DTA Hong-Kong - DBA Hongkong - CDI Hong-Kong


DTA Hong-Kong - DBA Hong-Kong - CDI Hong-Kong

Agreement between the Government of the Hong Kong Special Administrative Region of the People’s Republic of China and the Swiss Federal Council for the Avoidance of Double Taxation with respect to Taxes on Income 

Art. 1 Personal scope

This Agreement shall apply to persons who are residents of one or both of the Contracting Parties. 

Art. 2 Taxes covered

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting Party or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

3. The existing taxes to which this Agreement shall apply are in particular:
    (a) in the case of the Hong Kong Special Administrative Region,
        (i) profits tax;
        (ii) salaries tax; and
        (iii) property tax; whether or not charged under personal assessment;
    (b) in the case of Switzerland, the federal, cantonal and communal taxes on income (total income, earned income, income from capital, industrial and commercial profits, capital gains, and other items of            income).

4. This Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes, as well as any other taxes falling within paragraphs 1 and 2 of this Article which a Contracting Party may impose in future. The competent authorities of the Contracting Parties shall notify each other of any significant changes that have been made in their taxation laws.

5. The taxes on income referred to in the preceding paragraphs of this Article are hereinafter referred to as “Hong Kong Special Administrative Region tax” or “Swiss tax”, as the context requires.

6. The Agreement shall not apply to taxes withheld at the source on prizes in a lottery.


Art. 3 General definitions

1. For the purposes of this Agreement, unless the context otherwise requires:
    (a)(i) the term “Hong Kong Special Administrative Region” means any territory where the tax laws of the Hong Kong Special Administrative Region of the People’s Republic of China apply;
        (ii) the term “Switzerland” means the Swiss Confederation;
    (b) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;
    (c) the term “competent authority” means: 
        (i) in the case of the Hong Kong Special Administrative Region, the Commissioner of Inland Revenue or Cap 112CA - Inland Revenue (Double Taxation Relief with respect to Taxes on Income)(Switzerland)                Order 3 his authorised representative;
        (ii) in the case of Switzerland, the Director of the Federal Tax Administration or his authorised representative;
    (d) the term “Contracting Party” or “Party” means the Hong Kong Special Administrative Region or Switzerland, as the context requires;
    (e) the terms “enterprise of a Contracting Party” and “enterprise of the other Contracting Party” mean respectively an enterprise carried on by a resident of a Contracting Party and an enterprise carried on by a     resident of the other Contracting Party;
    (f) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting Party, except when the ship or aircraft is operated solely between places in the other            Contracting Party; 
    (g) the term “national”, in relation to Switzerland, means:
        (i) any individual possessing the nationality or citizenship of Switzerland; and
        (ii) any legal person, partnership or association deriving its status as such from the laws in force in Switzerland;
    (h) the term “person” includes an individual, a company and any other body of persons;
    (i) the term “tax” means Hong Kong Special Administrative Region tax or Swiss tax, as the context requires.

2. As regards the application of this Agreement at any time by a Contracting Party, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Party for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that Party prevailing over a meaning given to the term under other laws of that Party. 

Art. 4 Resident

1. For the purposes of this Agreement, the term “resident of a Contracting Party” means:
    (a) in the case of the Hong Kong Special Administrative Region,
        (i) any individual who ordinarily resides in the Hong Kong Special Administrative Region;
        (ii) any individual who stays in the Hong Kong Special Administrative Region for more than 180 days during a year of assessment or for more than 300 days in two consecutive years of assessment one of which         is the relevant year of assessment;
        (iii) a company incorporated in the Hong Kong Special Administrative Region or, if incorporated outside the Hong Kong Special Administrative Region, being normally managed and controlled in the Hong                Kong Special Administrative Region; 
        (iv) any other person constituted under the laws of the Hong Kong Special Administrative Region or, if constituted outside the Hong Kong Special Administrative Region, being normally managed and                        controlled in the Hong Kong Special Administrative Region; 
    (b) in the case of Switzerland, any person who, under the laws of Switzerland, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This        term, however, does not include any person who is liable to tax in Switzerland in respect only of income from sources in Switzerland;
    (c) in the case of either Contracting Party, the Government and the political subdivisions or local authorities of that Party.

