The German Ministry of Finance has published a consultation agreement signed with Switzerland regarding relief from Germany withholding tax under the 1971 tax treaty between the two countries. The agreement was signed considering the introduction of mandatory electronic application procedures for the relief of German taxes withheld by way of deduction according to double taxation agreements. The main points of the agreement are as follows:

Procedure for Relieving Taxes Withheld by way of Deduction

If there is a right under the tax treaty for relief from tax withheld by way of deduction, the following procedures are provided in Germany:

• For dividends within the meaning of Article 10 (Dividends) of the treaty, relief is provided in principle by reimbursement. Paragraph 1(a) of the final protocol to the treaty provides that each Contracting State will establish procedures whereby dividends that are not subject to tax under Article 10(3) of the treaty may be paid without tax being deducted (exemption for 10% holding for at least 12 months). Currently, German law only provides for relief at source for corporations that are subject to income tax;
• For interest within the meaning of Article 11 (Interest) of the treaty, relief is provided by reimbursement;
• For royalties within the meaning of Article 12 (Royalties) of the treaty, relief is provided by reimbursement, although tax can also be waived upon request.

Application Forms

The electronic forms applicable under German law are to be used to apply for the relief provided for in Articles 10 (Dividends), 11 (Interest), and 12 (Royalties) of the treaty. With the entry into force of this consultation agreement, the paper forms R-D 1, R-D 2, R-D 3, R-D 4, and R-D 5 are no longer to be used.

Confirmation of Residence

Applications for relief from taxes withheld by way of deduction must be accompanied by an official certificate of residence of the applicant in Switzerland within the meaning of Article 4 (Resident) of the treaty. The confirmation of residency within the meaning of Article 4 (Resident) of the treaty must be issued and certified by the local cantonal or communal authority responsible for taxing the income and assets of the applicant.

The competent authority of Switzerland will endeavor, in consultation with the other tax authorities of Switzerland, to develop a uniform official certificate for the confirmation of residence within the meaning of Article 4 (Resident) of the treaty, which the issuing authorities will normally use. The competent authority of Switzerland will inform the German competent authority of the outcome of these efforts

Submission of Applications

The applications for the relief provided for in Articles 10 (Dividends), 11 (Interest), and 12 (Royalties) of the treaty must be transmitted together with the necessary supporting documents using the officially prescribed data set via the officially designated interface in accordance with German law.

Effective Date and Applicability

The consultation agreement is effective 1 December 2023.