The avoidance of double taxation in Hong Kong and Switzerland
Hong Kong signed a double taxation agreement (DTA) with Switzerland in December 2010. This initial treaty was replaced by another DTA between the two parties on October 2011. The double taxation relief applies to taxes on income and addresses the residents of one or both signatory parties.
Until 2001 Hong Kong had no such taxation treaties in place. However, the Government negotiated certain double taxation treaties with a number of countries worldwide. Our Hong Kong company formation representatives can provide a complete list of the DTAs signed between the Special Administrative Region and other countries.
The taxes covered by the Hong Kong-Switzerland treaty
The double taxation agreement between Hong Kong and Switzerland applies on taxes on income imposed by one of the Contracting Parties, irrespective of the manner in which they are levied. The treaty also concerns taxes on elements of income. In case of the Hong Kong Special Administrative Region the taxes covered by the DTA are:
– the profits tax;
– the salaries tax;
– the property tax.
The taxes covered by the double tax treaty in case of Switzerland are all the federal, cantonal and communal taxes on income. The agreement also applies on similar taxes imposed after the signature of the Agreement which replace the ones described above.
Hong Kong has an advantageous taxation system. Our agents can help you with comprehensive information about taxes and company registration in Hong Kong.
General definitions included in the Hong Kong treaty
The treaty applies to all persons who are residents of Hong Kong, Switzerland or both. A national is an individual who possesses the nationality or citizenship of Switzerland and/or Hong Kong. It can also include a legal person, partnership or association.
For the purpose of the agreement, a permanent establishment in one of the Contracting Parties includes places of management, branches in Hong Kong or Switzerland, offices, factories, workshops and others. The treaty describes the manner in which each state may tax differed types of profits made by an individual or company in Hong Kong or Switzerland. The taxation of income from immovable property, business profits, associates enterprises, interest, royalties and dividends is described in detail in the treaty.
For more information about the applicability of the treaty and how it can influence your business if you are a foreign investor from Switzerland, you can contact our Hong Kong company formation specialists.