What does the India–Switzerland DTAA actually give you — the rates, the conditions attached to them, and what the MLI changed?
The rates, at a glance
Every figure below is taken from the article named beside it, not from a rates table. Read the condition in the same row before you use the rate — in this treaty the condition is usually the whole answer.
Income
Rate
The condition attached to it
Article
Dividends
10 per cent of the gross amount — a single flat ceiling, conditional on the beneficial owner of the dividends being a resident of the other Contracting State. Art. 10(2), which carries an amendment marker and is therefore a substituted paragraph, not the 1994 original.
None. There is no shareholding threshold and no two-tier structure in Article 10. There is also no MLI Art. 8 holding-period condition, because the MLI does not apply — so the 10 per cent rate carries no…
Article 10, paragraph 2
Interest
10 per cent of the gross amount — a single flat ceiling, conditional on the beneficial owner being a resident of the other Contracting State. Art. 11(2), a substituted paragraph.
Art. 11(3) contains four separate exemption limbs, three of which confer exclusive residence-state taxation rather than a mere source exemption, and they are asymmetric — the (a) and (b) limbs face in opposite…
Article 11, paragraph 2 for the rate; 3(a) to 3(d) for the exemptions
Royalties
10 per cent of the gross amount — Art. 12(2), conditional on the beneficial owner being a resident of the other Contracting State. A single flat ceiling covering royalties and fees for technical services alike, with no split by type and no time-tiering. The whole of article 12 (paragraphs 1 to 7) was substituted as a block by amendment, so this is not the 1994 text.
Art. 12(3) is a single composite definition covering copyright of a literary, artistic or scientific work including cinematograph films or work on film, tape or other means of reproduction for use in…
Article 12, paragraph 2
Fees for technical services
10 per cent of the gross amount — the same single ceiling as royalties, Art. 12(2). Royalties and FTS do not carry different rates on this treaty.
There is no make-available requirement in article 12, and — this is the point that distinguishes switzerland from france — the protocol'S MFN clause does not supply one automatically. Art. 12(4) reads in full…
Article 12, paragraph 4, with the exclusions at 5 and the MFN at Protocol para 5
Status
In force
29 December 1994. The Agreement and its Protocol were signed at New Delhi on 2 November 1994 (in Hindi, German and English, all texts equally authentic, the english text to prevail in case of doubt) and entered into force on 29-12-1994 under Art. 26(1) as it then stood. The Agreement covers taxes on income only — the long title is 'for the avoidance of double taxation with respect to taxes on income', with no capital or wealth-tax limb.
Given effect by
Notification No. G.S.R. 357(E), dated 21-4-1995 — issued under s.90 of the Income-tax Act 1961 alone.
Modified by the MLI
No synthesised text was found for this treaty in the source searched.
Principal purpose test
No. There is no principal purpose test anywhere in this Agreement or its Protocol, and no synthesised text exists to supply one. This is the finding to flag hardest on this treaty. Every other treaty examined in this batch so far either has the MLI Art. 7(1) PPT applied through a synthesised text (Australia, Canada, France) or has an equivalent written into the treaty text bilaterally (China, Article 27A). India-Switzerland has neither. A structure denied benefits under a comparable treaty by the PPT may not be deniable here, and the revenue's route is instead the Protocol para 5 conduit rule — with its higher 'main purpose' threshold and its confinement to Articles 10, 11, 12 and 22 — or domestic GAAR.
Dividends
Rate
10 per cent of the gross amount — a single flat ceiling, conditional on the beneficial owner of the dividends being a resident of the other Contracting State. Art. 10(2), which carries an amendment marker and is therefore a substituted paragraph, not the 1994 original.
The holding that unlocks it
None. There is no shareholding threshold and no two-tier structure in Article 10. There is also no MLI Art. 8 holding-period condition, because the MLI does not apply — so the 10 per cent rate carries no 365-day ownership requirement, unlike Canada.
