UK-Swiss Tax Treaty

UK-Swiss Tax Treaty AgreementA landmark taxation agreement between the UK and Switzerland (the UK-Swiss Tax Treaty) will come into force on 1 January 2013.

 

It is important that individuals with undeclared assets in Switzerland give early consideration to the implications of the UK-Swiss Tax Treaty agreement to ensure that the best possible action is taken.

 

–  A one-off levy of between 21% and 34% will be applied to Swiss bankable assets held at 31 December 2010 up to the value of £1,000,000.

 

–  From 6 April 2013 there will be a withholding tax of 48% on interest income, 27% on Capital Gains, and 40% on dividends.

 

–  The upper threshold then increases by one percentage point for every £1m worth of assets up to a maximum charge of 41%.

 

–   The treaty will generally apply to UK taxpayers who held a Swiss account as of 31 December 2010 and where the account remains open as of 31 May 2013.

 

UK-Swiss Tax Treaty Agreement v LDF

 

The Liechtenstein Disclosure facility (LDF) is a viable alternative method of disclosure providing assets are moved to Liechtenstein to create a ‘meaningful  relationship’. Please note that if the LDF is to be used action should be taken  to ensure that the terms of the LDF apply before a disclosure has to be made under the Swiss Tax Treaty i.e. by 31 May 2013.

 

The two options are compared in brief below; however the best disclosure method will vary depending on each individual’s circumstances.

 

Swiss Agreement LDF

Swiss Agreement

 

LDF

 

Enables privacy to be retained

 

Guaranteed immunity from prosecution

 

 

Applies to Swiss assets only

Applies to worldwide undisclosed assets

 

 

One off levy to regularise untaxed Swiss assets

Composite tax rate option — potential for significant tax savings

 

 

Penalties covered by the one off levy

Guaranteed reduced penalty rate of 10% for tax years to April 2009

 

 

Clearance for past years only applies to funds subject to the one-off levy

Achieves certainty for the future

 

 

 

 

Withholding taxes apply from April 2013

Applies to tax liabilities from April 1999 only

 

 

How Eaves & Co Can Help

 

Under the revised money laundering reporting obligations, as tax advisors Eaves and Co, are relevant specialist  advisors anUK-Swiss Tax Treaty Agreementd therefore benefit from the Privileged Reporting Exemption. This  enables fully confidential discussions to take place.

 

We can help you understand how the UK Swiss Agreement will affect you and advise on the best course of action based upon your circumstances.

 

If required we are able to prepare a report and some illustrative calculations comparing the outcomes of disclosing under the UK Swiss Agreement and the LDF for a pre agreed fee.

 

Our Firm

 

Eaves & Co have been established for over 17 years. The firm specialises in tax investigations and robust tax planning, so you can be assured you are getting bespoke advice tailored to your individual circumstances.

 

Our Experience

 

Our partners, Paul Eaves, a former senior HMRC inspector and Paul Davison, private client tax specialist, have already helped a number of people understand the LDF and, where appropriate, voluntarily disclose unpaid UK tax liabilities to HMRC.

 

What to do now

 

–  Contact Eaves & Co to arrange a fully confidential initial meeting

–  Conduct an initial prognosis of the likely outcomes under the two disclosure options

–  Implement the appropriate action

 

If you would like more information or would like to discuss the matter further please do not hesitate to contact us.

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