The UK has signed a landmark tax agreement that could tax
British account holders in Switzerland at more than twice
the rate of German clients from 2013 but allows ‘special rules’ to
be applied to non-UK domiciled individuals.

The UK/Swiss agreement contains many of the same provisions as

the Swiss/German deal signed two weeks ago and could net the UK
government £5bn ($8.2bn) in new taxes.

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Swiss banks also agreed to pay a CHF500m ($630m) guarantee in
order to ensure a minimum income from the retrospective
taxation.

 

Key points

Some of the key points from the agreement include:

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Retrospective taxation: UK residents can either make an
anonymous lump-sum tax payment, varying between 19% and 34%, of
their Swiss-based assets, or disclose their banking relationship in
Switzerland to the UK authorities.

Final withholding tax: From 2013, future assets and
investments will be subject to a final withholding tax
of 48% on interest income, 40% on dividend income and
27% on capital gains.

This is almost double the 26% flat rate agreed in the
Swiss/German deal.

Equal access: Both countries will have greater mutual
market access for their financial institutions and products.

 

“No” to witch-hunt on large scale

So-called ‘fishing expeditions’, where authorities ask for
access to a large number of client accounts, will also not be
permissible.

UK authorities can submit requests stating the name of the
client, but not necessarily the name of the bank.

The number of these requests is limited to up to 500 for a
one-year period and will be adjusted at later stage, depending on
the results.

In comparison, German authorities are allowed to submit between
750 and 999 requests over a two-year period.

The agreement is scheduled to be signed by both governments in
the next few weeks and to be implemented at the start of 2013.