The protocol between the Government of the Republic of Serbia and the Swiss Federal Council on the amendment of the Agreement between the Council of Ministers of Serbia and Montenegro and the Swiss Federal Council on the avoidance of double taxation in relation to income taxes and property taxes was signed in Belgrade on September 19, 2023.
The Protocol amends the Double Taxation Avoidance Agreement signed in 2005 between the Council of Ministers of Serbia and Montenegro and the Swiss Federal Council, which has been in force since 2007 and applies to economic relations between Serbia and Switzerland. The protocol harmonizes the text of the agreement with the provisions of the Multilateral Convention for the Implementation of Measures Related to Tax Treaties to Prevent Tax Base Erosion and Profit Shifting in accordance with the OECD/G20 BEPS Action Plan, which both countries signed in 2017 and entered into force in 2018.
The BEPS Action Plan, developed by the OECD and the G20, introduces new rules for cross-border taxation and prevents the abuse of tax treaties by multinational corporations. The Convention also modifies existing bilateral tax treaties but without the need for their ratification or consolidation. However, according to Swiss domestic legislation, bilateral contracts can only be changed by signing a protocol or a new contract, following the usual procedure for concluding bilateral agreements. That is why Switzerland proposed to comply with the Multilateral Convention by signing a protocol on amendments to the current agreement with Serbia, which was accepted.
The Protocol contains several improvements and clarifications regarding the taxation of company profits, taxation of related companies, and capital gains, as well as the exchange of information between competent authorities of contracting states. It also includes minimum standards for cross-border taxation, which primarily relate to the preamble of the treaty and prevention of treaty abuse i.e., limiting the right to treaty benefits.