IFA bilateral UK/Swiss meeting Swiss treaty anti abuse provisionals CFC May 10 / 11, 2012 Dr. Georg Lutz Attonary at law, Swiss certified tax expert Lecturer at University of St. Gallen Partner at Ernst & Young

Dr. Georg Lutz Page 2 IFA bilateral UK/Swiss meeting Historic overview of Swiss anti-abuse rules 1951Art. VI Abs. 2 DTT-US BRB 62 and circular letter Art. 14 DTT-F 1966Art. 9 Abs. 2 lit. a (i) DTT-NL 1971Art. 23 DTT-D 1976Art. 23 DTT-I 1978Art. 22 DTT-B 1996Art. 22 DTT-US Circular letter New Art. 23 DTT-D 2008Art. 3 DTT-UK, conduit arrangement, subsequently used in a number of new treaties 2010Circular letter 2010

Dr. Georg Lutz Page 3 IFA bilateral UK/Swiss meeting Anti-abuse rules arranged- and maintained rules prohibitive tests ownership test forced dividend distribution base erosion test subject to tax clause exclusion of entities / tax regimes holding period

Dr. Georg Lutz Page 4 IFA bilateral UK/Swiss meeting Anti-abuse rules concept of beneficial ownership bona fide clauses / safe harbour rules activity test stock exchange test holding test derivative benefit test

Dr. Georg Lutz Page 5 IFA bilateral UK/Swiss meeting BRB 62 / CL 62 and CL 99 activity test stock exchange test pure holding test mixed holding test minimum dividend payment Art. 47 Abs 1 lit. b VStG no treaty abuse, treaty protectedtreaty abuse, no treaty protection base erosion test respected Swiss owned and controlled yes no

Dr. Georg Lutz Page 6 IFA bilateral UK/Swiss meeting Art. 22 DTT USA 96 - Limitation on benefits ownership test stock exchange test activity test holding test treaty protection based on judgement limited derivative benefit test no corporation no yes no treaty abuse, treaty protectedtreaty abuse, no treaty protection

Dr. Georg Lutz Page 7 IFA bilateral UK/Swiss meeting Legal basis of anti abuse rules unilateral rulesbilateral rulesmultilateral rules BRB 62Art. 23 DTT-DArt. 15 sec. 1 and 2 Swiss-EU saving directive §50d sec. 3 EStGArt. 23 DTT-I Art. 23 DTT-B Art. 23 DTT-US 96 Art. 3 sec. 1 letter l DTT-UK etc.

Dr. Georg Lutz Page 8 IFA bilateral UK/Swiss meeting Overview of Swiss treaty anti-abuse provisions maintained or arranged rules prohibitive testsbonafine/safe harbour rules treaty override provisions DTT CH-NL (Art. 9 § 2 lit. a (i)) DTT CH-GB (Art. 3 § 1 lit. l) DTT CH-F (Art. 14) DTT CH-Chile (Protocol to Art ) DTT CH-Mexiko (Protocol to Art ) DTT CH-USA (Art. 22) DTT CH-GB (Art. 3 § 1 lit. l) DTT CH-F (Art. 14) DTT CH-Chile (Protocol to Art ) DTT CH-Mexiko (Protocol to Art ) DTT CH-B (Art. 22) BRB 62 / CL 1962 / CL 1999 Swisss EU saving directives (Art. 15 § 1) DTT CH-D (Art. 23 § 1) DTT CH-A (Art. 28 § 7) DTT -US 96 (Art. 22) BRB 62 / CL 1962 / CL 1999 DTT CH-I (Art. 23)

Dr. Georg Lutz Page 9 IFA bilateral UK/Swiss meeting Swiss CFC rules Switzerland has no codified CFC rules similar to United States, United Kingdom, Germany, France etc. Switzerland has no limitation of the dividend received exemption for dividends derived from passive or low taxed subsidiaries Switzerland however does qualify Siwss controlled passive offshore Companies as Swiss tax resident if actual management and control is executed in Switzerland

Dr. Georg Lutz Page 10 IFA bilateral UK/Swiss meeting Thank you for your attention