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UK – Swiss Tax Treaty An update

UK – Swiss Tax Treaty An update. 10 th May 2012 Jim Ferguson. Key events. Agreement initialled 24 August 2011 Agreement signed 6 October 2011 Protocol signed 20 March 2012 Joint memorandum 18 April 2012 Expected entry into force 1 January 2013. General Proposition.

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UK – Swiss Tax Treaty An update

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  1. UK – Swiss Tax TreatyAn update 10th May 2012 Jim Ferguson

  2. Key events • Agreement initialled 24 August 2011 • Agreement signed 6 October 2011 • Protocol signed 20 March 2012 • Joint memorandum 18 April 2012 • Expected entry into force 1 January 2013

  3. General Proposition • UK individuals with untaxed money in Switzerland can • Make a disclosure; • Suffer a one off payment for the past and/or withholding taxes for the future, or; • Take their money out of Switzerland

  4. The Past: one off payment • Taxes covered: IT, CGT, IHT and VAT • Period of calculation: 1/1/2003 -31/12/12 • Requires account to be open at 31/12/10 and 31/5/2013

  5. The Past: original computation of one off payment • Formula • Not mimic UK tax system • Accounts for: • Capital and income/gains • Length account held • Rate of balance increase • Overall rate 34% • Charged by reference to bankable assets held at 31/12/10

  6. The Past: computation of one off payment as amended by Protocol and joint memorandum • Minimum rate increased from 19% to 21% • Maximum rate increased from 34% in certain circumstances • Rate chargeable 34%, and • Relevant capital £1m or more, then • Rate chargeable increases by 1% of each additional £1m up to a maximum of 41%

  7. The Future – original structure • Withholding tax: • Covers IT and CGT • Charged on income arising and gains realised on account (not funds deposited)

  8. The Future – original structure • Withholding tax: • Rates: • UK Interest/other income 48% • Dividends 40% • Capital Gains 27% • Discount from UK marginal rate is for early payment • Rates will move in line with UK changes • Final tax - no further tax, interest or penalties • Funds to UK by 31st March following calendar year end

  9. The future – as amended by the Protocol • UK interest – distinguish between that covered by EU Savings Agreement and that not. • If covered by EU Savings Agreement • 35% EUSA WHT applies as normal • An additional 13% tax finality payment will be payable • Inheritance tax – if an authorised person does not agree with 12 months of the death of a relevant person that details of the account can be disclosed, the Swiss paying agent shall withhold 40% of the account to pay to the UK.

  10. Enhanced Exchange of Information • In addition to normal OECD standard exchanges • Suitable cases: • UK has plausible grounds (risk has been identified) • No requirement to demonstrate there is a bank account held in CH. • No fishing • Information provided: • Number of accounts held by UK person where new funds introduced since 31/12/10 • Up to previous 10 yrs (as requested) • Number of requests: • Limit initially up to 500 per year • Automatic review process from 2016- 15% increase/decrease depending on usefulness in previous year

  11. Questions?

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