Double taxation treaty between Ireland and Switzerland

Double taxation often crops up when doing business internationally and can be such a headache to the modern business world. Swiss citizens contemplating of doing business in Ireland will be relieved to know of the 1965 standing treaty that prevents double taxation in the event where a legal entity carries out taxable activities in one of the two states.
The Switzerland – Ireland Double taxation agreement benefits Irish businesses and natural persons who partake in taxable activities in Switzerland. Legal framework also allows targets income taxes in the following brackets:
 
Irish Tax Regime
In Ireland, Swiss business people will be imposed with taxes such as:

  • The income tax

Income tax is charged on the gross income earned by an entity from its business activities within Ireland
 

  • The corporation tax

Businesses resident in Ireland will be taxed on trading profits they receive from their activities. 
 

  • The capital gains tax

Capital gains tax is applicable on the revenue gained from asset disposal. Certain exemptions are applicable in the case of asset transfer between spouses. There is also an annual individual tax exemption awarded, this particular exemption is non-transferable between spouses.
 
Swiss Tax Regime
In Switzerland, the taxation system is comprised of three main levels:
 

  • Federal tax

Federal tax of 8.5% is deductible for tax purposes and reduces the applicable tax base, resulting in a direct federal CIT rate on profit before tax of approximately 7.83%
 

  • Cantonal tax

Each canton has a different applicable tax rate with cantons such as Geneva and Basel having higher tax rates. Special taxes and other benefits also apply as per canton.
 

  • Communal tax

Under the treaty Irish based businesses with operations in Switzerland are liable to taxation on these three levels. Tax on income and investments on foreign businesses is subject to double taxation treaties.
 
Tax Regulatory effects of the treaty
Regulatory measures of the treaty therefore require businesses to pay for:
 

  • Taxes on income
  • Taxes on capital

 
Taxes on capital applies to income received from immovable and movable property, paid up capital and parts of capital.
Legal advice on how the taxation affects Irish enterprise is readily available. According to the guidelines provided by the new agreement. 
 
Residency under the Swiss-Irish DTA
The treaty rules that the taxation applied will be that of the business or person’s place of management or residency. This stipulates that the tax laws applicable for Irish resident businesses will be that of Ireland. Any changes in either state’s tax laws are reconciled with the terms of treaty.

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