2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting Parties, then his status shall be determined as follows:
    (a) he shall be deemed to be a resident only of the Party in which he has a permanent home available to him; if he has a permanent home available to him in both Parties, he shall be deemed to be a resident        only of the Party with which his personal and economic relations are closer (“centre of vital interests”);
    (b) if the Party in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Party, he shall be deemed to be a resident only of the Party in            which he has an habitual abode;
    (c) if he has an habitual abode in both Parties or in neither of them, he shall be deemed to be a resident only of the Party in which he has the right of abode (in the case of the Hong Kong Special Administrative     Region) or of which he is a national (in the case of Switzerland);
    (d) if he has the right of abode in the Hong Kong Special Administrative Region and is also a national of Switzerland, or if he neither has the right of abode in the Hong Kong Special Administrative Region nor is     a national of Switzerland, the competent authorities of the Contracting Parties shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting Parties, then it shall be deemed to be a resident only of the Party in which its place of effective management is situated.

Art. 5 Permanent establishment

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term “permanent establishment” includes especially:
    (a) a place of management; 
    (b) a branch; 
    (c) an office; 
    (d) a factory; 
    (e) a workshop; and 
    (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. The term “permanent establishment” also encompasses: 
    (a) 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; 
    (b) 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 subparagraph (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.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or similar activities which have a preparatory or auxiliary character for the enterprise; (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 6 applies – is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting Party an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that Party in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 

6. An enterprise shall not be deemed to have a permanent establishment in a Contracting Party merely because it carries on business in that Party through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. 

7. The fact that a company which is a resident of a Contracting Party controls or is controlled by a company which is a resident of the other Contracting Party, or which carries on business in that other Party (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. 


Art. 6 Income from immovable property

1. Income derived by a resident of a Contracting Party from immovable property (including income from agriculture or forestry) situated in the other Contracting Party may be taxed in that other Party.

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting Party in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, quarries, sources and other natural resources; ships and aircraft shall not be regarded as immovable property. 

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. 

Art. 7 Business profits

1. The profits of an enterprise of a Contracting Party shall be taxable only in that Party unless the enterprise carries on business in the other Contracting Party through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other Party but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting Party carries on business in the other Contracting Party through a permanent establishment situated therein, there shall in each Contracting Party be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Party in which the permanent establishment is situated or elsewhere. 

4. Insofar as it has been customary in a Contracting Party to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, or on the basis of such other method as may be prescribed by the laws of that Party, nothing in paragraph 2 shall preclude that Contracting Party from determining the profits to be taxed by such apportionment or other method as may be customary; the method adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article. 

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 

6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 

7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. 

Art. 8 Shipping and air Transport

1. Profits of an enterprise of a Contracting Party from the operation of ships or aircraft in international traffic shall be taxable only in that Party. 


2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency


Art. 9  Associated enterprises

1. Where: 

    (a) an enterprise of a Contracting Party participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting Party, or 

    (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting Party and an enterprise of the other Contracting Party, 

     and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then         any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed         accordingly.


2. Where a Contracting Party includes in the profits of an enterprise of that Party – and taxes accordingly – profits on which an enterprise of the other Contracting Party has been charged to tax in that other Party and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Party if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Party, if it agrees that the adjustment made by the first-mentioned Party is justified both in principle and as regards the amount, shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting Parties shall if necessary consult each other. 


3. A Contracting Party shall not change the profits of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its domestic laws and, in any case, after six years from the end of the year in which the profits which would have accrued to an enterprise of that Party. This paragraph shall not apply in the case of fraud or wilful default. 


Art. 10 Dividends

1. Dividends paid by a company which is a resident of a Contracting Party to a resident of the other Contracting Party may be taxed in that other Party. 

