Withholding tax agreements off to a good start: Switzerland transfers first tranche to Austria and the United Kingdom
Bern, 25.07.2013 - The Federal Tax Administration (FTA) has transferred the first tranche from the retrospective taxation of assets to the Austrian and UK tax authorities and forwarded the first declarations concerning the disclosure of assets. Converted into Swiss francs, approximately CHF 900 million was transferred in tax and around CHF 12 billion of assets disclosed. Switzerland thereby fulfilled an obligation which is set out in the bilateral withholding tax agreements with the two countries. This transfer of funds and forwarding of declarations constitutes the first in a series of tranches which will be carried out in the coming months. These measures enable the assets in Switzerland of bank clients residing in Austria and the United Kingdom to be regularised from a tax viewpoint.
The first transfer to the United Kingdom amounted to GBP 258.3 million (or CHF 372 million), while EUR 416.7 million (CHF 515 million) was transferred to Austria. As an alternative to paying the withholding tax, Austrian and UK taxpayers with a bank account or securities deposit in Switzerland can disclose their account details to the tax authorities in their respective countries. The FTA recorded 14,789 declarations for the United Kingdom concerning the disclosure of GBP 4.5 billion of assets (CHF 6.4 billion) and 13,592 declarations for Austria concerning assets amounting to EUR 4.4 billion (CHF 5.4 billion). The regularisation of so-called legacy assets has thus begun and is being implemented according to the respective agreements. Withholding tax on capital income generated on bank accounts or securities deposits after the entry into force of the agreements will be forwarded from 2014 onwards.
Withholding tax agreements are an effective solution
These first results show that the withholding tax agreements can help attain the goal of an untarnished financial centre in terms of taxation. This goal forms a central pillar of the Federal Council's financial market strategy. No major problems have arisen with the implementation of the agreements. Negotiations on similar agreements are currently under way with Greece and Italy.
Withholding tax agreements and their modus operandi
The withholding tax agreements ensure that banks' foreign clients fulfil their tax obligations. Their personal privacy is guaranteed thanks to a deduction of withholding tax. For the regularisation of untaxed assets, those concerned have the choice between a deduction of withholding tax and the disclosure of specific information regarding their accounts or deposits: if they opt for the tax, the paying agents deduct a one-off tax for the regularisation of the assets and a final withholding tax on capital income after the entry into force of the agreements; if they choose to make a declaration, the paying agents forward the corresponding information to the FTA, which in turn passes it on to the tax authorities in the respective partner state. Any inheritances are also taxed in accordance with the respective agreement.
Switzerland concluded withholding tax agreements with Austria and the United Kingdom which have been in force since 1 January 2013. From end-July 2013 until June 2014, the FTA will forward the amounts stemming from the regularisation of assets along with the disclosure declarations to the tax authorities in the partner states on a monthly basis. The FTA will start to forward the amounts generated by the withholding tax on capital income at the end of March 2014.
Address for enquiries
Beat Furrer, Head of Communications, Federal Tax Administration
+41 31 324 91 29, email@example.com