPS minimum standards through bilateral amendments to the DTAs. . .