The Government of the People’s Republic of China, and the Swiss Federal
Council;
Desiring to conclude an Agreement for the avoidance of double taxation with
respect to taxes on income and capital;
Have agreed as follows:
ARTICLE 1
PERSONAL SCOPE
This Agreement shall apply to persons who are residents of one or both of the
Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income and on capital imposed on behalf
of a Contracting State or of its political subdivisions or local authorities, irrespective
of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital all taxes imposed on
total income, on total capital, or on elements of income or of capital, including taxes
on gains from the alienation of movable or immovable property, as well as taxes on
capital appreciation.
3. The existing taxes to which this Agreement shall apply are in particular:
(a) in China:
(i) the individual income tax;
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(ii) the income tax concerning joint ventures with Chinese and foreign
investment;
(iii) the income tax concerning foreign enterprises; and
(iv) the local income tax;
(hereinafter referred to as “Chinese tax” ) ;
(b) in Switzerland:
the federal, cantonal and communal taxes
(i) on income (total income, earned income, income from capital,
industrial and commercial profits, capital gains, and other items of
income) ; and
(ii) on capital (total property, movable and immovable property, business
assets, paid-up capital and reserves, and other items of capital) ;
(hereinafter referred to as “Swiss tax” )
4. This Agreement shall apply also to any identical or substantially similar taxes
which are imposed after the date of signature of this Agreement in addition to, or in
place of, the existing taxes referred to in paragraph 3. The competent authorities of the
Contracting States shall notify each other of any substantial changes which have been
made in their respective taxation laws within a reasonable period of time after such
changes.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires:
(a) the term “China” means the People’s Republic of China, including all the
territory and the territorial sea of the People’s Republic of China, in which
the laws relating to Chinese tax apply, and all the area beyond its territorial
sea, and the sea bed and sub-soil thereof, over which the People’s Republic
of China has jurisdiction in accordance with international law and in which
the laws relating to Chinese tax apply;
(b) the term “Switzerland” means the Swiss Confederation;
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(c) the terms “a Contracting State” and “the other Contracting State” mean
China or Switzerland, as the context requires;
(d) the term “tax” means Chinese tax or Swiss tax, as the context requires;
(e) the term “person” includes an individual, a company and any other body of
persons;
(f) the term “company” means any body corporate or any entity which is
treated as a body corporate for tax purposes;
(g) the terms “enterprise of a Contracting State” and “enterprise of the other
Contracting State” mean respectively an enterprise carried on by a resident
of a Contracting State and an enterprise carried on by a resident of the
other Contracting State;
(h) the term “nationals” means all individuals possessing the nationality of a
Contracting State and all legal persons, partnerships and associations
deriving their status as such from the laws in force in a Contracting State;
(i) the term “international traffic” means any transport by a ship or aircraft
operated by an enterprise which has its place of head office (place of
effective management) in a Contracting State, except when the ship or
aircraft is operated solely between places in the other Contracting State;
(j) the term “competent authority” means:
(i) in the case of China, the State Tax Bureau or its authorised
representative;
(ii) in the case of Switzerland, the Director of the Federal Tax
Administration or his authorised representative.
2. As regards the application of this Agreement by a Contracting State any term not
defined therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that Contracting State concerning the taxes to which this
Agreement applies.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term “resident of a Contracting State”
means any person who, under the laws of that Contracting State, is liable to tax
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therein by reason of his domicile, residence, place of head office (place of effective
management) or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of
both Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident of the Contracting State in which he
has a permanent home available to him; if he has a permanent home
available to him in both Contracting States, he shall be deemed to be a
resident of the Contracting State with which his personal and economic
relations are closer (centre of vital interests) ;
(b) if the Contracting State in which he has his centre of vital interests cannot
be determined, or if he has not a permanent home available to him in either
Contracting State, he shall be deemed to be a resident of the Contracting
State in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States or in neither of them,
he shall be deemed to be a resident of the Contracting State of which he is
a national;
(d) if he is a national of both Contracting States or of neither of them, the
competent authorities of the Contracting States shall settle the question by
mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be a
resident of the Contracting State in which its place of head office (place of effective
management) is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term “permanent establishment” means a
fixed place of business through which the business of an enterprise is wholly or partly
carried on.
2. The term “permanent establishment” includes especially:
(a) a place of management;
(b) a branch;
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(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources.
