Switzerland Ends India's MFN Status Citing Nestle Ruling

Switzerland revoked India's Most Favoured Nation status under the DTAA, effective January 1, 2025, citing the Indian Supreme Court's 2023 Nestle ruling that the MFN clause doesn't automatically apply when a country joins the OECD without explicit notification.

Issues are the withholding tax on dividends will increase from 5% to 10%, impacting Indian companies with subsidiaries in Switzerland and Swiss investors with holdings in India.

Switzerland justifies the move as reciprocity, while Indian experts view it as unilateral retaliation, reflecting differing interpretations of MFN clause applicability in tax treaties.

Switzerland suspended MFN benefits, affecting tax predictability and international investments.