Switzerland and the UAE have clarified the agreement on the avoidance of double taxation

Switzerland and the United Arab Emirates (UAE) have amended their Double Taxation Agreement (DTA), which entered into force in early 2012. These changes concern the taxation of dividends, interest, royalties and capital gains, and they strengthen cooperation between the two countries in the field of tax cooperation.

One of the important changes is the provision on taxation of dividends. According to the amended agreement, dividends paid by a Swiss company to a UAE resident may be taxed in the United Arab Emirates. If the recipient of the dividends is a company that owns at least 10% of the authorized capital of the company paying the dividends, the tax should not exceed 5%. In other cases, the dividend tax rate is 15%.

In addition, the changes in the agreement concern the taxation of interest and royalties. If the interest or royalties arise in one of the two countries and are paid to a resident of the other country, tax may be charged in the country of the recipient. This will ensure clearer rules and avoid double taxation on interest and royalties between Switzerland and the UAE.

Capital gain arising from the disposal of shares also in the amended agreement. If the disposal of shares takes place in the UAE or a Swiss company, the capital gains tax will be charged in the country of residence of the alienator. However, if the assets consist of immovable property, capital gains tax will be levied in the country where the property is located.

These changes to the double taxation agreement between Switzerland and the UAE reflect the desire of both parties to strengthen their economic ties and create a favorable environment for investment. The updated agreement will make it easier for entrepreneurs and investors to do business and reduce tax barriers between the two countries.