London deals another blow to Swiss tax haven reputation
The UK has become the second country this month to strike a tax deal with Switzerland’s government, and David Cameron’s government says it could capture up to £5bn revenue as a result.
The news of another Western European nation seeking to bolster its finances through tax deals with Bern follows yesterday’s announcement France will impose extra tax on its residents who earn over €500,000.
Under Switzerland’s deal with London – still subject to approval by the former’s government – Britons sheltering money in Swiss banks face various tax charges.
These include 48% withholding tax on future income, and a one-off levy of between 19% and 34% applied to all Swiss accounts held by UK residents.
The level of levy will accord with the size and longevity of each account.
Swiss banks will also pay CHF 500m, up-front, to Whitehall.
The deal broadly resembles another that the secretive financial centre made with Berlin, though there Swiss banks consented to CHF 2bn up-front payments.
British taxpayers face tax on future income from Swiss accounts at up to double the rate of their German counterparts.
But their identities will remain shrouded – as was the case for Germans – in return for Swiss banks calculating and remitting the levies to London.
George Osborne, UK chancellor, said nevertheless the days are past of putting profits of tax evasion in Switzerland. Eveline Widmer-Schlumpf, Swiss finance minister, said by creating legal certainty the deal would strengthen her country’s long-term competitiveness as a financial centre.
Without question its reputation as a haven of anonymity for the world’s wealthy to park their cash has been battered recently.
Earlier this month Bern bent to Berlin’s will in agreeing a deal broadly similar to the UK one.
The tax rates on future income and capital gains agreed for Germans was 26.4% – what they would pay at home. Equity analysts told Britain’s Financial Times at the time that Germany could rake in between €130bn and €180bn as a result.
At the start of August it was revealed Washington was looking into six more Swiss and one Lichtenstein banks, as part of its ongoing investigation into whether bankers in the jurisdictions helped Americans avoid tax.