3. The term “permanent establishment” likewise encompasses:
(a) a building site, a construction, assembly or installation project or
supervisory activities in connection therewith, but only where such site,
project or activities continue for a period of more than six months;
(b) the furnishing of services, including consultancy services, by an enterprise
of a Contracting State through employees or other personnel in the other
Contracting State, provided that such activities continue for the same
project or a connected project for a period or periods aggregating more
than six months within any twelve-month period.
4. Notwithstanding the preceding provisions of this Article, the term “permanent
establishment” shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of
goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise or of collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of
activities mentioned in sub-paragraphs (a) to (e), provided that the overall
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activity of the fixed place of business resulting from this combination is of a
preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person–other than
an agent of an independent status to whom the provisions of paragraph 6 apply–is
acting in a Contracting State on behalf of an enterprise of the other Contracting State,
and has and habitually exercises an authority to conclude contracts in the name of the
enterprise, that enterprise shall be deemed to have a permanent establishment in the
first-mentioned Contracting State in respect of any activities which that person
undertakes for the enterprise, unless his activities are limited to those mentioned in
paragraph 4 which, if exercised through a fixed place of business, would not make
this fixed place of business a permanent establishment under the provisions of that
paragraph.
6. An enterprise of a Contracting State shall not be deemed to have a permanent
establishment in the other Contracting State merely because it carries on business in
that Contracting State through a broker, general commission agent or any other agent
of an independent status, provided that such persons are acting in the ordinary course
of their business. However, when the activities of such an agent are devoted wholly or
almost wholly on behalf of that enterprise, he will not be considered an agent of an
independent status within the meaning of this paragraph.
7. The fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or which
carries on business in that other Contracting State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a permanent
establishment of the other.
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property
(including income from agriculture or forestry) situated in the other Contracting State
may be taxed in that other Contracting State.
2. The term “immovable property” shall have the meaning which it has under the
law of the Contracting State in which the property in question is situated. The term
shall in any case include property accessory to immovable property, livestock and
equipment used in agriculture and forestry, rights to which the provisions of general
law respecting landed property apply, usufruct of immovable property and rights to
variable or fixed payments as consideration for the working of, or the right to work,
mineral deposits, sources and other natural resources; ships and aircraft shall not be
regarded as immovable property.
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3. The provisions of paragraph 1 shall apply to income derived from the direct use,
letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from
immovable property of an enterprise and to income from immovable property used for
the performance of independent personal services.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that
Contracting State unless the enterprise carries on business in the other Contracting
State through a permanent establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in the other
Contracting State but only so much of them as is attributable to that permanent
establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting
State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be attributed to
that permanent establishment the profits which it might be expected to make if it were
a distinct and separate enterprise engaged in the same or similar activities under the
same or similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as
deductions expenses which are incurred for the purposes of the permanent
establishment, including executive and general administrative expenses so incurred,
whether in the Contracting State in which the permanent establishment is situated or
elsewhere.
4. Insofar as it has been customary in a Contracting State to determine the profits to
be attributed to a permanent establishment on the basis of an apportionment of the
total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude
that Contracting State from determining the profits to be taxed by such an
apportionment as may be customary; the method of apportionment adopted shall,
however, be such that the result shall be in accordance with the principles contained
in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere
purchase by that permanent establishment of goods or merchandise for the enterprise.
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6. For the purposes of the paragraphs 1 to 5, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year unless
there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other
Articles of this Agreement, then the provisions of those Articles shall not be affected
by the provisions of this Article.
ARTICLE 8
SHIPPING AND AIR TRANSPORT
1. Profits from the operation of ships or aircraft in international traffic shall be
taxable only in the Contracting State in which the place of head office (place of
effective management) of the enterprise is situated.
2. If the place of head office (place of effective management) of a shipping
enterprise is aboard a ship, then it shall be deemed to be situated in the Contacting
State in which the home harbour of the ship is situated, or, if there is no such home
harbour, in the Contracting State of which the operator of the ship is a resident.
3. The provisions of paragraph 1 shall also apply to profits from the participation in
a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
Where
(a) an enterprise of a Contracting State participates directly or indirectly in the
management, control or capital of an enterprise of the other Contracting
State, or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in
their commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those conditions,
have not so accrued, may be included in the profits of that enterprise and taxed
accordingly.
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ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a
resident of the other Contracting State may be taxed in that other Contracting State.
2. However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident and according to the laws of that
Contracting State, but if the recipient is the beneficial owner of the dividends the tax
so charged shall not exceed 10 per cent of the gross amount of the dividends.
