PROTOCOLAMENDING THE CONVENTIONBETWEEN JAPAN AND SWITZERLANDFOR THE AVOIDANCE OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME

PROTOCOLAMENDING THE CONVENTIONBETWEEN JAPAN AND SWITZERLANDFOR THE AVOIDANCE OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME
The Government of Japan and the Swiss Federal Council,
Desiring to amend the Convention between Japan and
Switzerland for the Avoidance of Double Taxation withrespect to Taxes on Income signed at Tokyo on 19 January
1971, as amended by the Protocol signed at Berne on 21 May
2010 (hereinafter referred to as “the Convention”), and theProtocol, which forms an integral part of the Convention,
signed at Berne on 21 May 2010 (hereinafter referred to as“the Protocol to the Convention”),
Have agreed as follows:
ARTICLE 1
The preamble of the Convention shall be amended bydeleting the words “Desiring to conclude a convention for
the avoidance of double taxation with respect to taxes on
income,” and replacing them with the following:“Desiring to further develop their economic
relationship and to enhance their co-operation in tax
matters,
Intending to conclude a Convention for theelimination of double taxation with respect to taxes
on income without creating opportunities for nontaxation or reduced taxation through tax evasion or
avoidance (including through treaty-shopping
arrangements aimed at obtaining reliefs provided inthis Convention for the indirect benefit of residentsof third States),”
ARTICLE 2
Subparagraph (a) of paragraph 1 of Article 2 of theConvention shall be deleted and replaced by the following:“(a)in the case of Japan:(i)

the income tax;(ii)

the corporation tax;

- 1 -(iii)

the special income tax forreconstruction;(iv)

the local corporation tax; and(v)

the local inhabitant taxes(hereinafter referred to as “Japanesetax”);”ARTICLE 3
1.
Subparagraph (h) of paragraph 1 of Article 3 of theConvention shall be deleted and replaced by the following:“(h)the term “international traffic” means any
transport by a ship or aircraft except when
the ship or aircraft is operated solely
between places in a Contracting State andthe enterprise that operates the ship or
aircraft is not an enterprise of thatContracting State;”

2.
Clause (ii) of subparagraph (j) of paragraph 1 of
Article 3 of the Convention shall be deleted and replacedby the following:“(ii) in the case of Switzerland, the Head of
the Federal Department of Finance or
his authorised representative; and”
ARTICLE 4
1.
Paragraph 2 of Article 5 of the Convention shall beamended by deleting the semicolon at the end of
subparagraph (f) and replacing it with a period and by
deleting subparagraph (g).
2.
A new paragraph shall be added immediately afterparagraph 2 of Article 5 of the Convention as follows:“3.
A building site or construction or installation
project constitutes a permanent establishment only if
it lasts more than twelve months.”
3.
Paragraph 4 of Article 5 of the Convention shall beamended by deleting the words “paragraph 5” and replacing
them with the words “paragraph 6”, and deleting the words“paragraph 3” and replacing them with the words “paragraph
4”.

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4.
Paragraphs 3, 4, 5 and 6 of Article 5 of theConvention shall be renumbered as paragraphs 4, 5, 6 and 7
respectively.
ARTICLE 5
Article 7 of the Convention shall be deleted andreplaced by the following:“Article 7
1.
Profits of an enterprise of a Contracting State
shall be taxable only in that Contracting State unlessthe 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 that are
attributable to the permanent establishment inaccordance with the provisions of paragraph 2 may betaxed in that other Contracting State.
2.
For the purposes of this Article and Article 23,
the profits that are attributable in each Contracting
State to the permanent establishment referred to inparagraph 1 are the profits it might be expected tomake, in particular in its dealings with other partsof the enterprise, if it were a separate andindependent enterprise engaged in the same or similar
activities under the same or similar conditions,taking into account the functions performed, assets
used and risks assumed by the enterprise through thepermanent establishment and through the other parts ofthe enterprise.
3.
Where, in accordance with paragraph 2, aContracting State adjusts the profits that are
attributable to a permanent establishment of anenterprise of one of the Contracting States and taxes
accordingly profits of the enterprise that have been
charged to tax in the other Contracting State, that
other Contracting State shall, to the extent necessary
to eliminate double taxation on these profits, make anappropriate adjustment to the amount of the tax
charged therein on those profits. In determining suchadjustment, the competent authorities of theContracting States shall if necessary consult eachother.

