On December 5, 2024, the U.S. Internal Revenue Service (“IRS”) published a competent authority arrangement (“CAA”) entered into by the competent authorities of the United States and Switzerland.1 The CAA supersedes the CAA signed on May 6, 2021, and applies to dividends paid on or after January 1, 2020.2
WHY THIS MATTERS
The CAA may be used to determine whether a pension plan or retirement arrangement is exempt from source-country taxation on dividends under Article 10(3) of the United States-Switzerland income tax treaty (the “treaty”). Similar to the previous CCA (covered in GMS Flash Alert 2021-169), the superseding CAA does not address whether the identified pension plans are “generally corresponding” plans for purposes of Article 28(4) of the treaty.3 Article 28(4) allows contributions to a generally corresponding pension plan to be deducted or excluded from income.4 As a result, it remains open as to whether individuals holding such pension plans identified as generally corresponding plans for purposes of Article 10(3) could seek relief under Article 28(4).
More Details
The CAA identifies certain U.S. and Swiss pension or other retirement arrangements, including individual retirement savings plans, that may be eligible for an exemption from source-country taxation on dividends under Article 10(3) of the treaty.5 The text of the superseding CAA is nearly identical to the previous CAA signed in 2021, except that it provides a procedure for U.S. Group Trusts for purposes of claiming a refund from the Swiss tax authorities under Article 10(3).6
Footnotes:
1 Competent Authority Agreement, Pension Plans for Tax Treaty Benefits (Dec. 5, 2024).
2 Ibid.
3 GMS Flash Alert 2021-169 (June 11, 2021).
4 Ibid.
5 Competent Authority Agreement, Pension Plans for Tax Treaty Benefits (Dec. 5, 2024).
6 Ibid.
Contacts
More information
Disclaimer
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the KPMG International member firm in the United States.
GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2025 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.