2. However, such dividends may also be taxed in the Contracting Party of which the company paying the dividends is a resident and according to the laws of that Party, but if the beneficial owner of the dividends is a resident of the other Contracting Party, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends. 

3. Notwithstanding the provisions of paragraph 2, the Contracting Party of which the company paying the dividends is a resident shall not levy a tax on dividends paid by that company, if the beneficial owner of the dividends is: 
    (a) a company (other than a partnership) which is resident of the other Contracting Party and which holds directly at least 10 per cent of the capital of the company paying the dividends; or 
    (b) a pension fund or pension scheme; or 
    (c) in the case of the Hong Kong Special Administrative Region, the Hong Kong Monetary Authority; and in the case of Switzerland, the Swiss National Bank. 

4. The competent authorities of the Contracting Parties shall by mutual agreement settle the mode of application of the limitations mentioned in paragraphs 2 and 3. Paragraphs 2 and 3 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 

5. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Party of which the company making the distribution is a resident.

 6. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting Party, carries on business in the other Contracting Party of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other Party independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

 7. Where a company which is a resident of a Contracting Party derives profits or income from the other Contracting Party, that other Party may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Party or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other Party, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Party.

 8. The provisions of this Article shall not apply in respect of any dividends paid in the course of a transaction or series of transactions which is structured in such a way that a resident of a Contracting Party entitled to the benefits of this Agreement receives an item of income arising in the other Contracting Party but the resident pays, directly or indirectly, all or substantially all of that income (at any time or in any form) to another person who is not a resident of either Contracting Party and who, if it received that item of income directly from the other Contracting Party, would not be entitled under an agreement for the avoidance of double taxation between the Party in which that other person is resident and the Contracting Party in which the income arises, or otherwise, to benefits with respect to that item of income which are equivalent to, or more favourable than, those available under this Agreement to a resident of a Contracting Party and the main purpose of such structuring is obtaining benefits under this Agreement. 

Art. 11 Interest

1. Interest arising in a Contracting Party and beneficially owned by a resident of the other Contracting Party shall be taxable only in that other Party.

2. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

3. The provisions of paragraph 1 shall not apply if the beneficial owner of the interest, being a resident of a Contracting Party, carries on business in the other Contracting Party in which the interest arises, through a permanent establishment situated therein, or performs in that other Party independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 

4. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting Party, due regard being had to the other provisions of this Agreement.

5. The provisions of this Article shall not apply in respect of any interest paid in the course of a transaction or series of transactions which is structured in such a way that a resident of a Contracting Party entitled to the benefits of this Agreement receives an item of income arising in the other Contracting Party but the resident pays, directly or indirectly, all or substantially all of that income (at any time or in any form) to another person who is not a resident of either Contracting Party and who, if it received that item of income directly from the other Contracting Party, would not be entitled under an agreement for the avoidance of double taxation between the Party in which that other person is resident and the Contracting Party in which the income arises, or otherwise, to benefits with respect to that item of income which are equivalent to, or more favourable than, those available under this Agreement to a resident of a Contracting Party and the main purpose of such structuring is obtaining benefits under this Agreement.

Art. 12 Royalties

1. Royalties arising in a Contracting Party and paid to a resident of the other Contracting Party may be taxed in that other Party.

2. However, such royalties may also be taxed in the Contracting Party in which they arise and according to the laws of that Party, but if the beneficial owner of the royalties is a resident of the other Contracting Party, the tax so charged shall not exceed 3 per cent of the gross amount of the royalties. The competent authorities of the Contracting Parties shall by mutual agreement settle the mode of application of this limitation. 

3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. 

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting Party, carries on business in the other Contracting Party in which the royalties arise, through a permanent establishment situated therein, or performs in that other Party independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 

5. Royalties shall be deemed to arise in a Contracting Party when the payer is a resident of that Party. Where, however, the person paying the royalties, whether he is a resident of a Contracting Party or not, has in a Contracting Party a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the Party in which the permanent establishment or fixed base is situated. 

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting Party, due regard being had to the other provisions of this Agreement. 

