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HMRC internal manual

Double Taxation Relief Manual

Switzerland: Exchange of Notes of 26 June 2007

In relation to paragraph 1 of Article 4 (Residence):

It is understood and confirmed that the term “resident of a Contracting State” includes:

(a) a pension scheme established in that State; and

(b) an organisation that is established and is operated exclusively for religious, charitable, scientific, cultural, or educational purposes (or for more than one of those purposes) and that is a resident of that State according to its laws, notwithstanding that all or part of its income or gains may be exempt from tax under the domestic law of that State.

In relation to sub-paragraph (a) (ii) of paragraph 2 of Article 10 (Dividends):

It is understood and confirmed that the term “pension scheme” means any plan, scheme, fund, trust or other arrangement established in a Contracting State which is:

(a) generally exempt from income taxation in that State; and

(b) operated principally to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such arrangements.

In relation to Article 15 (Dependent personal services):

It is understood that Article 15 applies to the employment benefit derived from stock-options regardless of when that benefit is taxed.

In relation to Article 25 (Exchange of information):

  1. The Contracting States agree that under sub-paragraph (b) of paragraph 1 of Article 25, only information which is in the possession of the tax authorities and which does not necessitate specific investigation measures may be exchanged.
  2. It is understood that in respect of sub-paragraph (b) of paragraph 1 of Article 25, Swiss companies covered by paragraph 2 of Article 28 of the Tax Harmonisation Act of 14 December 1990 are considered holding companies.
  3. It is understood that “tax fraud” means fraudulent conduct deemed to be an offence under the laws of both States, and punishable by imprisonment, such as the use or presentation of false or falsified documents, including an incorrect profit and loss account or balance sheet, with the intention to deceive the authorities.
  4. It is further understood that the term “[tax fraud] or the like” includes:

(a) the use or presentation of an incomplete statement of assets and / or an incorrect certificate of full disclosure at the conclusion of an investigation by the United Kingdom tax authorities;

(b) the destruction of records required to be prepared or maintained under a legal duty with the intention to deceive the United Kingdom tax authorities.

  1. It is understood that, in cases of tax fraud or the like, banking secrecy provisions shall not preclude the furnishing of documentary evidence by banks and the forwarding thereof to the competent authority of the requesting State. The provision of information, however, presupposes a direct connection between the fraudulent conduct and the requested administrative assistance measures.