Where this comes from
Article 10, paragraph 2
Art. 10(3) defines dividends broadly and in the continental European style: income from shares, 'jouissance' shares or 'jouissance' rights, mining shares, founders' shares or other rights (not being debt-claims) participating in profits, plus income from other corporate rights subjected to the same taxation treatment as income from shares by the distributing company's State. The jouissance and founders'-share limbs matter for Swiss capital structures and have no counterpart in the Australia, Canada or China treaties. Art. 10(4) is the PE / fixed-base override. Art. 10(5) is the extraterritorial-dividend and undistributed-profits prohibition. The conduit rule in protocol para 5 applies to this article: the whole of Article 10 is disapplied in respect of any dividend paid under or as part of a conduit arrangement.
Interest
Rate
10 per cent of the gross amount — a single flat ceiling, conditional on the beneficial owner being a resident of the other Contracting State. Art. 11(2), a substituted paragraph.
Exemptions
Art. 11(3) contains four separate exemption limbs, three of which confer exclusive residence-state taxation rather than a mere source exemption, and they are asymmetric — the (a) and (b) limbs face in opposite directions and are not mirror images. All four open 'Notwithstanding the provisions of paragraph 2', so they override the 10 per cent ceiling. Art. 11(3)(a) — swiss-source only. Interest arising in switzerland and paid to a resident of India is taxable only in india if it is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured, by: the Government, a political sub-division, A statutory body or a local authority of India; or the Export-Import Bank of India; the Reserve Bank of India; the Industrial Finance Corporation of India; the Industrial Development Bank of India; the National Housing Bank; the Small Industries Development Bank of India; or by any institution specified and agreed in letters exchanged between the competent authorities. Note this limb gives relief from swiss tax, not Indian tax. Art. 11(3)(b) — indian-source. Interest arising in india and paid to a resident of Switzerland is taxable only in switzerland if paid in respect of a loan made, guaranteed or insured, or credit extended, guaranteed or insured, under the swiss provisions regulating the export or investment risk guarantee, or by any institution specified and agreed in letters exchanged between the competent authorities. This is a functional test keyed to a Swiss statutory scheme rather than a list of named bodies. Art. 11(3)(c) — a shipping and aircraft limb that is easy to miss because it sits inside the interest article: interest arising in one State and paid to a resident of the other engaged in the operation of ships or aircraft in international traffic is taxable only in that other State, to the extent that the interest is paid on funds connected with such activity. The 'to the extent' qualifier apportions rather than exempting wholesale. Art. 11(3)(d) — the broadest and most valuable limb, and the one most often overlooked. 'Interest arising in India and paid to a resident of Switzerland shall be exempt from indian tax if the loan or other indebtedness in respect of which the interest is paid is an approved loan. The term "approved loan" means any loan or other indebtedness approved by the government of india in this behalf.' There is no restriction by lender, by borrower, by purpose or by amount. The whole question is whether Government approval has been given. This converts an administrative approval into a complete treaty exemption from Indian withholding, and it operates only in the India-source direction. Art. 11(5) disapplies paras 1 and 2 (not, on its face, para 3) where the debt-claim is effectively connected with a PE or fixed base. The conduit rule in protocol para 5 applies to article 11 and can strip these exemptions where the interest is paid under or as part of a conduit arrangement.
Where this comes from
Article 11, paragraph 2 for the rate; 3(a) to 3(d) for the exemptions
Art. 11(4) defines interest as 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, in particular income from Government securities and from bonds or debentures including premiums and prizes; penalty charges for late payment are expressly excluded. One paragraph of the original Article 11 has been deleted by amendment and is shown only as '***'; its former content is not established. Art. 11(6) sourcing is the ordinary payer-residence rule with a PE / fixed-base carve-in. Art. 11(7) is the special-relationship restriction.
Royalties
Rate
10 per cent of the gross amount — Art. 12(2), conditional on the beneficial owner being a resident of the other Contracting State. A single flat ceiling covering royalties and fees for technical services alike, with no split by type and no time-tiering. The whole of article 12 (paragraphs 1 to 7) was substituted as a block by amendment, so this is not the 1994 text.
