The Swiss government has reversed its 2021 decision that restricted double taxation relief for Swiss companies receiving dividends from India, restoring the full 10% relief agreed under the India-Switzerland Double Taxation Avoidance Agreement (DTAA).A unilateral statement issued by Switzerland on August 13, 2021, had limited the relief to 5%, despite Indian tax authorities levying a 10% tax on dividends as per the DTAA. This led to double taxation, as Swiss companies could claim relief only up to 5% in Switzerland while being taxed 10% in India.
On December 11, 2024, Switzerland issued a new statement suspending the application of the Most Favoured Nation (MFN) clause, effectively restoring full relief. Under the DTAA, the MFN clause allowed treaty nations to avail of reduced tax rates on income such as dividends, royalties, or technical fees.
With this reversal, Swiss companies can now claim credit for the entire 10% tax paid in India, eliminating double taxation. The move is expected to enhance investor confidence and encourage greater Swiss investments in India.Also Read: US slams high India duties on farm goods before April 2 tariffs
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