Slovakia: Amended Double Taxation Treaty with Switzerland comes into force
Reference
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On 8 August 2012, the amendments to the Double Taxation Treaty (DTT) between Slovakia and Switzerland came into force, to become effective as of 1 January 2013.
Under the amended treaty, the following reduced withholding tax rates are applicable:
| Rate under amended DTT | Rate under former DTT | |
| Dividends, if the investor is not a pension fund: | 15% | 15% |
| Dividends, if the investor is a pension fund: | 0% | 15% |
| Interest, if the investor is not a pension fund: | 5% | 10% |
| Interest, if the investor is a pension fund: | 0% | 10% |
The standard withholding tax rate on Swiss interest and dividends is 35%. As Switzerland is a reclaim-only investment country, the application of a reduced tax rate under the DTT can only be achieved by way of a tax reclaim.
The standard withholding tax rate on Slovak dividends is 0%. Therefore, the tax rate stated in the DTT is not relevant. Relief at source and tax reclaims of interest from Slovak government bonds for non-residents is not covered by the amended DTT but by local Slovak law. Therefore, the amended DTT does not affect these procedures.
Entry into force
The provisions of the amended DTT between Slovakia and Switzerland are applicable for interest and dividends payable as of 1 January 2013.
Impact on investors
Eligible investors resident in Slovakia may benefit from lower tax rates when receiving interest and dividends from Swiss securities.
Eligible investors resident in Switzerland may benefit from lower tax rates when receiving interest and dividends from Slovak securities.
[Source: Swiss Federal Tax Administration (EStV)]