SWITZERLAND Law and Practice Contributed by: René Matteotti, Monika Bieri, Daniel Schönenberger and Caterina Colling-Russo, Tax Partner AG
hidden profit distribution if the material and pro - cedural criteria for collection are met. The mutual agreement concluded by the Swiss state competent body – ie, the State Secretariat for International Finance ( Staatssekretariat für internationale Finanzfragen , or SIF) – and the other state(s) may provide for the possibility that the taxpayer makes a repatriation payment of the amount of the confirmed primary adjust - ment by the Swiss cantonal tax authority; this should generally take place within 60 days after the taxpayer’s acceptance of the mutual agree - ment. If the taxpayer performs this repatriation, the secondary adjustment will not be made – ie, the SFTA will not levy withholding tax on the amount of the adjustment confirmed by the mutual agreement. The payment must be docu - mented by the SIF, which forwards the relevant information to the SFTA. However, the existence of such a reference in the mutual agreement does not oblige the taxpayer to make a repatria - tion payment. If no repatriation payment takes place, withholding tax is levied on the amount of the primary adjustment in accordance with the applicable DTA. The taxpayer does not have any right to have such a reference included in the mutual agree - ment – this depends on the circumstances of the individual case. In particular, the levying of withholding tax is not waived in obvious cases of profit shifting. Also, such reference is excluded in case of tax audits performed by the SFTA. Repatriation payments are repatriations of profits that have been adjusted by a tax administration between associated enterprises that are parties to a transaction. They are used to reconcile the commercial balance sheet with the tax balance sheet resulting from the adjustment. These are not mandatory under treaty law or domestic law.
In application of Article 18 paragraph 4 of the Federal Act on the Implementation of Interna - tional Tax Agreements (ITAIA), repatriation pay - ments are not considered to be hidden profit distributions as defined in Article 4 paragraph 1 letter b of the Withholding Tax Act (WTA) and are not subject to withholding tax, provided they are carried out in accordance with the results of a MAP or an internal agreement concluded on the basis of Article 16 of the ITAIA. In contrast, in the absence of a MAP or an internal agreement, withholding tax is levied on the payments made for repatriation purposes.
6. Cross-Border Information Sharing 6.1 Sharing Taxpayer Information Exchange of Information on Request
In 2009, Switzerland committed to the interna - tionally agreed standard regarding the exchange of information on request. By doing so, Switzer - land renewed most of its more than 100 DTAs. Moreover, in 2016, Switzerland ratified the Mul - tilateral Convention on Mutual Administrative Assistance in Tax Matters, extending the net - work of jurisdictions for exchange of informa - tion even further. Switzerland has implemented the legal basis for exchange of information on request with around 140 jurisdictions. In addi - tion, Switzerland has signed ten tax information exchange agreements. Under current law, administrative assistance may only be provided if the requesting state demonstrates in its request that the information requested is foreseeably relevant and confirms that it will treat the requested information con - fidentially. Administrative assistance may be refused if the information is to be used for taxa -
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