Switzerland-Russia Double Tax Treaty

The ‘how-not-to-pay-tax’ industry has grown so much that when governments make new agreements to fight it their anti-avoidance efforts do not always appear to be moving in this direction. Instead they seem to be seeking to advance own countries on this lucrative market.

Russia is one of the most promising sources of clients for the global tax planning and wealth management business. Negotiating double tax treaties is often not so different from negotiating good old trade agreements.

On September 24, Switzerland’s Federal Councillor Eveline Widmer-Schlumpf and Russia's Deputy Prime Minister Alexei Kudrin signed a protocol amending the double taxation agreement between the two countries. The revised DTA slashes taxation of interest from 10% to zero. Thus, Switzerland becomes one of the most attractive destinations to set up a conduit company for business in Russia. Why it is so important to have low taxes on profits repatriated in the form of interests we wrote here.

The agreement contains provisions on the exchange of information ‘in line with the internationally applicable standards’. In practice the arrangement, restrained by numerous buts and ifs, will have limited effect.