Where this comes from
Article 12, paragraph 2
Art. 12(3) is a single composite definition covering copyright of a literary, artistic or scientific work including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting; any patent, trademark, design or model, plan, secret formula or process; the use of or right to use any industrial, commercial or scientific equipment; and information concerning industrial, commercial or scientific experience. Equipment royalties are inside the definition at the same 10 per cent, so unlike Australia and Canada there is nothing to gain by characterising a payment as an equipment royalty. Protocol para 7 draws the boundary with the capital gains article and is the qualifier that decides ip-sale cases: gains derived from the alienation of a right or property mentioned in Art. 12(3) may be taxed according to Article 7 or Article 13 — i.e. As business profits or capital gains — but gains from the alienation of any such right or property which are contingent on the profits, productivity or use thereof may be taxed according to Article 12. So an outright ip sale falls outside Article 12; an earn-out or productivity-linked consideration falls inside it at 10 per cent gross. Art. 12(6) PE / fixed-base override, keyed to whether the contract is effectively connected. Art. 12(7) sourcing. Art. 12(8) special-relationship restriction. The conduit rule in protocol para 5 applies to article 12.
Fees for technical services
Rate
10 per cent of the gross amount — the same single ceiling as royalties, Art. 12(2). Royalties and FTS do not carry different rates on this treaty.
Make-available requirement
No
Where this comes from
Article 12, paragraph 4, with the exclusions at 5 and the MFN at Protocol para 5
There is no make-available requirement in article 12, and — this is the point that distinguishes switzerland from france — the protocol'S MFN clause does not supply one automatically. Art. 12(4) reads in full: 'For purposes of this Article the term "fees for technical services" means payments of any kind to any person in consideration for the rendering of any managerial, technical or consultancy services, including the provision of services by technical or other personnel.' That is the whole test — a pure services-nature test with no technology-transfer condition, no enduring-benefit condition and no make-available limb. Nor is there any territorial requirement of the kind the China treaty carries: the services need not be performed in the source State. Art. 12(5) supplies only two exclusions, and they are narrow: 'fees for technical services' does not include amounts paid (a) for teaching in or by educational institutions; or (b) for services covered by article 14 or article 15 — independent personal services and dependent personal services. There is no sale-of-property carve-out, no shipping-and-aircraft carve-out and no personal-use carve-out of the kind the Australia and Canada treaties contain. Now the MFN. Protocol para 5 as substituted by the Amending Protocol contains two separate MFN limbs and they are not drafted alike. The rate limb is self-executing: where India, under any Convention, Agreement or Protocol with a third State that is an OECD member signed after the signature of the amending protocol, limits its source taxation on dividends, interest, royalties or fees for technical services to a rate lower than this Agreement provides, 'the same rate ... Shall also apply between both Contracting States under this Agreement as from the date on which such Convention, Agreement or Protocol enters into force.' The scope limb is not self-executing: 'If after the date of signature this Amending Protocol, India under any Convention, Agreement or Protocol with a third State which is a member of the OECD, restricts the scope in respect of royalties or fees for technical services than the scope for these items of income provided for in Article 12 of this Agreement, then switzerland and india shall enter into negotiations without undue delay in order to provide the same treatment to Switzerland as that provided to the third State.' That is an obligation to negotiate, not a rule of automatic application. A narrower FTS definition conceded to a third OECD State — a make-available limb, for instance — therefore does not flow into this treaty of its own force; it triggers only a duty to open negotiations. This is the decisive difference from the France Protocol para 7, which provides in terms that 'the same rate or scope ... Shall also apply'. Anyone importing make-available into the Switzerland treaty by analogy with the France MFN arguments is reading a clause that is not there.
Capital gains on shares
Treatment
A residence-state exemption that is expressly disapplied in india'S favour — the structure is asymmetric and quoting only the first half of it produces exactly the wrong answer. Art. 13(5): gains from the alienation of shares other than those mentioned in para 4, of a company which is a resident of a Contracting State, '(a) shall be taxable only in the Contracting State of which the alienator is a resident; (b) notwithstanding the provision of sub-paragraph (a), india may tax gains from the alienation of shares in A company which is A resident of india.' Read together: a Swiss resident selling shares in an indian company gets no treaty protection — India may tax under domestic law. An Indian resident selling shares in a swiss company is taxable only in India. The residence-only rule in (a) is real but, on the India-source side, sub-paragraph (b) takes it all back. Art. 13(4) separately allows the situs State to tax gains on shares of a company whose property consists principally of immovable property situated there. Art. 13(6) is a residual residence-only rule for any property not within paras 1 to 5. Where sub-paragraph (b) applies, the closing words of Art. 13(5) direct that Art. 23(1)(b) — the Swiss relief provision — shall apply.