- 3 -4.
Where profits include items of income which aredealt with separately in other Articles of thisConvention, then the provisions of those Articles
shall not be affected by the provisions of this
Article.”ARTICLE 6
Paragraph 2 of Article 9 of the Convention shall bedeleted and replaced by the following:“2.
Where a Contracting State includes in the profits
of an enterprise of that Contracting State - and taxes
accordingly - profits on which an enterprise of theother Contracting State has been charged to tax inthat other Contracting State and the profits so
included are profits which would have accrued to theenterprise of the first-mentioned Contracting State if
the conditions made between the two enterprises had
been those which would have been made between
independent enterprises, then that other Contracting
State shall make an appropriate adjustment to theamount of the tax charged therein on those profits.
In determining such adjustment, due regard shall be
had to the other provisions of this Convention and thecompetent authorities of the Contracting States shall
if necessary consult each other.”
ARTICLE 7
Paragraphs 2 and 3 of Article 10 of the Convention
shall be deleted and replaced by the following:“2.
However, dividends paid by a company which is a
resident of a Contracting State may also be taxed inthat Contracting State according to the laws of thatContracting State, but if the beneficial owner of thedividends is a resident of the other Contracting
State, the tax so charged shall not exceed 10 per centof the gross amount of the dividends.
3.
Notwithstanding the provisions of paragraph 2,
dividends paid by a company which is a resident of aContracting State shall be taxable only in the other
Contracting State if the beneficial owner of thedividends is a resident of that other Contracting
State and is either:

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(a)

(b)

a company which has owned directly or
indirectly, throughout a 365 day period that
includes the date on which entitlement to
the dividends is determined (for the purposeof computing that period, no account shallbe taken of changes of ownership that would
directly result from a merger or divisive
reorganisation, or from a change of legal
form, of the company that is the beneficial
owner of the dividends or that pays thedividends), at least 10 per cent of:(i)in the case where the company paying
the dividends is a resident of Japan,
the voting power of that company;(ii)

in the case where the company paying
the dividends is a resident of
Switzerland, the capital or voting
power of that company; ora pension fund or pension scheme, provided
that such dividends are derived from theactivities described in clause (ii) of
subparagraph (k) of paragraph 1 of Article
3.”
ARTICLE 8

1.
Paragraphs 1 to 4 of Article 11 of the Convention
shall be deleted and replaced by the following:“1.
Interest arising in a Contracting State andbeneficially owned by a resident of the other
Contracting State shall be taxable only in that other
Contracting State.
2.
Notwithstanding the provisions of paragraph 1,
interest arising in a Contracting State that isdetermined by reference to receipts, sales, income,profits or other cash flow of the debtor or a related
person, to any change in the value of any property ofthe debtor or a related person or to any dividend,
partnership distribution or similar payment made by
the debtor or a related person, or any other interest
similar to such interest arising in a Contracting
State, may be taxed in that Contracting Stateaccording to the laws of that Contracting State, but
if the beneficial owner of the interest is a residentof the other Contracting State, the tax so charged
shall not exceed 10 per cent of the gross amount of
the interest.”

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2.
Paragraph 6 of Article 11 of the Convention shall beamended by deleting the words “paragraphs 1, 2 and 3” andreplacing them with the words “paragraphs 1 and 2”.
3.
Paragraphs 5, 6, 7, 8 and 9 of Article 11 of theConvention shall be renumbered as paragraphs 3, 4, 5, 6 and
7 respectively.
ARTICLE 9
1.
Subparagraph (a) of paragraph 2 of Article 15 of theConvention shall be deleted and replaced by the following:“(a)the recipient is present in that other
Contracting State for a period or periods
not exceeding in the aggregate 183 days in
any twelve month period commencing or ending
in the calendar year concerned, and”