7. The provisions of this Article shall not apply in respect of any royalties paid in the course of a transaction or series of transactions which is structured in such a way that a resident of a Contracting Party entitled to the benefits of this Agreement receives an item of income arising in the other Contracting Party but the resident pays, directly or indirectly, all or substantially all of that income (at any time or in any form) to another person who is not a resident of either Contracting Party and who, if it received that item of income directly from the other Contracting Party, would not be entitled under an agreement for the avoidance of double taxation between the Party in which that other person is resident and the Contracting Party in which the income arises, or otherwise, to benefits with respect to that item of income which are equivalent to, or more favourable than, those available under this Agreement to a resident of a Contracting Party and the main purpose of such structuring is obtaining benefits under this Agreement.  

Art. 13 Capital gains

1. Gains derived by a resident of a Contracting Party from the alienation of immovable property referred to in Article 6 and situated in the other Contracting Party may be taxed in that other Party.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting Party has in the other Contracting Party or of movable property pertaining to a fixed base available to a resident of a Contracting Party in the other Contracting Party for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other Party.

3. Gains derived by an enterprise of a Contracting Party from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that Party.

4. Gains derived by a resident of a Contracting Party from the alienation of shares of a company deriving more than 50 per cent of its asset value directly or indirectly from immovable property situated in the other Contracting Party may be taxed in that other Party provided that the resident owns, directly or indirectly, at least 5 per cent of the issued shares of the company. However, this paragraph does not apply to gains derived from the alienation of shares:
    (a) quoted on a stock exchange established in and recognised by a Contracting Party or on any other stock exchange as may be agreed between the competent authorities of the Contracting Parties; or
    (b) alienated or exchanged in the framework of a reorganisation of a company, a merger, a scission or a similar operation; or 
    (c) in a company deriving more than 50 per cent of its asset value from immovable property in which it carries on its business. 

5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting Party of which the alienator is a resident. 

Art. 14 Independent personal services

1. Income derived by a resident of a Contracting Party in respect of professional services or other activities of an independent character shall be taxable only in that Party unless: 
    (a) he has a fixed base regularly available to him in the other Contracting Party for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other Party but only so         much of it as is attributable to that fixed base; or 
    (b) his stay in the other Contracting Party is for a period or periods amounting to or exceeding in the aggregate 183 days in the fiscal year concerned of that other Party. In that case, only so much of the                income as is derived from his activities performed in that other Party may be taxed in that other Party. 

2. The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. 

Art. 15 Dependent personal services

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting Party in respect of an employment shall be taxable only in that Party unless the employment is exercised in the other Contracting Party. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Party. 

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting Party in respect of an employment exercised in the other Contracting Party shall be taxable only in the first-mentioned Party if: 
    (a) the recipient is present in the other Party for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned of that other Party, and 
    (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Party, and (c) the remuneration is not borne by a permanent establishment or fixed base which the employer has        in the other Party.

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting Party shall be taxable only in that Party


Art. 16 Directors' fees

Directors’ fees and other similar payments derived by a resident of a Contracting Party in his capacity as a member of the board of directors of a company which is a resident of the other Contracting Party may be taxed in that other Party. 

Art. 17 Artistes and Sportsmen

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting Party as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting Party, may be taxed in that other Party.

2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting Party in which the activities of the entertainer or sportsman are exercised. This paragraph shall not apply if it is established that neither the entertainer or the sportsman himself, nor persons related to him, participate directly in the profits of such person. 

3. Paragraphs 1 and 2 shall not apply to income from activities performed in a Contracting Party by entertainers or sportsmen if such income is derived directly or indirectly, wholly or mainly from public funds of the other Contracting Party, a political subdivision or a local authority thereof.

Art. 18 Pensions

Pensions and other similar remuneration in consideration of past employment or self-employment, arising in a Contracting Party and paid to a resident of the other Contracting Party, shall be taxable only in the first-mentioned Party. 