Grandfathering
None. There is no acquisition-date cut-off, no transition rate and no limitation-of-benefits condition attached to Article 13. Because sub-paragraph (b) has always preserved India's right to tax Indian company shares, this treaty never conferred the kind of benefit that would need grandfathering.
Conditions
Protocol para 6 contains A contingent future replacement of article 13(5) that should be recorded because IT is self-executing on its terms: it is understood that if at A later stage switzerland introduces A capital gains tax on the alienation of shares of a Swiss company other than shares of a company mentioned in para 4, then Art. 13(5) 'shall be replaced by' a symmetrical rule reading 'Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State' — and in that case Art. 23(1)(b) shall be deleted. Whether that condition has been satisfied is a question of Swiss domestic law and is not established here; it should be checked before advising on an Indian resident's disposal of Swiss shares. Because the MLI does not apply, the Art. 13(4) real-property-rich test has no 365-day look-back and is not extended to partnership or trust interests — it remains a point-in-time test confined to shares. And note it says only 'principally', with no stated percentage and no carve-out for property used in the company's business, unlike the France treaty.
Where this comes from
Article 13, paragraph 5(a) and 5(b), with 4, 6 and Protocol para 6
Permanent establishment
Construction or installation PE
More than six months — Art. 5(2)(j), covering 'a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than six months'. Supervision is expressly inside the limb. There is no aggregation-across-projects language and, because the MLI does not apply, no splitting-up-of-contracts rule — connected activities of closely related enterprises are not added together. Separately, Art. 5(2)(k) makes an installation or structure used for the exploration or development of natural resources a PE if so used for more than 90 days — note 'development', not 'exploitation', and note that 90 days is the shortest threshold in the article.
Service PE
Two thresholds, 90 days and 30 days, and the 30-day one is the one that catches people. Art. 5(2)(l), a substituted sub-paragraph, deems a PE to arise from 'the furnishing of technical services, other than services as defined in article 12, within a Contracting State by an enterprise through employees or other personnel, but only if: (i) activities of that nature continue within that State for a period or periods aggregating more than 90 days within any twelve month period; or (ii) the services are performed within that State for A related enterprise (within the meaning of paragraph 1 of Article 9) for a period or periods aggregating more than 30 days within any twelve-month period.' Four qualifiers. First, the limb is confined to technical services, not services generally. Second, services falling within the Article 12 definition are excluded — they are taxed at 10 per cent gross under Article 12 instead, so the two articles are meant to be mutually exclusive; but because the Art. 12(4) definition of fees for technical services is extremely wide (any managerial, technical or consultancy service), very little technical service activity is left for the service PE limb to catch. Third, the ordinary threshold is more than 90 days in any twelve-month period. Fourth, and critically, where the services are performed for a related enterprise the threshold collapses to more than 30 days. Note the contrast with Canada, where the related-enterprise limb has no time threshold at all, and with China, where there is no related-enterprise limb. Thirty days is a real number but a very short one for intra-group secondments. Protocol para 2 adds an election that is unique among the treaties in this batch and is worth real money: the remuneration for furnishing services covered by Art. 5(2)(l) 'shall be taxed according to Article 7 or, on request of the enterprise, according to the rates provided for in paragraph 2 of Article 12'. So an enterprise that has triggered a service PE may elect to be taxed at the 10 per cent gross treaty rate instead of on net PE profits under Article 7. Where margins are high the election is valuable; where the project is loss-making it is not, and the choice is the enterprise's.
