The Resource Re Swiss Swaps case I/A : Case 2C_364/2012

Re Swiss Swaps case I/A : Case 2C_364/2012

Re Swiss Swaps case I/A : Case 2C_364/2012
Re Swiss Swaps case I/A : Case 2C_364/2012
  • engger
  • eng
Judgment by the Federal Supreme Court (Second Administrative Law Division), Switzerland, judgment date 5 May 2015. The taxpayer was a Danish bank which, during the years 2006, 2007 and 2008 had entered into total return swaps (TRSs) over equities issued by Swiss companies with counterparty-companies in France, Germany, the UK and the US. Under the swap agreements, the taxpayer was obliged to make a payment to the counterparty equal to the economic return on the underlying equities over the swap period: this included any movements in the market price and any dividends received on the underlying equities. As a matter of practice, the taxpayer hedged its obligations under the swaps by acquiring the underlying equities from an international broker, not from the counter-party. In consideration for the swap, the taxpayer received a return of LIBOR plus a margin on a sum equivalent to a loan on the value of the underlying. The dividend article of the Denmark-Switzerland double taxation convention (prior to the protocol of 21 August 2009) provided: "Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State shall be taxable only in that other State". By comparison, the double taxation conventions with France, Germany, the UK and US all provided for a 15% withholding tax on dividends. The taxpayer received dividends from Swiss companies and applied for and received a refund of Swiss tax withheld on dividends from those companies in 2006. The Swiss Federal tax authorities (SFTA) claimed repayment of the refunds for 2006 and withholding tax for 2007 and 2008 on the basis that the taxpayer was not the beneficial owner of the dividends or on grounds that there had been abuse of the treaty. The taxpayer appealed successfully to the Federal Administrative Tribunal, and the Federal Tax Administration appealed against that decision to the Supreme Court
Citation source
In: International tax law reports. - London. - Vol. 18 (2015),
Geographic coverage
Language note
  • English
  • German
Baker, P
  • case law
  • tax treaty
  • swap
  • beneficial ownership
  • exemption
  • dividend withholding tax
  • treaty abuse
Re Swiss Swaps case I/A : Case 2C_364/2012

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