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Switzerland Transfers First Withholding Tax Tranches

Tuesday, 30 July 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

The Swiss Federal Tax Administration (FTA) has transferred the first tranche from the retrospective taxation of assets to the Austrian and UK tax authorities, and has forwarded the first declarations concerning the disclosure of assets. Converted into Swiss francs, approximately CHF900m (USD969m) was transferred in tax and around CHF12bn of assets disclosed.

Switzerland is required to transfer funds and to forward declarations under the terms of its bilateral withholding tax agreements with the UK and with Austria. The measures enable the assets in Switzerland of bank clients residing in Austria and the UK to be regularized from a tax viewpoint.

The first transfer to the UK amounted to GBP258.3m (CHF372m), while EUR416.7m (CHF515m) 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 are able to disclose their account details to the tax authorities in their respective countries.

The FTA recorded 14,789 declarations for the UK concerning the disclosure of GBP4.5bn of assets (CHF6.4bn) and 13,592 declarations for Austria concerning assets amounting to EUR4.4bn (CHF5.4bn). The regularization 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.

Commenting, the Swiss FTA states that: "These first results show that the withholding tax agreements can help attain the goal of an untarnished financial center 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.

"The FTA stresses that: "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 regularization 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 regularization 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's withholding tax agreements with Austria and the UK have been in force since January 1, 2013. From end-July 2013 until June 2014, the FTA will forward the amounts stemming from the regularization 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.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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