Agency PE
Yes — Art. 5(5) (renumbered from an earlier paragraph), with three limbs, and one of them is wider than the OECD model in a way that matters. A person acting in a Contracting State for or on behalf of an enterprise of the other State, other than an independent agent within Art. 5(6), is deemed a PE if: (i) he has and habitually exercises authority to negotiate and enter into contracts for or on behalf of the enterprise, unless his activities are limited to purchasing goods or merchandise — note 'negotiate and enter into', which on its face is a conjunctive requirement and therefore narrower than a bare 'conclude', not wider, and this should be read carefully rather than assimilated to the OECD formula; (ii) he habitually maintains a stock of goods from which he regularly delivers on behalf of the enterprise; or (iii) in so acting, he manufactures or processes in that State for the enterprise goods belonging to the enterprise — with an express limitation that this limb 'shall apply only in relation to the goods or merchandise so manufactured or processed', so the PE is a partial one. Protocol para 2, third sub-paragraph, adds A significant restriction on order-securing agents: a person who habitually secures orders in a Contracting State wholly or almost wholly for the enterprise itself is deemed a PE only if he habitually represents to persons offering to buy that acceptance of an order by him constitutes the enterprise'S agreement to supply on the terms specified in the order. That is a much higher bar than the bare 'habitually secures orders' limb in the Australia and Canada treaties. Art. 5(6) independent-agent relief is withdrawn where the agent's activities are devoted wholly or almost wholly on behalf of that enterprise, or for that enterprise and other enterprises which are controlled by it or have a controlling interest in it — exclusivity alone destroys independence here, with no arm's-length requirement, unlike Canada.
Where this comes from
Article 5
Art. 5(2) is unusually generous to the revenue in its fixed-place items: (d) A store or other sales outlet and (h) A permanent sales exhibition are both listed without any time qualification, alongside (g) a warehouse in relation to a person providing storage facilities for others. Art. 5(4), inserted by amendment, is an insurance PE limb with no counterpart in the other treaties in this batch: an insurance enterprise of one State is deemed to have a PE in the other, except in regard to re-insurance, if it collects premiums in that other State's territory or insures risks situated there through a person other than an independent agent. The re-insurance carve-out is the qualifier. Art. 5(3) preparatory-and-auxiliary exceptions run (a) to (f), with (e) framed narrowly as advertising, supply of information or scientific research 'being activities solely of a preparatory or auxiliary character in the trade or business of the enterprise', and (f) the combination exception added by amendment with its own preparatory-or-auxiliary proviso. Protocol para 2, second sub-paragraph, adds that with respect to Art. 5(3), the maintenance of a stock of goods for the purpose of delivery, or facilities used for delivery of goods, do not constitute a permanent establishment as long as the conditions of Art. 5(2) or 5(4) are not fulfilled — delivery is protected even though it is not in the Art. 5(3) list. Because the MLI does not apply there is no anti-fragmentation rule, no commissionnaire or principal-role agency test, and no closely-related definition. Article 5 stands as the two States wrote it. Protocol para 3 restricts PE profits on survey, supply, installation or construction contracts for industrial, commercial or scientific equipment or premises, or public works, to that part of the contract effectively carried out by the PE, with head-office profits taxable only in the residence State — but with a qualifier the France equivalent lacks: 'provided that the amount payable is not covered under the provisions of Article 12'.
Anti-abuse: limitation of benefits, and the MLI
LOB
No limitation-of-benefits article in the Agreement. But there is a targeted anti-abuse rule, and it is the only general one this treaty has: protocol para 5, first limb, a conduit arrangement rule applying to Articles 10, 11, 12 and 22. 'The provisions of Articles 10, 11, 12 and 22 shall not apply in respect to any dividend, interest, royalty, fees for technical services or other income paid under, or as part of a conduit arrangement.' The definition has four cumulative elements and every one must be met: (1) a transaction or series of transactions structured in such A way that a resident of a Contracting State entitled to the benefits of the Agreement receives an item of income arising in the other State; (2) that resident pays, directly or indirectly, all or substantially all of that income (at any time or in any form) to another person who is not a resident of either Contracting State; (3) that other person, had it received the income directly, would not be entitled — under a treaty between its State and the source State, or otherwise — to benefits equivalent to or more favourable than those available under this Agreement; and (4) the main purpose of such structuring is obtaining benefits under this Agreement. Note the fourth element: 'the main purpose', a materially higher threshold than the PPT's 'one of the principal purposes'. Note also that the rule reaches only conduit payments out to a third-State person; it does not touch treaty shopping that stops at a Swiss resident, nor does it apply to Articles 7, 13 or any other article. It is a narrow instrument compared with a PPT.
