Switzerland Proposes Lump-Sum Tax Credit for PEs to Avoid Cases of Double Taxation

On 19 September 2014, the Swiss Federal Council initiated consultation on the proposed granting of the lump-sum tax credit for permanent establishments (PE) in Switzerland in order to resolve issues of double taxation when a PE receives dividend, interest or royalty income from a third jurisdiction.

Double taxation arises when residual tax is levied on the revenue by the third country and it is also taxed in Switzerland if it is attributed to the PE. If a company is domiciled in a jurisdict…