Words and Phrases - "to Switzerland"

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15 May 2017 External T.I. 2016-0645891E5 F - Services rendered to a State

public-sector nurse did not provide services “to Switzerland” for purposes of Art. 18(2)(a) of the Canada-Swiss Treaty

Art. 18(2)(a) of the Canada-Swiss Treaty provides that “pensions paid by, or out of funds created by, Switzerland or a political subdivision or a local authority thereof to any individual in respect of services rendered to Switzerland or subdivision or local authority thereof in the discharge of functions of a governmental nature shall be taxable only in Switzerland.” Would an annuity received post-retirement as a result of having worked as a nurse at a Swiss public hospital (as well as pension benefits (the “OAS”) received from a Swiss canton that were provided by it to enable seniors to meet their basic needs) be exempted? CRA responded:

"[S]ervices rendered to Switzerland" refers to services rendered in the course of functions of a public character. The executive, legislative and judicial functions of a State constitute such functions, including the identification, development and implementation of government policies. …

[T]he exercise by a person of duties as a nurse within the Swiss healthcare sector, which is essentially dedicated to the provision of services for the benefit of the community as a whole, does not generally [so] qualify… . Thus, the deduction under subparagraph 110(1)(f)(i) could not be claimed by such a person… .

Words and Phrases
to Switzerland