Canada - Switzerland Agreement concerning the recognition of social security arrangements for the purposes of Article 27(4) of the Canada-Switzerland Tax Convention

In limited circumstances, Article 27(4) of the Canada-Switzerland Tax Convention (the "Convention") provides relief for certain contributions to a foreign pension plan for short-term transfer of employees. This allows the employees to continue to contribute to the pension plan they belonged to in the country where they are normally resident and obtain a deduction for the contributions in the country where they are temporarily resident.

The competent authorities for Canada and Switzerland have agreed that for the purposes of Article 27(4) of the Convention, in addition to employer-sponsored pension plans in the case of Canada, and occupational benefit plans in the case of Switzerland, the term “pension plan” is understood to include a pension plan created under the social security systems of Canada and Switzerland:

In the case of Canada:

  • Canada Pension Plan (CPP); and
  • Quebec Pension Plan (QPP).

In the case of Switzerland, plans covered under the:

  • Federal Law on Old Age and Survivors Insurance of December 20, 1946 (LAVS); and
  • Federal Law on Disability Insurance of June 19, 1959 (LAI).

This understanding applies in respect of taxation years that begin on or after January 1, 2012.

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