2.
Paragraph 3 of Article 15 of the Convention shall bedeleted and replaced by the following:“3.
Notwithstanding the preceding provisions of this
Article, remuneration derived by a resident of aContracting State in respect of an employment, as amember of the regular complement of a ship or
aircraft, that is exercised aboard a ship or aircraft
operated in international traffic shall be taxable
only in that Contracting State. Where, however, theship or aircraft is operated by an enterprise of theother Contracting State, such remuneration may also be
taxed in that other Contracting State.”
ARTICLE 10
Article 16 of the Convention shall be deleted andreplaced by the following:“Article 16
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, or ofa similar organ, of a company which is a resident of
the other Contracting State may be taxed in that other
Contracting State.”
ARTICLE 11
Article 21 of the Convention shall be deleted andreplaced by the following:- 6 -“Article 21
Payments which a student or business apprentice
who is or was immediately before visiting aContracting 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, provided that such payments
arise from sources outside that Contracting State. In
the case of a business apprentice, the exemption
provided by this Article shall apply only for a period
not exceeding four years from the date on which hefirst begins his training in that Contracting State.”
ARTICLE 12
Article 21A of the Convention shall be deleted andreplaced by the following:“Article 21A
Notwithstanding any other provisions of thisConvention, any income derived by a silent partner who
is a resident of a Contracting State in respect of asilent partnership (in the case of Japan, Tokumei
Kumiai) contract or another similar contract may betaxed in the other Contracting State according to thelaws of that other Contracting State, provided thatsuch income arises in that other Contracting State andis deductible in computing the taxable income of thepayer in that other Contracting State.”
ARTICLE 13
1.
Paragraph 1, paragraph 3, subparagraph (a) ofparagraph 5, subparagraph (a) of paragraph 6 and paragraph
7 of Article 22A of the Convention shall be amended bydeleting the words “subparagraph (c), (d) or (e) of
paragraph 3 of Article 11” and replacing them with thewords “paragraph 1 of Article 11” and by deleting the words“subparagraphs,”.
2.
Subclause (cc) of clause (i) of subparagraph (d) ofparagraph 8 of Article 22A of the Convention shall beamended by deleting the words “subparagraph (c), (d) or (e)of paragraph 3 of Article 11” and replacing them with thewords “paragraph 1 of Article 11”.

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ARTICLE 14
A new paragraph shall be added after paragraph 6 of
Article 23 of the Convention as follows:“7.
The provisions of paragraph 3 shall not apply toincome derived by a resident of Switzerland where
Japan applies the provisions of this Convention to
exempt such income from tax or applies the provisionsof paragraph 2 of Article 10 or paragraph 2 of Article
11 to such income.”
ARTICLE 15
Paragraph 3 of Article 24 of the Convention shall beamended by deleting the words “paragraph 8” and replacing
them with the words “paragraph 6”.
ARTICLE 16
1.
Paragraph 1 of Article 25 of the Convention shall bedeleted and replaced by the following:“1.
Where a person considers that the actions of one
or both of the Contracting States result or will
result for that person in taxation not in accordancewith the provisions of this Convention, that personmay, irrespective of the remedies provided by thedomestic law of those Contracting States, present thecase to the competent authority of either Contracting
State. 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 theConvention.”2.
New paragraphs shall be added after paragraph 4 of
Article 25 of the Convention as follows:“5.

Where,(a)under paragraph 1, a person has presented acase to the competent authority of aContracting State on the basis that theactions of one or both of the Contracting
States have resulted for that person intaxation not in accordance with theprovisions of this Convention, and

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(b)

the competent authorities are unable toreach an agreement to resolve that casepursuant to paragraph 2 within three years
from the date when all the information
required by the competent authorities inorder to address the case has been provided
to both competent authorities,

any unresolved issues arising from the case shall be
submitted to arbitration if the person so requests inwriting. These unresolved issues shall not, however,be submitted to arbitration if a decision on theseissues has already been rendered by a court oradministrative tribunal of either Contracting State.
Unless a person directly affected by the case does not
accept the mutual agreement that implements thearbitration decision, that decision shall be binding
on both Contracting States and shall be implemented
notwithstanding any time limits in the domestic lawsof these Contracting States. The competentauthorities of the Contracting States shall by mutual
agreement settle the mode of application of thisparagraph.
6.

(a)Where the competent authority of aContracting State has suspended theprocedure for resolving a case by mutual
agreement pursuant to paragraphs 1 and 2(hereinafter in this Article referred to as
the “mutual agreement procedure”) because acase with respect to one or more of the same
issues is pending before a court oradministrative tribunal, the period provided
in subparagraph (b) of paragraph 5 shallstop running until the case has beensuspended or withdrawn.

(b)

Where a person who presented a case and thecompetent authority of a Contracting State
have agreed to suspend the mutual agreement
procedure, the period provided insubparagraph (b) of paragraph 5 shall stoprunning until the suspension has been
lifted.

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7.

(c)

Where the competent authorities of theContracting States agree that a person
directly affected by the case has failed toprovide in a timely manner any additional
material information requested by either
competent authority after the start of theperiod provided in subparagraph (b) ofparagraph 5, that period shall be extended
for an amount of time equal to the period
beginning on the date by which theinformation was requested and ending on thedate on which that information was provided.

(a)

The following rules shall govern theappointment of arbitrators:(i)

An arbitration panel shall consist of
three individual arbitrators withexpertise or experience ininternational tax matters.

(ii)

Each of the competent authorities of
the Contracting States shall appoint
one arbitrator. The two arbitrators so
appointed shall appoint the third
arbitrator who shall serve as Chair of
the arbitration panel. The Chair shallnot be a national or resident of either
Contracting State.

