The Ministry of Finance of the Russian Federation has once again spoken about the possibility of amending the Agreement on Elimination of Double Taxation with Switzerland.
A relevant notice with the proposal to amend the agreement was sent to Switzerland in early September this year – which was recently announced by Russian Deputy Finance Minister Alexey Sazanov.
The content of the notice has not been made public, but given the previous amendments to the DTAs with Cyprus, Malta and Luxembourg, either the cancellation of existing tax benefits on dividends and interest or Russia's withdrawal from the agreement (as in the case of the Netherlands) can be expected.
If Russia and Switzerland come to a compromise this year, the existing benefits will become invalid from 2022. If no compromise can be found, the agreement can be terminated in 2023 at the earliest.
The Russian side expects that negotiations could start as early as October.
The changes to the DTA with Switzerland may affect a large number of companies. We therefore recommend closely monitoring further developments as well as, if necessary, considering the use of the remaining reduced rates – in particular for dividends - and effecting corresponding payments as well as considering possible options for restructuring of business.