Art. 19 Government service

1. (a) Salaries, wages and other similar remuneration paid by the Government of a Contracting Party or a political subdivision or a local authority thereof to an individual in respect of services rendered to that        Party or subdivision or authority shall be taxable only in that Party. 
    (b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting Party if the services are rendered in that other Party and the individual is a resident of that other     Party who: 
        (i) in the case of the Hong Kong Special Administrative Region, has the right of abode therein and in the case of Switzerland, is a national thereof; or 
        (ii) did not become a resident of that other Party solely for the purpose of rendering the services. 
2. The provisions of Articles 15, 16 and 17 shall apply to salaries, wages and other similar remuneration in respect of services rendered in connection with a business carried on by the Government of a Contracting Party or a political subdivision or a local authority thereof. 

Art. 20 Students

Payments which a student who is or was immediately before visiting a Contracting Party a resident of the other Contracting Party and who is present in the first-mentioned Party solely for the purpose of his education receives for the purpose of his maintenance or education shall not be taxed in that Party, provided that such payments arise from sources outside that Party. 

Art. 21 Other income

1. Items of income of a resident of a Contracting Party, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that Party. 

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting Party, carries on business in the other Contracting Party through a permanent establishment situated therein, or performs in that other Party independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

3. The provisions of this Article shall not apply in respect of any items of income referred to in paragraph 1 paid in the course of a transaction or series of transactions which is structured in such a way that a resident of a Contracting Party entitled to the benefits of this Agreement receives an item of income arising in the other Contracting Party but the resident pays, directly or indirectly, all or substantially all of that income (at any time or in any form) to another person who is not a resident of either Contracting Party and who, if it received that item of income directly from the other Contracting Party, would not be entitled under an agreement for the avoidance of double taxation between the Party in which that other person is resident and the Contracting Party in which the income arises, or otherwise, to benefits with respect to that item of income which are equivalent to, or more favourable than, those available under this Agreement to a resident of a Contracting Party and the main purpose of such structuring is obtaining benefits under this Agreement.  

Art. 22 Elimination of double taxation

1. In the case of the Hong Kong Special Administrative Region, double taxation shall be avoided as follows: 
Subject to the provisions of the laws of the Hong Kong Special Administrative Region relating to the allowance of a credit against Hong Kong Special Administrative Region tax of tax paid in a jurisdiction outside the Hong Kong Special Administrative Region (which shall not affect the general principle of this Article), Swiss tax paid under the laws of Switzerland and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of the Hong Kong Special Administrative Region from sources in Switzerland, shall be allowed as a credit against Hong Kong Special Administrative Region tax payable in respect of that income, provided that the credit so allowed does not exceed the amount of Hong Kong Special Administrative Region tax computed in respect of that income in accordance with the tax laws of the Hong Kong Special Administrative Region.

2. In the case of Switzerland, double taxation shall be avoided as follows: 
    (a) Where a resident of Switzerland derives income which, in accordance with the provisions of this Agreement, may be taxed in the Hong Kong Special Administrative Region, Switzerland shall, subject to the        provisions of subparagraph
    (b), exempt such income from tax but may, in calculating tax on the remaining income of that resident, apply the rate of tax which would have been applicable if the exempted income had not been so                exempted. However, such exemption shall apply to gains referred to in paragraph 4 of Article 13 only if actual taxation of such gains in the Hong Kong Special Administrative Region is demonstrated. (b) Where     a resident of Switzerland derives dividends or royalties which, in accordance with the provisions of Articles 10 and 12 respectively may be taxed in the Hong Kong Special Administrative Region, Switzerland            shall allow, upon request, a relief to such resident. The relief may consist of:
         (i) a deduction from the tax on the income of that resident of an amount equal to the tax levied in the Hong Kong Special Administrative Region in accordance with the provisions of Articles 10 and 12; such          deduction shall not, however, exceed that part of the Swiss tax, as computed before the deduction is given, which is appropriate to the income which may be taxed in the Hong Kong Special Administrative             Region; or
         (ii) a lump sum reduction of the Swiss tax; or 
        (iii) a partial exemption of such dividends or royalties from Swiss tax, in any case consisting at least of the deduction of the tax levied in the Hong Kong Special Administrative Region from the gross amount            of the dividends or royalties.
Switzerland shall determine the applicable relief and regulate the procedure in accordance with the Swiss provisions relating to the carrying out of international conventions of the Swiss Confederation for the avoidance of double taxation.