The provisions of this paragraph shall not affect the taxation of the company in
respect of the profits out of which the dividends are paid.
3. The term “dividends” as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from other
corporate rights which is subjected to the same taxation treatment as income from
shares by the laws of the Contracting State of which the company making the
distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
dividends, being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident, through a
permanent establishment situated therein, or performs in that other Contracting State
independent personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or
income from the other Contracting State, that other Contracting State may not
impose any tax on the dividends paid by the company, except insofar as such
dividends are paid to a resident of that other Contracting State or insofar as the
holding in respect of which the dividends are paid is effectively connected with a
permanent establishment or a fixed base situated in that other Contracting State,
nor subject the company’s undistributed profits to a tax on the company’s
undistributed profits, even if the dividends paid or the undistributed profits consist
wholly or partly of profits or income arising in such other Contracting State.
ARTICLE 11
INTEREST
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1. Interest arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other Contracting State.
2. However, such interest may also be taxed in the Contracting State in which it
arises and according to the laws of that Contracting State, but if the recipient is the
beneficial owner of the interest the tax so charged shall not exceed 10 per cent of
the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting
State and derived by a resident of the other Contracting State with respect to
debt-claims guaranteed, insured or indirectly financed by that other Contracting State,
its political subdivisions or local authorities, or any financial institution wholly owned
by that other Contracting State shall be exempt from tax in the first-mentioned
Contracting State.
4. The term “interest” as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a right to
participate in the debtor’s profits, and in particular, income from government
securities and income from bonds or debentures, including premiums and prizes
attaching to such securities, bonds or debentures. Penalty charges for late payment
shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 to 3 shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent establishment
situated therein, or performs in that other Contracting State independent personal
services from a fixed base situated therein, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent establishment or fixed
base. In such case the provisions of Article 7 or Article 14, as the case may be, shall
apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is that
Contracting State itself, a political subdivision, a local authority or a resident of that
Contracting State. Where, however, the person paying the interest, whether he is a
resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in Connection with which the indebtedness on which
the interest is paid was incurred, and such interest is borne by such permanent
establishment of fixed base, then such interest shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial
owner or between both of them and some other person, the amount of the interest,
having regard to the debt-claim for which it is paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in the absence of such
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relationship, the provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall remain taxable according
to the laws of each Contracting State, due regard being had to the other provisions of
this Agreement.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other Contracting State.
2. However, such royalties may also be taxed in the Contracting State in which they
arise and according to the laws of that Contracting State, but if the recipient is the
beneficial owner of the royalties the tax so charged shall not exceed 10 per cent of the
gross amount of the royalties.
3. The term “royalties” as used in this Article means payments of any kind received
as a consideration for the use of, or the right to use, any copyright of literary, artistic
or scientific work including cinematograph films and films or tapes for radio or
television broadcasting, any patent, trade mark, design or model, plan, secret formula
or process, or for the use of, or the right to use, industrial, commercial or scientific
equipment, or for information concerning industrial, commercial or scientific
experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
royalties, being a resident of a Contracting State, carries on business in the other
Contracting State in which the royalties arise, through a permanent establishment
situated therein, or performs in that other Contracting State independent personal
services from a fixed base situated therein, and the right or property in respect of
which the royalties are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is
that Contracting State itself, a political subdivision, a local authority or a resident
of that Contracting State. Where, however, the person paying the royalties,
whether he is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment or a fixed base in connection with which the liability to
pay the royalties was incurred, and such royalties are borne by such permanent
establishment or fixed base, then such royalties shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and the beneficial
12
owner or between both of them and some other person, the amount of the royalties,
having regard to the use, right or information for which they are paid, exceeds the
amount which would have been agreed upon by the payer and the beneficial owner in
the absence of such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall remain
taxable according to the laws of each Contracting State, due regard being had to the
other provisions of this Agreement.
ARTICLE 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of
immovable property referred to in Article 6 and situated in the other Contracting State
may be taxed in that other Contracting State.
2. Gains from the alienation of movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, including such gains from the
alienation of such a permanent establishment (alone or with the whole enterprise) or
of such fixed base, may be taxed in that other Contracting State.
3. Gains from the alienation of ships or aircraft operated in international traffic or
movable property pertaining to the operation of such ships or aircraft, shall be taxable
only in the Contracting State in which the place of head office (place of effective
management) of the enterprise is situated.
4. Gains from the alienation of the shares of a company the property of which
consists directly or indirectly principally of immovable property situated in a
Contracting State may be taxed in that Contracting State.
