The IBFD has received the English and Spanish texts of the Venezuela - Switzerland double taxation treaty of 20 December 1996. The treaty was concluded in the French, Spanish and English languages; in case of divergence, the English text prevails. The treaty generally follows the OECD Model Convention.
Under the treaty, the maximum withholding tax rates are:
- 10% on dividends, but dividends are exempt from withholding tax if the beneficial owner is a company (other than a partnership) which holds directly at least 25% of the company paying the dividends;
- 5% on interest, but the usual exemptions for interest paid to public bodies, etc. apply; and
- 5% on royalties.
A building site or a construction or installation project constitutes a permanent establishment only if it lasts for more than 12 months starting from the date on which the work actually begins.
In general, both states will use the exemption method to eliminate double taxation. Venezuela grants a full exemption, but Switzerland grants an exemption with progression. As to dividends, interest and royalties which are received by a resident of Switzerland and may be taxed in Venezuela, Switzerland will, upon request, allow relief to the resident. The relief may consist of (a) an ordinary credit, (b) a lump-sum reduction of the Swiss tax or (c) a partial exemption of the dividends, interest or royalties.
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.
For further information contact Deirdre Silberstein, Washington, on +1 202 955 4000 or enter a text search "Deloitte & Touche" and "Business Monitor".