Japan: Protocol to amend income tax treaty with Switzerland

Protocol to amend existing income tax treaty between Japan and Switzerland has been signed

Protocol to amend existing income tax treaty between Japan and Switzerland has been signed

Representatives of the governments of Japan and Switzerland on 16 July 2021 signed a Protocol to amend the existing income tax treaty.

Japan and Switzerland have signed the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” (MLI); however, neither government selected the existing tax treaty as a “covered tax agreement” with regard to the MLI. Accordingly, the MLI will not apply to either the existing tax treaty or the Protocol, although some provisions of the Protocol are in line with the provisions of the MLI.


The Protocol amendments include:

  • Provisions concerning the taxation of business profits attributable to a permanent establishment of a foreign enterprise, under which business profits are calculated by recognizing internal dealings between a head office and its branches and by applying the arm’s length principle
  • Corresponding adjustments in line with Article 17 of the MLI
  • Reduced tax rates on dividends in the source country
  • Reduced tax rates on interest in the source country
  • A 12-month period basis to determine whether or not the period of an individual’s stay in the other treaty-partner country exceeds in the aggregate 183 days (changed from a calendar year basis)
  • Amended Japanese text of Article 16 (directors’ fees)
  • Taxpayers allowed to raise a mutual agreement procedure (MAP) request to the competent authority of either contracting state
  • Content of the principal purpose test (PPT)

Entry into force

After completion of the ratification procedures in each country, the Protocol will enter into force 30 days after the later of each country’s notification exchanged through diplomatic channels.

Read an August 2021 report [PDF 158 KB] prepared by the KPMG member firm in Japan


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