PPT
No. There is no principal purpose test anywhere in this Agreement or its Protocol, and no synthesised text exists to supply one. This is the finding to flag hardest on this treaty. Every other treaty examined in this batch so far either has the MLI Art. 7(1) PPT applied through a synthesised text (Australia, Canada, France) or has an equivalent written into the treaty text bilaterally (China, Article 27A). India-Switzerland has neither. A structure denied benefits under a comparable treaty by the PPT may not be deniable here, and the revenue's route is instead the Protocol para 5 conduit rule — with its higher 'main purpose' threshold and its confinement to Articles 10, 11, 12 and 22 — or domestic GAAR.
Subject to tax
None. Protocol para 1, as amended, works in the opposite direction by confirming treaty access: 'resident of a Contracting State' in Art. 4(1) includes a recognised pension fund or pension scheme, defined as any pension fund or scheme recognised and controlled according to the statutory provisions of that State, which is generally exempt from income taxation in that state and which is operated principally to administer or provide pension or retirement benefits. So exemption from tax is expressly not a bar to residence for such a fund.
Where this comes from
Article Protocol para 5 (conduit arrangement). No LOB, PPT or subject-to-tax article in the Agreement itself.
No synthesised text exists for india-switzerland. On the evidence available here the MLI has not been applied to modify this Agreement. The consequence is material and should be stated plainly: unlike China, which achieved the beps minimum standard bilaterally by inserting Article 27A, this treaty has no principal purpose test at all. None of the MLI's provisions apply — no beps preamble, no PPT, no dual-resident rule, no anti-fragmentation, no commissionnaire agency test, no 365-day capital gains look-back. The only general anti-abuse provision in the whole instrument is the conduit-arrangement rule in Protocol para 5, which is narrower than a PPT in every dimension. This should be re-verified against the OECD depositary before publication, since Switzerland has historically preferred bilateral amendment to MLI coverage and a protocol or a synthesised text could change the position.
The protocols, in order
A treaty read without its protocols is a wrong answer.
Notification No. G.S.R. 74(E), dated 7-2-2001 — the first amending notification.
Notification No. S.O. 2903(E), dated 27-12-2011 — the second amending notification, giving effect to the instrument the Protocol itself calls 'this Amending Protocol'. It is the one that matters most: it carries the conduit-arrangement anti-abuse rule, the most-favoured-nation clause in its current form, the recognised-pension-fund rule, the permanent-establishment rate-differential cap and the whole modern exchange-of-information apparatus with its five-item request checklist and its express exclusion of automatic and spontaneous exchange.
Important limitation on this record. The consolidated Agreement carries numbered superscript amendment markers (1 through 17 across the text), but which notification each marker points to is not stated. So the fact that a provision was amended is established; which of the two notifications amended it is, for most provisions, not established here and must be confirmed from the footnotes or the Gazette before publication. What is established by content rather than by marker: the conduit rule and the MFN clause both refer to 'this Amending Protocol' and sit alongside the modern eoi provisions, so they belong to the instrument notified by S.O. 2903(E) dated 27-12-2011.
Provisions carrying an amendment marker, so far as visible: Art. 5(2)(l) (the service PE limb), Art. 5(3)(f) (the combination exception), Art. 5(4) (the insurance PE limb, inserted), the renumbering of Art. 5(5) to 5(7), Art. 10(2) and 10(4), the deletion of one paragraph of Art. 11 and the substitution of the Art. 11(3) exemptions, Art. 11(4) to 11(7), the whole of article 12 (paras 1 to 7, substituted as a block), Art. 13(2), 13(3) and 13(5), the whole of article 14, and Protocol paras 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10.
The protocol is the original Protocol of 2 November 1994 as amended, expressed to form an integral part of the Agreement. It has ten numbered paragraphs and is where the anti-abuse rule, the MFN clause and several decisive PE qualifications live.
