The protocol to the 1980 income tax treaty between New Zealand and Switzerland entered into force on 10 December 2020. The protocol, signed 8 August 2019, is the first to amend the treaty and includes the following changes:

• The preamble is replaced in line with BEPS standards;
• A new paragraph 7 is added to Article 7 (Business Profits), which provides that a Contracting State shall make no adjustment to the profits that are attributable to a permanent establishment of an enterprise of one of the Contracting States after 5 years from the end of the taxable year in which the profits would have been attributable to the permanent establishment, except in the case of fraud, gross negligence, or willful default;
• A new paragraph 2 is added to Article 9 (Associated Enterprises), which includes provisions regarding appropriate (corresponding) adjustments by a Contracting State where an adjustment has been made in the other State;
• A new paragraph 3 is added to Article 9 (Associated Enterprises), which provides that a Contracting State shall not include in the profits of an enterprise, and tax accordingly, profits that would have accrued to the enterprise but due to non-arm's length conditions have not so accrued, after 5 years from the end of the taxable year in which the profits would have accrued to the enterprise, except in the case of fraud, gross negligence, or willful default;
• A new paragraph 6 is added to Article 22 (Elimination of double taxation), which provides that the Swiss exemption from tax on income provided for in paragraph 3 of Article 22 will not apply where New Zealand applies the provisions of the treaty to exempt such income from tax or applies the provisions of paragraph 2 of Articles 10 (Dividends), 11 (Interest), or 12 (Royalties) to such income (treaty withholding rates of 15%, 10%, and 10%, respectively);
• Paragraph 1 of Article 23 (Mutual Agreement Procedure) is replaced with a new paragraph, which provides that where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States, present the case to the competent authority of either Contracting State;
• New paragraphs 5 and 6 are added to Article 23 (Mutual Agreement Procedure), which provide arbitration provisions, including that if the competent authorities are unable to reach an agreement to resolve a case within a period of two years from the date all required information has been provided to both competent authorities, then the person that presented the case may request that any unresolved issues be submitted to arbitration;
• A new Article 25A (Entitlement to Benefits) is added, which includes that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty; and
• A new paragraph 4 is added to the final protocol of the treaty to specify certain types of cases that may not be submitted to arbitration, including where the case involves the application of New Zealand's general anti-avoidance rule or permanent establishment anti-avoidance rule and cases involving Swiss tax avoidance, as well as certain cases concerning issues where Chapter VI D.4 of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (hard-to-value intangibles) have been applied by a Contracting State in an adjustment according to Article 9 (Associated Enterprises).

The protocol applies in respect of withholding taxes from 1 January 2021. For other taxes, the protocol applies in New Zealand from 1 April 2021 and in Switzerland from 1 January 2021. However, the amendments to Article 7 (Business Profits) and Article 9 (Associated Enterprises) and the new arbitration provisions apply from the date of the protocol's entry into force (10 December 2020), without regard to the taxable period to which the matter relates.