Italy-Switzerland Double Taxation Treaty

Italy and Switzerland have signed their first double taxation treaty in 1979. The convention was reviewed at the beginning of 2015, when new provisions were added. Among these, the Italian and the Swiss Finance Ministers agreed upon new provisions on the exchange of tax information, in order to remove Switzerland from Italy’s blacklist of tax havens. The agreement is considered to improve significantly trade relations between Italy and Switzerland.

What does new Italy-Switzerland double tax treaty contain?

The new double taxation agreement between Italy and Switzerland was amended with the following clauses:

• - the automatic exchange of information protocol according to the Organization for Economic Co-operation and Development standard,
• - the introduction of the new voluntary disclosure program through which Italian taxpayers may declare their bank accounts and other assets held in Switzerland,
• - reduced tax rates for Swiss and Italian employees commuting,
• - improving cross-border cooperation and financial market access.

At a later stage, Italy and Switzerland have planned to agree upon the reduction of tax rates on dividends and interest payments. A new arbitration clause will also be included in the double taxation treaty.

Our Italian lawyers will provide you with more information about the new amendments brought to the double taxation treaty with Switzerland.

Taxation under the current Italy-Switzerland double tax treaty

The current double tax treaty between Italy and Switzerland covers the following taxes:

• - the individual income tax, the corporate tax and the local income tax in Italy,
• - the income and the capital taxes in Switzerland.

Swiss and Italian companies will be taxed only in their resident countries, according to the Italy-Switzerland double tax agreement. Dividends will be taxed in the country where they are received and according to that country’s legislation at a 15% tax rate on the gross amount of the dividends.

Interests will be taxed at a maximum rate of 12.5% on the gross amount of the interest. Royalties will be taxed at a maximum rate of 5% on the gross amount.

For complete information about the applicable tax rates under the tax agreement with Switzerland, please contact our law firm in Italy.