Kosovo, Switzerland sign agreement on double taxation

Kosovo and Switzerland signed on Friday an agreement regulating taxation of income and capital, which is beneficial for both countries, the Swiss federal government said.

Under the agreement on double taxation dividends will be taxed at source at a maximum rate of 15%, while qualified participations – at no more than 5%, the Federal Council of Switzerland said in a statement published on its website.

The agreement envisages royalties to be taxed only in the beneficial owner’s state of domicile.

The two countries have had no such agreement since 2011.

“The agreement will ensure legal certainty and a contractual framework that will have a beneficial impact on the two states’ economic relations,” the Council’s statement reads.

The agreement includes a clause to combat base erosion and profit shifting.

Under the agreement, tax payers will receive administrative assistance in accordance with international standards.

In order to come into effect, the agreement has to be approved by the parliaments of both countries.

Kosovo’s finance ministry explained that the new agreement would eliminate double taxation and prevent fiscal evasion. Thus, the agreement is expected to boost Switzerland-Kosovo economic relations and especially investments.

Kosovo had a population of 1.8 million at the end of 2015, according to the results of the last census published in June 2016. About 270,000 Kosovo citizens live currently in Switzerland, according to the statement of the finance ministry.