5. Gains from the alienation of any property other than that referred to in paragraphs
1 to 4, shall be taxable only in the Contracting State of which the alienator is a
resident.
ARTICLE 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of professional
services or other activities of an independent character shall be taxable only in that
Contracting State except in one of the following circumstances, when such income
may also be taxed in the other Contracting State:
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(a) if he has a fixed base regularly available to him in the other Contracting
State for the purpose of performing his activities; in that case, only so
much of the income as is attributable to that fixed base may be taxed in
that other Contracting State;
(b) if his stay in the other Contracting State is for a period or periods
exceeding in the aggregate 183 days in the calendar year concerned; in that
case, only so much of the income as is derived from his activities
performed in that other Contracting State may be taxed in that other
Contracting State.
2. The term “professional services” includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the independent activities
of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and
other similar remuneration derived by a resident of a Contracting State in respect of
an employment shall be taxable only in that Contracting State unless the employment
is exercised in the other Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the other
contracting State shall be taxable only in the first-mentioned Contracting State if:
(a) the recipient is present in the other Contracting State for a period or
periods not exceeding in the aggregate 183 days in the calendar year
concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other Contracting State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base
which the employer has in the other Contracting State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in
respect of an employment exercised aboard a ship or aircraft operated in international
traffic, shall be taxable only in the Contracting State in which the place of head office
(place of effective management) of the enterprise is situated.
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ARTICLE 16
DIRECTORS' FEES
Directors’ fees and other similar payments derived by a resident of a Contracting
State in his capacity as a member of the board of directors of a company which is a
resident of the other Contracting State may be taxed in that other Contracting State.
ARTICLE 17
ARTISTES AND ATHLETES
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a
resident of a Contracting State as an entertainer, such as a theatre, motion picture,
radio or television artist, or a musician, or as an athlete, from his personal activities as
such exercised in the other Contracting State, may be taxed in that other Contracting
State.
2. Where income in respect of personal activities exercised by an entertainer or an
athlete in his capacity as such accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the entertainer or
athlete are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to remuneration or
profits, salaries, wages and similar income derived from activities performed in a
Contracting State by entertainers or athletes if their visit to that Contracting State
is substantially supported from public or governmental funds of the other
Contracting State, a political subdivision or a local authority thereof. In such case
the provisions of Articles 7, 14 or 15, as the case may be, shall apply.
ARTICLE 18
PENSIONS
Subject to the provisions of paragraph 2 of Article 19, pensions and other similar
remuneration paid to a resident of a Contracting State in consideration of past
employment shall be taxable only in that Contracting State.
ARTICLE 19
GOVERNMENT SERVICE
1. (a) Remuneration, other than a pension, paid by a Contracting State or a
political subdivision or a local authority thereof to an individual in respect
of services rendered to that Contracting State or subdivision or authority
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in the discharge of functions of a governmental nature shall be taxable
only in that Contracting State.
(b) However, such remuneration shall be taxable only in the other
Contracting State if the services are rendered in that other Contracting
State and the individual is a resident of that other Contracting State who:
(i) is a national of that other Contracting State; or
(ii) did not become a resident of that other Contracting State solely for the
purpose of rendering the services.
2. (a) Any pension paid by, or out of funds to which contributions are made
by, a Contracting State or a political subdivision or a local authority
thereof to an individual in respect of services rendered to that
Contracting State or subdivision or authority in the discharge of
functions of a governmental nature shall be taxable only in that
Contracting State.
(b) However, such pension shall be taxable only in the other Contracting
State if the individual is a resident of, and a national of, that other
Contracting State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to remuneration and
pensions in respect of services rendered in connection with a business carried on by a
Contracting State or a political subdivision or a local authority thereof.
ARTICLE 20
PROFESSORS AND TEACHERS
An individual who is, or immediately before visiting a Contracting State was, a
resident of the other Contracting State and is present in the first-mentioned
Contracting State for a period not exceeding two years for the primary purpose of
teaching, giving lectures or conducting research at a university, college, school or
educational institution or scientific research institution accredited by the Government
of the first-mentioned Contracting State shall be exempt from tax in the
first-mentioned Contracting State in respect of remuneration for such teaching,
lectures or research.
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ARTICLE 21
STUDENTS
1. Payments which a student or business apprentice who is or was immediately before
visiting a Contracting State a resident of the other Contracting State and who is present
in the first-mentioned Contracting State solely for the purpose of his education or
training receives for the purpose of his maintenance, education or training shall not be
taxed in that Contracting State.