(c) A company which is a resident of Switzerland and which derives dividends from a company which is a resident of the Hong Kong Special Administrative Region shall be entitled, for the purposes of Swiss tax with respect to such dividends, to the same relief which would be granted to the company if the company paying the dividends were a resident of Switzerland. 

Art. 23 Non-Discrimination

1. Persons who, in the case of the Hong Kong Special Administrative Region, have the right of abode or are incorporated or otherwise constituted therein, and, in the case of Switzerland, are nationals thereof, shall not be subjected in the other Contracting Party to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which persons who have the right of abode or are incorporated or otherwise constituted in that other Party (where that other Party is the Hong Kong Special Administrative Region) or nationals of that other Party (where that other Party is Switzerland) in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting Parties.

2. The taxation on a permanent establishment which an enterprise of a Contracting Party has in the other Contracting Party shall not be less favourably levied in that other Party than the taxation levied on enterprises of that other Party carrying on the same activities. This provision shall not be construed as obliging a Contracting Party to grant to residents of the other Contracting Party any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

3. Except where the provisions of paragraph l of Article 9, paragraph 4 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting Party to a resident of the other Contracting Party shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned Party.

4. Enterprises of a Contracting Party, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting Party, shall not be subjected in the first-mentioned Party to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned Party are or may be subjected.

5. The provisions of paragraphs 1 to 4 of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

Art. 24 Mutual agreement procedure

1. Where a person considers that the actions of one or both of the Contracting Parties result or will result for him intaxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic laws of those Parties, present his case to the competent authority of the Contracting Party of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting Party in which he has the right of abode or is incorporated or otherwise constituted (in the case of the Hong Kong Special Administrative Region) or of which he is a national (in the case of Switzerland). The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement. 

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting Party, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic laws of the Contracting Parties. 

3. The competent authorities of the Contracting Parties shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement. 

4. The competent authorities of the Contracting Parties may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.

5. Where, 
    (a) under paragraph 1, a person has presented a case to the competent authority of a Contracting Party on the basis that the actions of one or both of the Contracting Parties have resulted for that person in            taxation not in accordance with the provisions of this Agreement, and 
    (b) the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within three years from the presentation of the case to the competent authority of the other Contracting Party,

 any unresolved issues arising from the case shall be submitted to arbitration if the person so requests. These unresolved issues shall not, however, be submitted to arbitration if a decision on these issues has already been rendered by a court or administrative tribunal of either Party. Unless a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision that decision shall be binding on both Contracting Parties and shall be implemented notwithstanding any time limits in the domestic laws of these Parties. The competent authorities of the Contracting Parties shall by mutual agreement settle the mode of application of this paragraph.

Art. 25 Exchange of information

1. The competent authorities of the Contracting Parties shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws of the Contracting Parties concerning taxes covered by this Agreement, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Article 1.
2. Any information received under paragraph 1 by a Contracting Party shall be treated as secret in the same manner as information obtained under the domestic laws of that Party and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting Party the obligation: (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting Party; (b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting Party; (c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public). 

4. If information is requested by a Contracting Party in accordance with this Article, the other Contracting Party shall use its information gathering measures to obtain the requested information, even though that other Party may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting Party to decline to supply information solely because it has no domestic interest in such information. 

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting Party to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. In the case of Switzerland, in order to obtain such information, its tax authority shall, if necessary to comply with its obligations under this paragraph, have the power to ensure the disclosure of information covered by this paragraph, notwithstanding paragraph 3 or any contrary provisions in its domestic laws.
 

Art. 26 Member of Government Missions

Nothing in this Agreement shall affect the fiscal privileges of members of government missions, including consular posts, under the general rules of international law or under the provisions of special agreements. 


