– under double taxation treaties with third countries, neither company is fiscally established in that third country and Singapore, Hong Kong, Bermuda and Barbados have not signed an agreement. (1) accept the levying of the “withholding tax” at 35% under the eu-CH Agreement (as discussed above) or the Agreement between the European Community and the Swiss Confederation on measures equivalent to those provided for in Council Directive 2003/48/EC on the taxation of savings in the form of interestthe EUROPEAN COMMUNITY, hereinafter referred to as “the Community”, and the Swiss Confederation, hereinafter referred to as “Switzerland” or “the Contracting Parties”, HAVE AGREED TO CONCLUDE THE FOLLOWING AGREEMENTS:Article 1ErReparation by Swiss paying agencies1. Interest payments made by a paying agency established in the territory of Switzerland to beneficial owners within the meaning of Article 4 established in a Member State of the European Union, hereinafter referred to as `the Member State`, shall be subject to a deduction from the amount of the interest payment, subject to paragraphs 2 and 2. The exemption rate shall be 15% in the first three years from the date of application of this Agreement, 20% in the following three years and 35%.2. Interest payments on claims of debtors established in Switzerland or concerning institutions of non-residents in Switzerland are excluded from withholding. For the purposes of this Convention, the term “permanent establishment” has the meaning it has under the applicable double taxation agreement between Switzerland and the State of residence of the debtor. In the absence of such an agreement, the term “permanent establishment” means a permanent secretariat through which the business of a debtor is carried on in whole or in part.3. However, if Switzerland lowers its withholding tax rate on Swiss withholding interest paid to natural persons established in the Member States to below 35%, it shall collect a deduction from such interest payments. The withholding rate shall be the difference between the withholding rate provided for in paragraph 1 and the new anticipated rate.
However, it must not exceed the rate provided for in paragraph 1. If Switzerland reduces the scope of its advance tax legislation on the payment of interest to natural persons established in the Member States, interest payments thus excluded from input tax shall be subject to withholding at the rates provided for in paragraph 1.4. . .