The Governments of United Kingdom and Switzerland signed in principle[i] an historic agreement[ii] to tackle offshore tax evasion and to resolve the long-standing abuse of Swiss banking secrecy by those who seek to conceal the proceeds of tax evasion. It is expected to recover billions of pounds of unpaid tax from 2013.
Under the agreement, existing funds held by UK taxpayers in Switzerland will be subject to a significant one-off deduction of between 19% and 34% to settle past tax liabilities (not on who have already paid their taxes). As a gesture of good faith Swiss banks will make an up-front payment from Switzerland to Britain of CHF 500m.
From 2013, a new withholding tax of 48% on investment income and 27% on gains will ensure the effective future taxation of UK residents with funds in Swiss bank accounts, along with a new information sharing system which will facilitate to find out about Swiss accounts held by UK taxpayers.
George Osborne, Chancellor of the Exchequer, said that tax evasion is wrong at the best of times, but is worst in economic circumstances like this, so is a Coalition Government priority to go after those who don’t pay, in particular the richest who evade tax and those who cheat on benefits. “The days when it was easy to stash the profits of tax evasion in Switzerland are over.”
[i] The agreement was already ratified in principle, and is expected to come into force in 2013, following scrutiny by Parliament and after ratification procedures in Switzerland are complete.
[ii] http://www.hm-treasury.gov.uk/press_98_11.htm, 98/11, Agreement with Switzerland to secure billions in unpaid tax.