Art. 27 Miscellaneous

Nothing in this Agreement shall prejudice the right of each Contracting Party to apply its domestic laws and measures concerning tax avoidance, whether or not described as such. 


Art. 28 Entry into force

1. Each Contracting Party shall notify the other in writing of the completion of the procedures required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications.

2. The provisions of this Agreement shall have effect: 
    (a) in the Hong Kong Special Administrative Region: in respect of Hong Kong Special Administrative Region tax, for any year of assessment beginning on or after the first day of April of the calendar year next        following that in which this Agreement enters into force;
    (b) in Switzerland: 
        (i) in respect of taxes withheld at source on amounts paid or credited on or after the first day of January of the calendar year next following that in which this Agreement enters into force; 
        (ii) in respect of other taxes for taxation years beginning on or after the first day of January of the calendar year next following that in which this Agreement enters into force. 
3. Notwithstanding the provisions of subparagraphs (a) and (b) of paragraph 2, Article 8 and paragraph 3 of Article 13 shall have effect in both Contracting Parties from the date on which this Agreement enters into force.

Art. 29 Termination

This Agreement shall remain in force until terminated by a Contracting Party. Either Contracting Party may terminate this Agreement by giving written notice of termination to the other Contracting Party at least six months before the end of any calendar year. In such event, this Agreement shall cease to have effect:
    (a) in the Hong Kong Special Administrative Region: in respect of Hong Kong Special Administrative Region tax, for any year of assessment beginning on or after the first day of April of the calendar year next        following that in which the notice is given; 
    (b) in Switzerland: (i) in respect of taxes withheld at source on amounts paid or credited on or after the first day of January of the calendar year next following that in which the notice is given; (ii) in respect of     other taxes for taxation years beginning on or after the first day of January of the calendar year next following that in which the notice is given. 

Protocol

to the Agreement between the Government of the Hong Kong Special Administrative Region of the People’s Republic of China and the Swiss Federal Council for the Avoidance of Double Taxation with respect to Taxes on Income

1. ad Article 2 

 In respect of paragraph 5 of Article 2, it is understood that the terms “Hong Kong Special Administrative Region tax” and “Swiss tax” do not include any penalty or interest (including, in the case of the Hong Kong Special Administrative Region, any sum added to the Hong Kong Special Administrative Region tax by reason of default and recovered therewith and “additional tax” under Section 82A of the Inland Revenue Ordinance) imposed under the laws of either Contracting Party. 2. ad Articles 3 and 4 In respect of subparagraph (h) of paragraph 1 of Article 3 and paragraph 1 of Article 4, it is understood that the terms “person” and “resident of a Contracting Party” do not include a trust, or an individual or a company 

2. ad Articles 3 and 4

In respect of subparagraph (h) of paragraph 1 of Article 3 and paragraph 1 of Article 4, it is understood that the terms “person” and “resident of a Contracting Party” do not include a trust, or an individual or a company acting in the capacity of a trustee. 

3. ad Article 4 

In respect of paragraph 1 of Article 4, it is understood that the term “resident of a Contracting Party”, in the case of Switzerland, includes: 
    (a) a recognised pension fund or pension scheme established in Switzerland; and 
    (b) an organisation that is established and is operated exclusively for religious, charitable, scientific, cultural, artistic, sportive or educational purposes (or for more than one of those purposes) and that is a            resident of Switzerland according to its laws, notwithstanding that all or part of its income or gains may be exempt from tax under the domestic laws of Switzerland. 
Regarding subparagraph (a), it is understood that any pension fund or pension scheme recognised and controlled according to statutory provisions of Switzerland, which is generally exempt from income taxation in Switzerland and which is operated principally to administer or provide pension or retirement benefits or to earn income for the benefit of such arrangements shall be regarded as a recognised pension fund or pension scheme of Switzerland. 

4. ad Article 7

In respect of paragraphs 1 and 2 of Article 7, where an enterprise of a Contracting Party sells goods or merchandise or carries on business in the other Party through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received by the enterprise, but shall be determined only on the basis of that part of the total receipts which is attributable to the actual activity of the permanent establishment for such sales or business.

