Monday, October 10, 2011
Swiss Federal Councillor Eveline Widmer-Schlumpf and UK Exchequer Secretary to the Treasury David Gauke recently signed a landmark tax agreement in London, concerning the taxation of UK investors’ income in Switzerland.
According to the Swiss federal administration, under this agreement, persons resident in the United Kingdom can retrospectively tax their existing banking relationships in Switzerland either by making a one-off tax payment or by disclosing their accounts.
Future investment income and capital gains of British bank clients in Switzerland will be subject to a final withholding tax, and the proceeds of this will be transferred to the British authorities by Switzerland. In addition, mutual market access for financial services will be improved.
The Swiss administration states that: “The agreement represents a good result for the two countries, as it satisfies the interests and requirements of both countries equally well. The tax agreement signed by Switzerland and the United Kingdom... respects the protection of bank clients' privacy applicable in Switzerland and also ensures the implementation of the British authorities' legitimate tax claims. In addition, mutual market access for financial services will be improved.”
It adds: “The tax agreement between Switzerland and the United Kingdom is largely the same as the agreement with Germany that was signed on September 21, 2011. For example, the tax rates for the regularization of the past are identical. The differences are due primarily to the different tax systems, and concern in particular the tax rates for future income and procedural arrangements.”
“Both sides acknowledge that the agreed system will have a long-term impact that is equivalent to the automatic exchange of information in the area of capital income.”
The administration points out that the agreement requires the approval of parliament in both countries, and that it should enter into force at the start of 2013.
The administration concludes: “With both agreements with the United Kingdom and Germany, Switzerland underscores its new financial market policy, which consistently focuses on the management of tax-compliant assets. This creates legal certainty and should strengthen the competitiveness and the reputation of Switzerland as a financial centre in the long term.”