Hong Kong – Switzerland Double Tax Treaty
Hong Kong – Switzerland Double Tax TreatyUpdated on Tuesday 17th January 2017
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A double tax treaty (DTA) represents a mutual agreement between two different states which has the objective of eliminating the double taxation of income. Also, another one of its objectives is to improve the tax rights of the jurisdictions which entered the agreement.
The first Hong Kong – Switzerland DTA was signed in 2010, after which the two countries entered another DTA in the following year. Hong Kong has entered DTAs with numerous countries worldwide following the changes in its legislation after the year 2010. Our lawyers in Hong Kong can provide you with detailed information on all the DTAs signed by the Special Administrative Region with other states.
Main aspects of the Hong Kong – Switzerland DTA
The Hong Kong – Switzerland DTA sets the rules for the taxing rights between the two states and the tax rate relief on the various categories of passive income. This way, investors are able to better predict their possible tax responsibilities which derive from cross-border economic undertakings, engage in closer trade and economic links and provide supplementary incentives for Swiss businesses activating in Hong Kong and vice versa.
According to the Hong Kong – Switzerland DTA, airlines originating from Hong Kong which undertake flights to Switzerland are taxed according to the corporation tax rate of Hong Kong, which is smaller than in Switzerland.
Also, income derived from international shipping transport gained by residents of Hong Kong which arise in Switzerland, benefit from a tax exemption under the DTA.
Taxes stipulated in the Hong Kong – Switzerland DTA
If before the DTA, income earned by Swiss residents in Hong Kong were taxed twice, one time by the Hong Kong authorities and one – by the Swiss ones, the Hong Kong – Switzerland DTA enables for that income to be exempt from taxes in Switzerland, since it has already been taxed in Hong Kong. Our law firm in Hong Kong can offer more information on this matter.
Moreover, an applicable tax of 10% instead of 35% is applied on dividends gained by Hong Kong residents originating from Switzerland. Also, the dividends are exempt from taxation for beneficial owners who own minimum 10% of the company paying the dividends.
For more details on the stipulations of the Hong Kong – Switzerland DTA and how it can have an impact on your company if you are a Swiss foreign investor in the Special Administrative Region, please get in touch with our Hong Kong lawyers.