In the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, when the enterprise has a permanent establishment, the profits of such permanent establishment shall not be determined on the basis of the total amount of the contract, but shall be determined only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the Party where the permanent establishment is situated.

The profits related to that part of the contract which is carried out by the head office of the enterprise shall be taxable only in the Party of which the enterprise is a resident.

5. ad Articles 7 and 12

It is understood that payments received as a consideration for the use of, or the right to use industrial, commercial or scientific equipment constitute business profits covered by Article 7.

6. ad Article 10 

Regarding subparagraph (b) of paragraph 3 of Article 10, it is understood that the term “pension fund or pension scheme” includes the following and any identical or substantially similar schemes which are established pursuant to legislation introduced after the date of signature of the Agreement: 
    (a) in the Hong Kong Special Administrative Region, any scheme in which individuals may participate to secure retirement benefits and which is recognised for tax purposes in the Hong Kong Special                        Administrative Region; 
    (b) in Switzerland, any plans and schemes covered by 
        (i) the Federal Act on old age and survivors’ insurance of 20 December 1946; 
        (ii) the Federal Act on disabled persons’ insurance of 19 June 1959; 
        (iii) the Federal Act on supplementary pensions in respect of old age, survivors’ and disabled persons’ insurance of 6 October 2006; 
        (iv) the Federal Act on old age, survivors’ and disabled persons’ insurance payable in respect of employment or self-employment of 25 June 1982, including the non-registered pension schemes which offer            professional pension plans; and 
        (v) the forms of individual recognised pension schemes comparable with the professional pension plans, in accordance with article 82 of the Federal Act on old age, survivors’ and disabled persons’ insurance         payable in respect of employment or self-employment of 25 June 1982. 

 It is further understood that the term “pension fund or pension scheme” includes investment funds or trusts where all of the interest of the funds or trusts are held by pension funds or pension schemes. 

7. ad Article 18 

It is understood that the term “pensions” as used in Article 18 does not only cover periodic payments, but also includes lump sum payments. 

8. ad Article 25 

    (a) The Hong Kong Special Administrative Region confirms that, in accordance with its current domestic laws and subject to the same, the tax authorities of the Hong Kong Special Administrative Region have        the power to enforce the disclosure of information covered by paragraph 5 of Article 25. 
    (b) It is understood that an exchange of information will only be requested once the requesting Contracting Party has exhausted all regular sources of information available under the internal taxation procedure.     (c) It is understood that the tax authorities of the requesting Party shall provide, in particular, the following information to the tax authorities of the requested Party when making a request for information            under Article 25: 
        (i) the identity of the person under examination or investigation; 
        (ii) the period of time for which the information is requested; 
        (iii) a statement of the information sought including its nature and the form in which the requesting Party wishes to receive the information from the requested Party; 
        (iv) the tax purpose for which the information is sought; 
        (v) to the extent known, the name and address of any person believed to be in possession of the requested information. 
    (d) It is understood that while the provisions of subparagraph (c) are intended to ensure that fishing expeditions do not occur, they are to be construed in a manner which does not frustrate the effective                exchange of information. 
    (e) It is further understood that Article 25 shall not commit the Contracting Party to exchange information on an automatic or a spontaneous basis. 
    (f) It is understood that in case of an exchange of information, the administrative procedural rules regarding taxpayers’ rights provided for in the requested Contracting Party remain applicable before the            information is transmitted to the requesting Contracting Party. It is further understood that this provision aims at guaranteeing the taxpayer a fair procedure and not at preventing or unduly delaying the                exchange of information process. 
    (g) In the case of the Hong Kong Special Administrative Region, the persons or authorities to whom the information may be disclosed under paragraph 2 of Article 25 include the Board of Review. (h) It is also        understood that information requested shall not be disclosed to a third jurisdiction. 
    (i) It is understood that a Contracting Party may only request information relating to taxable periods for which the provisions of the Agreement have effect for that Party.

Varia


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