November 11 2021

Federal Council Enacts New Legal Framework on Implementation of International Tax Agreements

Source: IBFD Tax Research Platform News

The Federal Council has enacted the Federal Act on the Implementation of International Tax Agreements (ITAIA) and the associated Ordinance with effect from 1 January 2022 in order to align the existing legal framework with developments in international tax law.

Before, domestic legislation on certain issues regarding the implementation and application of tax treaties was governed by the Federal Act of 22 June 1951 on the Implementation of International Federal Conventions on the Avoidance of Double Taxation and the ordinances based thereon. The ITAIA supplements the existing legal provisions as necessary and introduces new areas of regulation. The revision of the law also stipulates how mutual agreement procedures are to be carried out at domestic level, provided the applicable agreement does not contain any deviating provisions. Moreover, it contains the key points for withholding tax relief based on international agreements, as well as criminal provisions in connection with relief from withholding taxes on investment income.

The entry into force of the ITAIA requires certain existing ordinances to be amended. Further, 2 ordinances and a federal decree will be repealed, as they will be superseded with the entry into force of the ITAIA. The Federal Council enacted the ITAIA in its meeting on 10 November 2021.