Netherlands And Switzerland Clarify DTA Fund Treatment
The Netherlands and Switzerland have signed an agreement clarifying the tax treatment of certain collective investment vehicles (CIVs) in each jurisdiction under their bilateral double tax avoidance agreement.
The Competent Authority Agreement was signed on June 8, 2016, and deals with the application of the 2010 Dutch-Swiss double tax treaty to Netherlands fiscal investment institutions (fiscale beleggingsinstelling, FBI), Swiss contractual funds (fonds commun de placement, FCP), and a type of Swiss open ended investment funds, SICAV (société d’investissement à capital variable).
The Competent Authority Agreement clarifies that a resident of a contracting state in which one of the aforementioned CIVs is organized and who beneficially owns more than 95 percent of the CIV’s capital may claim a refund of the withholding tax on income derived from the other contracting state.
Where the percentage of ownership by such residents does not exceed 95 percent, the new agreement states that CIVs may claim the withholding tax refund limited to that proportion of the capital of the vehicles beneficially owned by residents.
The Competent Authority Agreement confirms that the vehicle or its authorized representatives must indicate, based on data established at the due date of withholding tax in the source state or at least once every year, the percentage of ownership of the capital of the vehicle beneficially owned by residents. It also states that each state may apply “appropriate control mechanisms.”