The words themselves
Quoted from the treaty as notified.
If after the date of signature this Amending Protocol, India under any Convention, Agreement or Protocol with a third State which is a member of the OECD, restricts the scope in respect of royalties or fees for technical services than the scope for these items of income provided for in Article 12 of this Agreement, then Switzerland and India shall enter into negotiations without undue delay in order to provide the same treatment to Switzerland as that provided to the third State.
Article Protocol, paragraph 5 of the treaty as notified.
For purposes of this Article the term "fees for technical services" means payments of any kind to any person in consideration for the rendering of any managerial, technical or consultancy services, including the provision of services by technical or other personnel.
Article 12, paragraph 4 of the treaty as notified.
(a) shall be taxable only in the Contracting State of which the alienator is a resident; (b) notwithstanding the provision of sub-paragraph (a), India may tax gains from the alienation of shares in a company which is a resident of India.
Article 13, paragraph 5 of the treaty as notified.
the services are performed within that State for a related enterprise (within the meaning of paragraph 1 of Article 9) for a period or periods aggregating more than 30 days within any twelve-month period
Article 5, paragraph 2(l)(ii) of the treaty as notified.
interest arising in India and paid to a resident of Switzerland shall be exempt from Indian tax if the loan or other indebtedness in respect of which the interest is paid is an approved loan. The term "approved loan" means any loan or other indebtedness approved by the Government of India in this behalf.
Article 11, paragraph 3(d) of the treaty as notified.
It is understood that the remuneration for furnishing of services covered by sub-paragraph (1) of paragraph 2 shall be taxed according to Article 7 or, on request of the enterprise, according to the rates provided for in paragraph 2 of Article 12.
Article Protocol, paragraph 2 of the treaty as notified.
the main purpose of such structuring is obtaining benefits under this Agreement
Article Protocol, paragraph 5 of the treaty as notified.
What to watch
The MFN clause, precisely, and why IT is not the france clause. Protocol para 5 has two MFN limbs with different legal characters. The rate limb is self-executing — the lower third-State rate 'shall also apply'. The scope limb is not — a narrower third-State definition of royalties or fees for technical services obliges the two States only to 'enter into negotiations without undue delay'. So the standard argument that a make-available limb conceded to the UK or the USA is imported into the Indian treaty network by MFN cannot be run in the same way here as it can on France. On Switzerland, scope MFN is an agreement to negotiate.
The MFN trigger date is also narrower. The rate limb bites only on third-State instruments signed after the signature of the amending protocol. France's clause reaches back to instruments signed after 1 September 1989. So the pool of qualifying third-State treaties is much smaller here, and the exact signature date of the Amending Protocol — which this record does not establish — is the gating fact for every MFN claim on this treaty.
This treaty has no principal purpose test. No MLI, no synthesised text, no bilateral equivalent of China's Article 27A. The only general anti-abuse provision is the Protocol para 5 conduit rule, which requires that the Swiss recipient pay on all or substantially all of the income to a third-State person who would not have got equivalent benefits, and that the main purpose be treaty benefits. Structures that stop at a genuine Swiss recipient are outside it on its terms.
The service PE threshold drops to 30 days for related enterprises. Art. 5(2)(l)(ii) is the shortest service PE trigger among the treaties in this batch that have a day count at all. Intra-group technical support visits totalling more than a month in a twelve-month period create a PE — subject only to the Article 12 exclusion, which is itself doing most of the work because the Art. 12(4) FTS definition is so wide.
The protocol para 2 election is A real planning tool and is unique in this batch. An enterprise that has a service PE under Art. 5(2)(l) may request to be taxed at the Article 12(2) rate of 10 per cent gross instead of under Article 7. Compare the gross rate against the expected net margin before conceding or contesting a PE.
The art. 11(3)(d) approved-loan exemption is the most valuable interest provision in the treaty and IT turns on A purely administrative fact. Any loan or other indebtedness approved by the Government of India carries a complete exemption from Indian tax on the interest, regardless of who the lender is. It is one-directional — India-source only — and it sits at the end of a list of institution-based limbs where a reader may stop before reaching it.
