UK News

UK/Swiss tax agreement update

April 2012

On 20th March 2012, the UK and Swiss governments signed a protocol to the agreement on tax co-operation that they signed on 6th October 2011.

The UK/Swiss tax agreement is designed to make UK residents account for UK tax in relation to funds they have in Swiss bank accounts.

In 2013 a one off charge of between 21% and 41% of the balance will be applied to Swiss accounts held on 31 December 2010 that remain open on 31 May 2013. From 2013 onwards, a rate of 27% to 48% withholding tax will be applied to income and gains received in the account going forward.

The protocol ensures that the agreement does not take precedence over the EU Savings Agreement (EUSA) with Switzerland. Where an individual has suffered withholding tax under the EUSA, an additional 13 per cent 'tax finality payment' will need to be paid to obtain tax clearance under the terms of the Agreement. This achieves the same effect as the 48 per cent withholding tax levied under the original terms of the Agreement.

It also introduces a new one-off Inheritance Tax levy of 40% on death of a person covered by the agreement unless their personal representatives authorise the Swiss bank to disclose the account details to the UK.

Commentary

This protocol is designed to remove any further obstacle to the introduction of the agreement. However recent indications from Switzerland are that the Swiss banking community have been voicing concerns to the Swiss federal government that they have with regard to the agreement. This could lead to further delay to the agreement’s introduction.

Resources

Funds in swiss bank accounts to be taxed from 2013

For further information or to discuss the issues raised, please contact Guy Abbiss or John Mooney on +44 (0) 20 3051 5711.