(iii)

Each arbitrator must be impartial andindependent of the competentauthorities, tax administrations, andministries of finance of theContracting States and of all persons
directly affected by the case (as wellas their advisors) at the time ofaccepting an appointment, maintain his
or her impartiality and independence
throughout the arbitration proceedings,
and avoid any conduct for a reasonable
period of time thereafter which may
damage the appearance of impartiality
and independence of the arbitratorswith respect to the arbitration
proceedings.

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8.

(b)

The competent authorities of the Contracting
States shall ensure that arbitrators andtheir staff agree in writing, prior to theiracting in the arbitration proceedings, totreat any information relating to thearbitration proceedings consistently withthe confidentiality and non-disclosure
obligations provided for in paragraph 2 ofArticle 25A and the applicable laws of theContracting States.

(c)Solely for the purposes of the applicationof the provisions of this Article andArticle 25A and of the domestic laws of theContracting States related to the exchange
of information, confidentiality, andadministrative assistance, arbitrators and amaximum of three staff per arbitrator (andprospective arbitrators solely to the extent
necessary to verify their ability to fulfil
the requirements of arbitrators) shall beconsidered to be persons or authorities towhom information may be disclosed.
Information received by the arbitration
panel or prospective arbitrators andinformation that the competent authoritiesof the Contracting States receive from thearbitration panel shall be consideredinformation that is exchanged under theprovisions of paragraph 1 of Article 25A.

(a)

An arbitration decision shall be final.

(b)

The arbitration decision shall not bebinding on both Contracting States, if a
final decision of the courts of one of theContracting States holds that thearbitration decision is invalid. In such acase, the request for arbitration underparagraph 5 shall be considered not to havebeen made, and the arbitration proceedings
shall be considered not to have taken place(except for the purposes of subparagraphs(b) and (c) of paragraph 7, and paragraph11). In such a case, a new request forarbitration may be made unless the competentauthorities of the Contracting States agree
that such a new request should not be
permitted.

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9.

(c)

An arbitration decision shall have noprecedential value.

(a)

If a person directly affected by the casedoes not accept the mutual agreement that
implements the arbitration decision, thecase shall not be eligible for any further
consideration by the competent authoritiesof the Contracting States.

(b)

The mutual agreement that implements thearbitration decision on the case shall beconsidered not to be accepted by a person
directly affected by the case if any person
directly affected by the case does not,within 60 days after the date on which
notification of the mutual agreement is sent
to the person, withdraw all issues resolvedin the mutual agreement implementing thearbitration decision from consideration by
any court or administrative tribunal orotherwise terminate any pending court oradministrative proceedings with respect tosuch issues in a manner consistent with thatmutual agreement.

10. For the purposes of this Article, the arbitration
proceedings, as well as, in the case of subparagraphs(a) and (b), the mutual agreement procedure, withrespect to a case shall terminate if, at any timeafter the request for arbitration has been made andbefore the arbitration panel has delivered its
decision to the competent authorities of theContracting States:(a)the competent authorities of the Contracting
States reach a mutual agreement to resolve
the case pursuant to paragraph 2;(b)the person who presented the case withdraws
the request for arbitration or the request
for the mutual agreement procedure; or(c)a decision concerning the unresolved issues
arising from the case is rendered by a court
or administrative tribunal of one of theContracting States.

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11. Each of the competent authorities of theContracting States shall bear its own expenses andthose of its appointed arbitrator. Unless otherwise
agreed by the competent authorities of the Contracting
States, the cost of the Chair of the arbitration panel
and other expenses associated with the conduct of thearbitration proceedings shall be borne by thecompetent authorities of the Contracting States inequal shares.
12. The provisions of paragraphs 5 to 11 shall not
apply to the following cases:(a)cases falling within paragraph 3 of Article
4; and(b)cases concerning a change of profits in thecircumstances referred to in paragraph 1 of
Article 9 relating to hard-to-value
intangibles, provided that such change ismade with respect to a taxable year forwhich profits may be subject to such change
under the provisions regarding time limitsof the laws of the Contracting State making
such change and the provisions of paragraph
3 of Article 9 but concerns any transaction
involving hard-to-value intangibles carriedout in another taxable year for which
profits shall not be subject to such change
under those provisions.”
ARTICLE 17

