On 14 June 2024, the Swiss Federal Council announced it adopted the dispatch on the protocol of amendment to the double taxation agreement (DTA) with Germany. The protocol adapts the DTA to various changes in the needs of the contracting states and implements the minimum standards from the base erosion and profit shifting (BEPS) project regarding DTAs.
Signed on 21 August, 2023, the protocol marks the sixth amendment to the tax treaty. It incorporates updates consistent with BEPS standards and introduces provisions to clarify the implementations of forthcoming national minimum taxation rules in alignment with the Pillar 2 global minimum tax (GloBE) rules.
Regarding Swiss practice, the protocol of amendment does not provide for any major changes to the allocation of taxing rights between Switzerland and Germany. It contains provisions that improve legal certainty and cooperation between the two contracting states.
These include various clarifications in connection with salaried cross-border employment and new provisions on the mutual agreement procedure. The protocol also adopts the approach of the Organisation for Economic Co-operation and Development (OECD) for the attribution of corporate profits to permanent establishments.
Furthermore, the protocol implements the minimum standards from the BEPS project with regard to DTAs. Among other things, an anti-abuse clause is intended to prevent a person who is resident in neither Switzerland nor Germany from claiming benefits provided for in the DTA. In addition, the protocol adopts the minimum standards regarding mutual agreement procedures.
The cantons and interested business sectors have welcomed the conclusion of the protocol of amendment. It still has to be approved by the legislator in both countries before it can come into force.