Switzerland and the UK initial tax agreement

British and Swiss negotiators concluded the negotiations on outstanding tax issues and initialled a tax agreement

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. The size of this tax burden will vary from between 19% to 34% of the assets.

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. The tax rate has been set between 27% and 48%, depending on the category of capital income.

In order to prevent new, undeclared funds from being deposited in Switzerland, it has been agreed that the British authorities can submit requests for information. The number will not exceed 500 per year.

In order to ensure a minimum income from the retrospective taxation of existing banking relationships as well as to state their resolve to implement the agreement, the Swiss banks have undertaken to pay a guarantee in the amount of CHF 500 million.

The funds advanced by the banks will be offset by the incoming tax payments and refunded to the banks.

The agreement should be signed by both governments in the next few weeks and could enter into force at the start of 2013.