Business NEWS
ISLAND CONNECTIONS :: EDITION 690 :: 08/03/2013 - 21/03/2013
Tax revenues start to flow
from Switzerland to UK
T
he new tax agreement between the UK and Switzerland is already reaping dividends for the Treasury.
Within a month of it coming into force on January 1, HM Revenue & Customs recouped £342 million in unpaid tax from Swiss banks. The agreement enables the British authorities to tax the income on assets held in Swiss financial institutions by UK taxpayers, even if the income is not declared. Chancellor George Osborne said it was, “the first time in our history that money due in taxes has flowed from Switzerland to the UK instead of the other way round”. This £342 million (500 million Swiss Francs) is just the first
tranche of revenue. The Treasury calculates the deal will deliver around £5 billion of previously unpaid tax by 2018. £3.1 billion is expected in the 2013-14 tax year. Switzerland has a similar arrangement with Austria, and the Swiss Federal Government confirmed that similar agreements are under way with Greece and Italy, and that other countries, “both within and outside Europe” have shown an interest. It is possible that Spain will enter into a deal with Switzerland at some point in the future. The UK-Swiss tax accord has four main components. (1) One-off levy of between 21 per cent and 41 per cent will be deducted on May 31, 2013, unless the account holder authorises his bank to disclose information to HMRC. This will cover past unpaid tax. If funds are moved
Chancellor George Osborne
out of Switzerland before May 31, the levy will be applied immediately. (2) Future withholding tax of 48 per cent on interest, 40 per cent on dividends and 27 per cent on capital gains, to be applied on all income, again unless the owner authorises disclosure. (3) Inheritance tax. When the holder of an undisclosed Swiss bank account dies, 40 per cent will be deducted and paid to the UK Treasury.
Credit M. Holland
By Bill Blevins, Financial Correspondent, Blevins Franks
(4) Information requests. A set number can be submitted to the Swiss authorities each year and Swiss banks will be obliged to respond. Under the first three components, where the taxes are deducted at source the identities of the account owners remain anonymous and are not disclosed to the HMRC. This does not
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necessarily mean that they cannot be investigated or prosecuted. The Treasury described the information sharing arrangement as, “a powerful new provision”. It goes further than the existing double tax treaty and enables HMRC to submit up to 500 information exchange requests from the Swiss authorities each year. Swiss banks have to respond regardless of whether the individual consents or not. HMRC will only need name the suspected tax evader, it does not have to name their bank. For advice on effective and compliant tax planning in today’s world, speak to an established firm like Blevins Franks which specialises in bespoke tax planning for British expatriates. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should 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 You may also contact our partner Paul Montague on Tel: 922 716 079 or Email: paul.montague@ blevinsfranks.com