The US Internal Revenue Service (IRS) has released Announcement 2025-08, which outlines a competent authority arrangement (CAA) established with Switzerland in December 2024.
The Competent Authority Arrangement entered into by the competent authorities of the US and the Swiss Confederation under paragraph 3 of Article 25 (Mutual Agreement Procedure) of the Convention Between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income signed at Washington on 2 October, 1996, as amended by the Protocol, signed on 23 September 2009, regarding certain US and Swiss pension or other retirement arrangements, including individual retirement savings plans, that may be eligible for benefits under paragraph 3 of Article 10 (Dividends).
Article 10(3) states: Notwithstanding paragraph 2, dividends may not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends is a pension or other retirement arrangement which is a resident of the other Contracting State, or an individual retirement savings plan set up in, and owned by a resident of, the other Contracting State, and the competent authorities of the Contracting States agree that the pension or retirement arrangement, or the individual retirement savings plan, in a Contracting State generally corresponds to a pension or other retirement arrangement, or to an individual retirement savings plan, recognised for tax purposes in the other Contracting State. This shall not apply if such pension or retirement arrangement, or such individual retirement savings plan, controls the company paying the dividends.
Qualified US pension or other retirement arrangements
The following arrangements are US pension or other retirement arrangements that should qualify for benefits under Article 10(3) provided that they do not control the Swiss company paying the dividend and that they satisfy all additional applicable requirements set forth in the Treaty, including Article 22 (Limitation on Benefits):
- A trust providing pension or retirement benefits under a Code section 401The Thrift Savings Fund (Code section 7701(j))(a) qualified pension plan (which includes a Code section 401(k) plan) and a profit sharing or stock bonus plan;
- A trust described in Code section 457(g) providing pension or retirement benefits under a Code section 457(b) plan;
- A Code section 403(a) qualified annuity plan and a Code section 403(b) plan;
- A group trust described in IRS Revenue Ruling 81-100 (as amended by IRS Revenue Ruling 2014-24 and IRS Revenue Ruling 2011-1) (U.S. Group Trust), provided that it is operated exclusively or almost exclusively to earn income for the benefit of pension funds that are themselves entitled to benefits under the Treaty as a resident of the United States; and
- The Thrift Savings Fund (Code section 7701(j)).
