The Swiss Tax Agreements - A Template For The Future?

Switzerland has signed bi-lateral tax agreements with the UK, Germany and Austria, and started discussions with Italy and Greece.

It looks likely that this withholding tax model will be the way forward to collect taxes on assets hidden in Switzerland. It fulfils two seemingly paradoxical objectives: the foreign governments receive the tax due to them, while Switzerland gets to keep its prized banking secrecy.
The main components of the treaties are:

(1) A retrospective levy to cover past unpaid tax. For UK taxpayers this will be between 21% and 41% of the assets.

(2) A withholding tax to be applied on future income. For UK tax residents, interest will be taxed at 48%; dividends at 40% and capital gains at 27%.

(3) Inheritance tax.
(4) Information requests. A set number can be submitted to the Swiss authorities each year.

The agreements are seen as an attractive alternative by EU States with banking confidentiality. They are a way of "efficiently" collecting taxes and will greatly influence and the ongoing debate within the EU on the taxation of undeclared assets.

The Swiss government is keen to reach similar tax agreements with other countries. I expect more European countries will approach Switzerland as they realise it is an effective way of collecting unpaid taxes. Many people across Europe with undisclosed assets could be in for a shock.

There never was any legitimate tax planning benefit to holding assets in a Swiss bank account. For advice on arrangements which can legitimately save you tax in Portugal, speak to an established tax and estate planning advisory firm like Blevins Franks.

Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals must take personalised advice.

To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com

By Bill Blevins,
Financial Correspondent,
Blevins Franks