[Senate Treaty Document 112-1]
[From the U.S. Government Publishing Office]


112th Congress
1st Session                     SENATE                     Treaty Doc.
112-1
_______________________________________________________________________
 
       PROTOCOL AMENDING TAX CONVENTION WITH SWISS CONFEDERATION

                               __________

                                MESSAGE

                                  from

                     THEPRESIDENTOFTHEUNITEDSTATES

                              transmitting

 PROTOCOL AMENDING THE CONVENTION BETWEEN THE UNITED STATES OF AMERICA 
 AND THE SWISS CONFEDERATION FOR THE AVOIDANCE OF DOUBLE TAXATION WITH 
  RESPECT TO TAXES ON INCOME, SIGNED AT WASHINGTON ON OCTOBER 2, 1996




 January 26, 2011.--Treaty was read the first time, and together with 
the accompanying papers, referred to the Committee on Foreign Relations 
          and ordered to be printed for the use of the Senate
                         LETTER OF TRANSMITTAL

                              ----------                              

                                 The White House, January 26, 2011.
To the Senate of the United States:
    I transmit herewith, for the advice and consent of the 
Senate to their ratification, the Protocol Amending the 
Convention between the United States of America and the Swiss 
Confederation for the Avoidance of Double Taxation with Respect 
to Taxes on Income, signed at Washington on October 2, 1996, 
signed on September 23, 2009, at Washington, as corrected by an 
exchange of notes effected November 16, 2010 (the ``proposed 
Protocol'') and a related agreement effected by an exchange of 
notes on September 23, 2009 (the ``related Agreement''). I also 
transmit for the information of the Senate the report of the 
Department of State, which includes an Overview of the proposed 
Protocol and related Agreement.
    The proposed Protocol and related Agreement provide for 
more robust exchange of information between tax authorities in 
the two countries to facilitate the administration of each 
country's tax laws. They generally follow the current U.S. 
Model Income Tex Convention and the Organization for Economic 
Cooperation and Development standards for exchange of tax 
information. The proposed Protocol and related Agreement also 
provide for mandatory arbitration of certain cases that the 
competent authorities of each country have been unable to 
resolve after a reasonable period of time.
    I recommend that the Senate give early and favorable 
consideration to the proposed Protocol and related Agreement 
and give its advice and consent to their ratification.
                                                      Barack Obama.
                          LETTER OF SUBMITTAL

                              ----------                              

                                       Department of State,
                                      Washington, December 8, 2010.
The President,
The White House.
    The President: I have the honor to submit to you, with a 
view to their transmission to the Senate for advice and consent 
to ratification, the Protocol Amending the Convention between 
the United States of America and the Swiss Confederation for 
the Avoidance of Double Taxation with Respect to Taxes on 
Income, Signed at Washington on October 2, 1996, signed on 
September 23, 2009, at Washington, as corrected by an exchange 
of notes effected November 16, 2010 (``proposed Protocol''), 
together with a related agreement effected by an exchange of 
notes on the same day (``related Agreement''). The proposed 
Protocol and related Agreement were negotiated to bring the 
existing income tax Convention with Switzerland into closer 
conformity with current U.S. tax treaty policy, and in 
recognition of the importance of the United States' economic 
relations with Switzerland. I recommend that the proposed 
Protocol and related Agreement be transmitted to the Senate for 
its advice and consent to ratification.
    The proposed Protocol and related Agreement provide for 
more robust exchange of information between tax authorities in 
the two countries to facilitate the administration of each 
country's tax laws. They generally follow the current U.S. 
Model Income Tax Convention and the current Organization for 
Economic Cooperation and Development standards for exchange of 
information. The proposed Protocol and related Agreement also 
provide for mandatory arbitration of certain cases that the 
competent authorities of each country have been unable to 
resolve after a reasonable period of time. An overview of key 
provisions of the proposed Protocol and related Agreement is 
enclosed with this report.
    The proposed Protocol is self-executing. The Department of 
the Treasury and the Department of State cooperated in the 
negotiation of the proposed Protocol and related Agreement, and 
the Department of the Treasury joins the Department of State in 
recommending that the proposed Protocol and related Agreement 
be transmitted to the Senate as soon as possible for its advice 
and consent to ratification.
    Respectfully submitted.
                                            Hillary Rodham Clinton.
    Enclosures: as stated.
                                Overview

    The proposed Protocol amending the Convention between the 
United States of America and the Swiss Confederation for the 
Avoidance of Double Taxation with Respect to Taxes on Income 
(``proposed Protocol'') and the related agreement effected by 
exchange of notes (``related Agreement'') were negotiated to 
bring the existing convention (``existing Convention''), signed 
in 1996, into closer conformity with current U.S. tax treaty 
policy regarding exchange of information and to include 
mandatory arbitration procedures for certain cases that the 
competent authorities of the countries have been unable to 
resolve after a reasonable period of time. There are, as with 
all bilateral tax conventions, some variations from the 
language of the current U.S. Model Income Tax Convention. In 
the proposed Protocol and related Agreement, these minor 
differences reflect particular aspects of Swiss law and treaty 
policy. However, the proposed Protocol and related Agreement 
and generally follow the current U.S. Model Income Tax 
Convention and the Organization for Economic Cooperation and 
Development standard for exchange of tax information.


                        exchange of information


    The proposed Protocol and related Agreement would replace 
the existing Convention's tax information exchange provisions 
with updated rules that are consistent with current U.S. tax 
treaty practice. The proposed Protocol and related Agreement 
allow the tax authorities of each country to exchange 
information relevant to carrying out the provisions of the 
Convention or the domestic tax laws of either country, 
including information that would otherwise be protected by the 
bank secrecy laws of either country.


        dispute resolution through mandatory binding arbitration


    The proposed Protocol and related Agreement update the 
provisions of the existing Convention with respect to the 
mutual agreement procedure by incorporating mandatory 
arbitration of certain cases that the competent authorities of 
the United States and the Swiss Confederation have been unable 
to resolve after a reasonable period of time. The arbitration 
provisions in the proposed Protocol and related Agreement are 
similar to other mandatory arbitration provisions that have 
recently been included in other U.S. bilateral tax treaties and 
that are currently in force.


                     individual retirement accounts


    The proposed Protocol updates the provisions of the 
existing Convention to provide that individual retirement 
accounts are eligible for the benefits afforded a pension under 
the Convention.


                            entry into force


    The proposed Protocol would enter into force when the 
United States and the Swiss Confederation exchange instruments 
of ratification. The proposed Protocol would have effect, with 
respect to taxes withheld at source, for amounts paid or 
credited on or after the first day of January of the year 
following entry into force of the Protocol. With respect to tax 
information exchange, the proposed Protocol would have effect 
with respect to requests for bank information to information 
that relates to any date beginning on or after the date of 
signature of the proposed Protocol and, with respect to all 
other cases, would have effect with respect to requests for 
information that relate to taxable periods beginning on or 
after the first day of January of the year following the date 
of signature. The mandatory arbitration provision would have 
effect with respect both to cases that are under consideration 
by the competent authorities as of the date on which the 
Protocol enters into force and to cases that come under 
consideration after that date. The related Agreement would 
enter into force on the date of entry into force of the 
proposed Protocol and would be annexed to the Convention as 
Annex A thereto and would be an integral part of the 
Convention.



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