On December 5, 2024, the U.S. Internal Revenue Service (“IRS�) published a competent authority arrangement (“CAA�) entered into by the competent authorities of the United States and Switzerland.1 The CAA supersedes the CAA signed on May 6, 2021, and applies to dividends paid on or after January 1, 2020.2
WHY THIS MATTERS
The CAA may be used to determine whether a pension plan or retirement arrangement is exempt from source-country taxation on dividends under Article 10(3) of the United States-Switzerland income tax treaty (the “treaty�). Similar to the previous CCA (covered in ), the superseding CAA does not address whether the identified pension plans are “generally corresponding� plans for purposes of Article 28(4) of the treaty.3 Article 28(4) allows contributions to a generally corresponding pension plan to be deducted or excluded from income.4 As a result, it remains open as to whether individuals holding such pension plans identified as generally corresponding plans for purposes of Article 10(3) could seek relief under Article 28(4).
More Details
The CAA identifies certain U.S. and Swiss pension or other retirement arrangements, including individual retirement savings plans, that may be eligible for an exemption from source-country taxation on dividends under Article 10(3) of the treaty.5 The text of the superseding CAA is nearly identical to the previous CAA signed in 2021, except that it provides a procedure for U.S. Group Trusts for purposes of claiming a refund from the Swiss tax authorities under Article 10(3).6
Footnotes:
1 Competent Authority Agreement, (Dec. 5, 2024).
2 Ibid.
3 (June 11, 2021).
4 Ibid.
5 Competent Authority Agreement, (Dec. 5, 2024).
6 Ibid.
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Disclaimer
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
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