Avoidance of double taxation in Switzerland and Japan
Switzerland and Japan have signed a double tax treaty
: a convention that allows for the avoidance of double taxation on income
for individuals and companies that are doing business in both jurisdictions. This is advantageous for foreign investors from Japan who want to open a company in Switzerland
The tax exemptions or preferential rates
that apply according to the treaty are also beneficial for branches in Switzerland
and for individuals who are Japan residents but work in the European country.
Our company registration consultants in Switzerland can tell you how this treaty influences the manner in which you are taxed in the country.
New provisions in the Switzerland – Japan treaty
The convention for the avoidance of double taxation signed between Switzerland and Japan covers those taxes on income produced in one of the countries. The revised double taxation agreement was entered into force at the beginning of 2012. Compared to the initial agreement, the one in force today offers better provisions for dividend payments as well as interest and royalties payments.
According to the double taxation agreement
, companies doing business in both countries can qualify for withholding tax reductions
. Companies that hold at least 25% of the voting power in another company that pays dividends to them can benefit from a 0% withholding tax on dividends
. The general withholding tax rate is 10% under the revised treaty. A 0% rate applies to certain financial institutions and pension funds.
Apply for the double tax benefits
Swiss or Japanese companies that want to benefit from these reduced withholding tax rates need to make an application to the relevant tax authorities in one of the Contracting Countries. Swiss companies in Japan will need to fill an application for release from the Japanese income tax. Japanese companies in Switzerland will also have to fill in certain forms and submit a Swiss tax residency certificate.