SWITZERLAND Trends and Developments Contributed by: René Matteotti, Manuel Ulrich, Gregor Steiner and Natalja Ezzaini, Tax Partner AG
Update on Measures to Avoid International Double Taxation in Switzerland MNE groups may be subject to double taxation (often as a result of a tax audit – eg, adjustment of intercom - pany transfer prices). In such cases, Switzerland may allow different approaches to mitigate/eliminate the double taxation – ie, bilateral or multilateral MAPs, as well as unilateral Swiss specific measures (unilateral tax relief). A unilateral tax relief generally constitutes a one-sided profitability adjustment of the taxpayer ((group) entity) located in Switzerland subsequent to the previous adjustment abroad to mitigate/eliminate double taxation resulting from this first adjustment. Such unilateral tax relief may be a faster and more pragmatic approach than a bilateral/multilateral MAP. Swiss specifics As Switzerland is organised as a federation that allo - cates a high degree of independence in legislation to the cantonal level, the availability of the legal instru - ment of a unilateral tax relief depends in general on the respective legislation of the specific canton. There - fore, when considering such measure, it is crucial to assess the availability and, if available, the specific regulations for applying the measure in the respective canton. In some cantons rather informal approaches may apply, while in others a formal application for an For instance, the cantonal tax authority of Zurich recently published guidance providing practical direc - tion on the procedures to eliminate intercantonal or international double taxation (ZStB No. 155.1, issued 5 March 2026). This guidance states that international double taxation does not, in itself, constitute grounds for revising a tax assessment that has already become final. A request for a revision based on the argument of international double taxation is, therefore, gener - ally not considered by the cantonal tax authority. This applies to both ordinary taxes and withholding taxes. In cases of international double taxation, a request for a MAP may be made to the State Secretariat for Inter - national Financial Affairs (SIF). It is then the responsi - bility of the SIF, in clear cases, to liaise with the can - tonal tax authority to negotiate a unilateral solution (domestic agreement, Article 16 StADG) if this can appeal may be necessary. Example canton: Zurich
• Mutual agreement procedures (MAPs)/arbitration: the MAP clause of the DTA (Article 26) is amended with regards to the arbitration clause, aiming to streamline the respective processes. • Alignments with respect to the latest OECD Model Convention for Double Taxation Agreements: further amendments align the text with the OECD Model Convention. These changes include provi - sions on the definition and taxation of permanent establishments, especially regarding activities of dependent agents (see the revised Articles 5 (4) and (7)). USA Given the close economic ties between the two countries, the DTA with the USA is also of paramount importance to Switzerland. The last partial revision took place in 2009, but it took around ten years for the DTA to be ratified and brought into force. A new partial revision is now due. The updated DTA between the USA and Switzerland is expected to be signed during 2026. Based on infor - mation currently available, the main expected amend - ments are as follows. • Expected reduction of WHT rate on group divi - dends from 5% to 0%. Such measure would move Switzerland closer to treaty positions already seen in the UK, the Netherlands and Luxembourg vis-à- vis the United States. • Expected tightening of the Limitation on Ben - efits (LOB) clause more in line with the US Model Income Tax Convention (2016). This measure would not introduce a new concept, but would rather make the existing LOB provision more strin - gent, thereby further restricting access to treaty benefits. In particular, stricter qualification criteria and enhanced anti-abuse safeguards are expected to be imposed, effectively narrowing the scope for claiming benefits compared to the current treaty framework. The update with regards to the expected DTA between the USA and Switzerland must be considered with caution as the revised DTA has not yet been signed and, as such, amendments during ongoing negotia - tions may apply.
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