The Protocol amending the Cyprus-Switzerland Double Tax Treaty ("DTT", which is effective from 1 January 2016) entered into force on the 3rd of November 2021 (per information on the Cyprus Ministry of Finance website).
The Protocol (signed on 20 July 2020, Cyprus ratified on 24 July 2020, the Swiss National Assembly approved on 31 May 2021) introduces, among others, minimum standards of the Base Erosion and Profit Shifting ("BEPS") actions of the Organization for Economic Co-operation and Development ("OECD").
The main amendments introduced by the Protocol include:
i. the incorporation of specific wording in the Preamble of the DTT;
ii. the introduction of a Principal Purpose Test ("PPT") through the 'Entitlement to Benefits' Article of the DTT;
iii. the introduction of specific wording in the 'Mutual Agreement Procedure' Article;
iv. the introduction of a six year limitation on adjustments made by the competent authorities of the two countries with respect to the attribution of profits to permanent establishments and profits from transactions between associated enterprises.
The amendments mentioned in points (i) and (ii) above shall have effect from 1 January 2022, while the amendments mentioned in points (iii) and (iv) above have effect from 3 November 2021 (date that the Protocol has entered into force).
More details on the above amendments can be found here.
Taxpayers will need to take into consideration the effects of the Protocol on their current and future investment plans.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.