2. An individual who is or was immediately before visiting a Contracting State a
resident of the other contracting State and who is present in the first-mentioned
Contracting State for the purpose of study, research or training or of acquiring
technical, professional or business experience, shall be exempt from tax in that
Contracting State for a period or periods not exceeding in the aggregate twelve
months on remuneration in respect of an employment in such Contracting State
provided that such employment is directly related to his studies, research, training or
acquiring of experience and that the remuneration from that employment does not
exceed 18000 Swiss francs or the equivalent thereof in Chinese currency at the
official rate of exchange.
ARTICLE 22
CAPITAL
1. Capital represented by immovable property referred to in Article 6, owned by a
resident of a Contracting State and situated in the other Contracting State, may be
taxed in that other Contracting State.
2. Capital represented by movable property forming part of the business property of
a permanent establishment which an enterprise of a Contracting State has in the other
Contracting State or by movable property pertaining to a fixed base available to a
resident of a contracting State in the other Contracting State for the purpose of
performing independent personal services, may be taxed in that other Contracting
State.
3. Capital represented by ships and aircraft operated in international traffic, and by
movable property pertaining to the operation of such ships and aircraft, shall be
taxable only in the Contracting State in which the place of head office (place of
effective management) of the enterprise is situated.
4. All other elements of capital of a resident of a Contracting State shall be taxable
only in that contracting State.
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ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
1. In China, double taxation shall be eliminated as follows:
(a) Where a resident of China derives income from Switzerland, the amount of
tax on that income payable in Switzerland, in accordance with the
provisions of this Agreement, may be credited against the Chinese tax
imposed on that resident. The amount of credit, however, shall not exceed
the amount of the Chinese tax on that income computed in accordance
with the taxation laws and regulations of China.
(b) Where the income derived from Switzerland is a dividend paid by a
company which is a resident of Switzerland to a company which is a
resident of China and which owns not less than 10 per cent of the shares of
the company paying the dividend, the credit shall take into account the tax
payable in Switzerland by the company paying the dividend in respect of
its income.
2. In Switzerland, double taxation shall be eliminated as follows:
(a) Where a resident of Switzerland derives income or owns capital which, in
accordance with the provisions of this Agreement, may be taxed in China,
Switzerland shall, subject to the provisions of sub-paragraph (b), exempt
such income or capital from tax but may, in calculating tax on the
remaining income or capital of that resident, apply the rate of tax which
would have been applicable if the exempted income or capital had not
been so exempted.
(b) Where a resident of Switzerland derives dividends, interest or royalties
which, in accordance with the provisions of Articles 10, 11 and 12, may be
taxed in China, Switzerland shall allow, upon request, a relief to such
resident. The relief may consist of:
(i) a deduction from the tax on the income of that resident of an amount
equal to the tax levied in China in accordance with the provisions of
Articles 10, 11 and 12; such deduction shall not, however, exceed that
part of the Swiss tax, as computed before the deduction is given, which
is appropriate to the income which may be taxed in China; or
(ii) a lump sum deduction of the Swiss tax determined by standardised
formula which have regard to the general principles of the relief
referred to in sub–paragraph (i) above; or
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(iii) a deduction from such dividends, interest or royalties consisting at least of
the tax levied in China on the gross amount of the dividends, interest or
royalties. Switzerland shall determine the applicable relief and regulate the
procedure in accordance with the Swiss provisions relating to the carrying
out of international conventions of the Swiss Confederation for the
avoidance of double taxation.
(c) Where a resident of Switzerland derives interest or royalties (including
payments for the use, or the right to use, industrial, commercial or
scientific equipment) which, in accordance with the Tax Law of China
providing for special incentive measures designed to promote the
economic development of China, are exempt from Chinese tax or taxed
at a rate lower than the rate provided for in paragraph 2 of Articles 11
and 12, Switzerland shall allow, upon request, a credit to such resident,
to the extent that he is entitled thereto, of an amount equal to 10 per
cent of the gross amount of the interest or royalties (including payments
for the use, or the right to use, industrial, commercial or scientific
equipment) . The provisions of sub-paragraph b) of this paragraph shall
apply accordingly.
(d) A company which is a resident of Switzerland and which derives
dividends from a company which is a resident of China shall be entitled
for the purposes of Swiss tax with respect to such dividends, to the same
relief which would be granted to the company if the company paying the
dividends were a resident of Switzerland.
