Details of the income tax treaty and protocol between Hong Kong and Switzerland, signed on 6 December 2010, have become available. The treaty was concluded in the German, Chinese and English languages, each text having equal authenticity. In the case of divergence, however, the English text prevails. The treaty generally follows the OECD Model Convention.
The maximum rates of withholding tax are:
|-||10% on dividends. However, dividends are exempt if the dividends are received by:
|-||0% on interest; and|
|-||3% on royalties; there are no provisions for managerial or technical service fees.|
Deviations from the OECD Model include that a permanent establishment includes:
|-||A building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities last more than 270 days (Art.5(3)(a)).|
|-||The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, in connection with a site, a project or supervisory activities referred to in Art.5(3)(a), if those services continue within a Contracting Party in connection with such site, project or activities for a period or periods aggregating more than 270 days within any twelve-month period.|
Hong Kong generally applies the credit method to avoid double taxation. Switzerland generally applies the exemption method to avoid double taxation.
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