The avoidance of double taxation
Switzerland and China have signed a double taxation treaty
for the avoidance of double taxation and the prevention of fiscal evasion
. The new treaty signed in 2013 replaces the old one from 1990. The agreement covers the taxes on income and those on capital and it is applicable for companies and for individuals.
from both countries benefit from better tax rates
, especially the withholding taxes on dividends, royalties and interest. If you are an investor from China who wants to open a company in Switzerland
the provisions of this treaty will directly influence the manner in which you can do business in the European country.
The taxes covered by the Switzerland – China DTA
The double taxation agreement (DTA) covers taxes on income tax capital levied by the two countries and any identical or similar taxes imposed after the signature date of the agreement. In case of Switzerland, the taxes covered by the agreement are federal, cantonal and communal taxes:
- on income: total income, income from capital, commercial profits, capital gains and others;
- on capital: movable and immovable property, business assets and other items of capital.
In case of China the double taxation agreement covers the following types of taxes:
- the personal income tax;
- the corporate income tax.
If you want to open a company in Switzerland
you should know more about the taxation system
in the country. Our tax consultants in Zurich
can give you detailed information about the taxes that apply at a cantonal level.
Preferential tax rates under the China – Switzerland DTA
The double taxation agreement between the two countries offers a more beneficial withholding tax rate on dividends, royalties and interest, under certain conditions. According to the DTA, dividends have a withholding tax rate of 5% if the company receiving them owns at least 25% of the capital of the company making the dividend payment.
The withholding tax on interest is 10% and certain exemptions apply for government or government-related companies. The withholding tax rate for royalties is 9% under the Switzerland – China double tax treaty.
The agreement also includes certain provisions for information exchange
. Companies in Switzerland
that perform international transport services, like shipping companies and airlines, can benefit from additional exemptions under the treaty.