The capital gains rule must never be quoted at sub-paragraph (a). Reading Art. 13(5)(a) alone produces the conclusion that a Swiss resident's gain on Indian shares is taxable only in Switzerland. Sub-paragraph (b) says the opposite for exactly that case. The residence-only rule is genuine only for gains on shares of Swiss and other non-Indian companies.
Protocol para 6 may have already changed article 13(5) without any further instrument. It provides that if Switzerland introduces a capital gains tax on the alienation of shares of a Swiss company, Art. 13(5) 'shall be replaced by' a symmetrical source-taxation rule and Art. 23(1)(b) 'shall be deleted'. Check the state of Swiss law before advising an Indian resident on a disposal of Swiss shares.
Protocol para 7 sends contingent ip consideration to article 12. An outright sale of a patent or know-how is taxed under Article 7 or Article 13; the same sale with an earn-out or a productivity-linked instalment is taxed under Article 12 at 10 per cent gross. Deal structure determines the article.
The order-securing agent rule is much narrower here than elsewhere. Protocol para 2 requires that the agent habitually represent to buyers that his acceptance binds the enterprise to supply. A person who merely passes orders back for acceptance is not a PE under this treaty, though he might be under the Australia or Canada treaties.
The insurance PE limb at art. 5(4) has no counterpart in the other nine treaties in this batch. Premium collection or risk insurance in the other State through a dependent person creates a PE, except for re-insurance. Swiss insurers and reinsurers operating into India need to be tested against it separately from the general fixed-place and agency rules.
Protocol para 8 caps the permanent-establishment rate differential. A State may tax a PE of the other State's company at a higher rate than a domestic company without breaching Art. 24(2), but the difference shall not exceed 10 percentage points. That is a hard numerical limit and it is the kind of qualifier that is routinely dropped when the non-discrimination article is summarised.
Protocol para 9 overrides domestic time limits on implementing A map outcome: if the mutual agreement procedure was introduced within five years of the assessment becoming final, any agreement reached shall be implemented notwithstanding any domestic time limits.
Protocol para 10 confines exchange of information in ways that matter to clients: the requesting State must first have exhausted all normal domestic procedures; it must supply five specified items with each request including the taxpayer's name; and — expressly — 'Article 26 of the Agreement shall not commit the Contracting States to exchange information on an automatic or A spontaneous basis'. Taxpayer procedural rights in the requested State remain applicable before information is transmitted.
What this page does not tell you. The date of signature of the amending protocol is not established, and it is the gating fact for the MFN rate limb, which reaches only third-State instruments signed after that date. Notification No. S.O. 2903(E) dated 27-12-2011 is the only date available here. The Protocol's own signature date must be obtained from the Gazette before any MFN claim is assessed. Which of the two amending notifications made which change is not established for most provisions. Amended text is marked with numbered superscripts 1 to 17, but these are not resolved to G.S.R. 74(E) dated 7-2-2001 or S.O. 2903(E) dated 27-12-2011. Only the conduit rule, the MFN clause and the exchange-of-information provisions can be attributed to the later instrument, and that by content rather than by marker. The original 1994 rates in Arts. 10(2), 11(2) and 12(2) are not established. All three paragraphs carry amendment markers and only the current text is available here. Any question about a period before the relevant amendment took effect requires the original notified text of G.S.R. 357(E) dated 21-4-1995. One paragraph of article 11 has been deleted and is shown only as '***'. Its former content is not established. The full text of article 12 as IT stood before substitution is not established. The whole article was replaced as a block, so the earlier definition of fees for technical services — which may or may not have differed — is not visible. Whether Switzerland has introduced a capital gains tax on the alienation of shares of a Swiss company, and therefore whether the Protocol para 6 replacement of Art. 13(5) has been triggered, is a question of Swiss domestic law and is not established here. Whether any institutions have been specified and agreed in letters exchanged between the competent authorities under Art. 11(3)(a) or 11(3)(b) is not established. Article 23 (elimination of double taxation), including sub-paragraph 1(b) which Art. 13(5) and Protocol para 6 both turn on, was not read in detail and is not summarised here. Whether a synthesised text may yet be prepared should be re-verified against the OECD depositary.