ARTICLE 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting
State to any taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of that
other Contracting State in the same circumstances are or may be subjected. This
provision shall, notwithstanding the provisions of Article 1, also apply to persons who
are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State shall not be less favourably levied in that other
Contracting State than the taxation levied on enterprises of that other contracting State
carrying on the same activities. This provision shall not be construed as obliging a
Contracting State to grant to residents of the other Contracting State any personal
allowances, reliefs and reductions for taxation purposes on account of civil status or
family responsibilities which it grants to its own residents.
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3. Except where the provisions of Article 9, paragraph 7 of Article 11, or paragraph
6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise
of a Contracting State to a resident of the other Contracting State shall, for the
purpose of determining the taxable profits of such enterprise, be deductible under the
same conditions as if they had been paid to a resident of the first-mentioned
Contracting State. Similarly, any debts of an enterprise of a Contracting State to a
resident of the other Contracting State shall, for the purpose of determining the
taxable capital of such enterprise, be deductible under the same conditions as if they
had been contracted to a resident of the first-mentioned Contracting State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned
or controlled, directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned Contracting State to any taxation or
any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of the
first-mentioned Contracting State are or may be subjected.
5. The provisions of this Article shall, notwithstanding the provisions of Article 2,
apply to taxes of every kind and description.
ARTICLE 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with the provisions
of this Agreement, he may, irrespective of the remedies provided by the domestic
law of those Contracting States, present his case to the competent authority of the
Contracting State of which he is a resident or, if his case comes under paragraph 1
of Article 24, to that of the Contracting State of which he is a national. The case
must be presented within three years from the first notification of the action
resulting in taxation not in accordance with the provisions of this Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve the
case by mutual agreement with the competent authority of the other Contracting State,
with a view to the avoidance of taxation which is not in accordance with this
Agreement.
3. The competent authorities of the Contracting States shall endeavour to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or
application of this Agreement. They may also consult together for the elimination of
double taxation in cases not provided for in this Agreement.
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4. The competent authorities of the Contracting States may communicate with each
other directly for the purpose of reaching an agreement in the sense of paragraphs 2
and 3. When it seems advisable for reaching agreement, representatives of the
competent authorities of the Contracting States may meet together for an oral
exchange of opinions.
ARTICLE 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such
information (being information which is at their disposal under their respective
taxation laws in the normal course of administration) as is necessary for carrying out
the provisions of this Agreement in relation to the taxes which are the subject of this
Agreement. Any information so exchanged shall be treated as secret and shall not be
disclosed to any persons other than those concerned with the assessment and
collection of the taxes which are the subject of this Agreement. No information as
aforesaid shall be exchanged which would disclose any trade, business, industrial or
professional secret or trade process.
2. In no case shall the provisions of this Article be construed as imposing upon
either of the Contracting States the obligation to carry out administrative measures at
variance with the regulations and practice of either Contracting State or which would
be contrary to its sovereignty, security or public policy or to supply particulars which
are not procurable under its own legislation or that of the Contracting State making
application.
ARTICLE 27
DIPLOMATIC AGENTS AND CONSULAR OFFICERS
1. Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents
or consular officers under the general rules of international law or under the
provisions of special agreements.
2. This Agreement shall not apply to international organisations, to organs or
officials thereof and to persons who are members of a diplomatic mission, consular
post or permanent mission of a third State, being present in a Contracting State and
not treated in either Contracting State as residents in respect of taxes on income or on
capital.
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ARTICLE 28
ENTRY INTO FORCE
This Agreement shall enter into force on the thirtieth day after the date on which
diplomatic notes indicating the completion of internal legal procedures necessary in
each country for the entry into force of this Agreement have been exchanged. This
Agreement shall have effect for any taxable year beginning on or after the first day of
January of 1990.
ARTICLE 29
TERMINATION
This Agreement shall continue in effect indefinitely but either of the Contracting
State may, on or before the thirtieth day of June in any calendar year beginning from
the date of its entry into force, give written notice of termination to the other
Contracting State through the diplomatic channel. In such event this Agreement shall
cease to have effect for any taxable year beginning on or after the first day of January
in the calendar years next following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Agreement.
DONE in duplicate at Beijing, this 6th day of July, 1990, in the Chinese, French and
English languages, all taxts being equally authentic. In case there is any divergency of
interpretation between the French and the Chinese texts, the English text shall prevail.
For the Government For the Swiss
of the People’s Republic of China Federal Council