1.
Paragraph 2 of Article 25A of the Convention shall bedeleted and replaced by the following:- 13 -

“2.
Any information received under paragraph 1 by aContracting State shall be treated as secret in thesame manner as information obtained under the domestic
laws of that Contracting State and shall be disclosed
only to persons or authorities (including courts andadministrative bodies) concerned with the assessment
or collection of, the enforcement or prosecution in
respect of, the determination of appeals in relation
to the taxes referred to in paragraph 1, or theoversight of the above. Such persons or authorities
shall use the information only for such purposes.
They may disclose the information in public court
proceedings or in judicial decisions. Notwithstanding
the foregoing, information received by a Contracting
State may be used for other purposes when suchinformation may be used for such other purposes under
the laws of both Contracting States and the competentauthority of the Contracting State supplying theinformation authorises such use.”
2.
The second sentence of paragraph 5 of Article 25A of
the Convention shall be deleted.
ARTICLE 18
1.
Paragraph 1 of the Protocol to the Convention shall bedeleted and replaced by the following:“1.
Notwithstanding any provisions of the Convention,a benefit under the Convention shall not be granted in
respect of an item of income if it is reasonable toconclude, having regard to all relevant facts andcircumstances, that obtaining that benefit was one ofthe principal purposes of any arrangement ortransaction that resulted directly or indirectly inthat benefit, unless it is established that grantingthat benefit in these circumstances would be inaccordance with the object and purpose of the relevant
provisions of the Convention.”2.
A new paragraph shall be added immediately afterparagraph 2 of the Protocol to the Convention as follows:“3.
With reference to paragraph 3 of Article 7 andparagraph 2 of Article 9 of the Convention:- 14 -

It is understood that a Contracting State is
obliged to make an adjustment pursuant to paragraph 3
of Article 7 or paragraph 2 of Article 9 of theConvention only if that Contracting State agrees thatthe adjustment made by the other Contracting State isjustified both in the principle contained in paragraph
2 of Article 7 or paragraph 1 of Article 9 of theConvention and as regards the amount assessed undersuch principle.”
3.
Paragraph 3 of the Protocol to the Convention shall beamended by deleting the words “subparagraph (a) ofparagraph 2 and”.
4.
Paragraph 4 of the Protocol to the Convention shall beamended by deleting the words “paragraph 3 of Article 11
and”.
5.
Paragraphs 3, 4 and 5 of the Protocol to theConvention shall be renumbered as paragraphs 4, 5 and 6
respectively.
ARTICLE 19
1.
Each of the Contracting States shall send in writing
and through diplomatic channels to the other Contracting
State the notification confirming that its internal
procedures necessary for the entry into force of thisProtocol have been completed. The Protocol shall enter
into force on the thirtieth day after the date of receiptof the later notification.
2.

This Protocol shall have effect:(a)in Japan:(i)with respect to taxes levied on the basis ofa taxable year, for taxes for any taxable
years beginning on or after 1 January in thecalendar year next following that in which
the Protocol enters into force;(ii)

with respect to taxes levied not on thebasis of a taxable year, for taxes levied on
or after 1 January in the calendar year next
following that in which the Protocol enters
into force;- 15 -

(b)in Switzerland:(i)with respect to taxes withheld at source, onamounts paid or credited on or after 1
January in the calendar year next followingthat in which the Protocol enters into
force;(ii)

with respect to other taxes, for taxable
years beginning on or after 1 January in thecalendar year next following that in which
the Protocol enters into force.

3.
Notwithstanding the provisions of paragraph 2, theprovisions of paragraph 1 of Article 25 of the Convention,as amended by paragraph 1 of Article 16 of this Protocol,
shall have effect from the date of entry into force of theProtocol without regard to the date on which the taxes arelevied or the taxable year to which the taxes relate.
4.
Notwithstanding the provisions of paragraph 2, theprovisions of paragraphs 5 to 12 of Article 25 of theConvention, as amended by paragraph 2 of Article 16 of thisProtocol, shall have effect from the date of entry into
force of the Protocol with respect to:(a)cases that are under consideration by thecompetent authorities of the Contracting Stateson the date on which the Protocol enters into
force. For such cases, no unresolved issues
arising therefrom shall be submitted toarbitration earlier than three years after thedate on which the Protocol enters into force;(b)cases that come under consideration by thecompetent authorities of the Contracting States
after the date on which the Protocol enters into
force.

5.
This Protocol shall remain in effect as long as theConvention remains in force.
IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Protocol.

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DONE in duplicate at Berne this sixteenth day of July,
2021, in the Japanese, German and English languages, alltexts being equally authentic. In case of any divergenceof interpretation, the English text shall prevail.

For the Governmentof Japan:
白石

For the Swiss Federal
Council:Stefan Flückiger

興二郎- 17 -