Swiss bankers are famously tight-lipped and the privacy of bank accounts is a cornerstone of the Swiss banking industry.
However, a reputation for harbouring tax-evaders is damaging not only to the banking industry, but also to Switzerland’s international standing.
For this reason, there are several agreements in place to allow foreign tax authorities to collect money owed to them.
The USA – Switzerland Agreement
In recent years, the USA has been putting increasing pressure on foreign financial centres to disclose information about Americans’ assets on their books.In 2012, the USA and Switzerland reached an agreement which makes it significantly harder for American citizens to hide money there.
Under the agreement, the Swiss authorities have made an exception to their strict privacy laws, which will allow Swiss banks to transmit information on US citizens’ accounts to the IRS.
This will take place with the client’s consent, and if this consent is not granted, the US government will use another, more complicated process to recover the information.
The UK – Switzerland Agreement
The tax co-operation agreement between Switzerland and the UK was signed in October 2011 and is likely to come into force in January 2013.The agreement applies to any UK resident with an account in Switzerland or any customer who has provided an address in the UK when opening the account.
The agreement covers past and future tax liabilities for assets held in Swiss accounts.
In the future, UK residents will have two options for paying tax owed in the UK. The first option is to disclose assets to HMRC.
The second is to opt for the Final Witholding Tax, which is collected by the Swiss authorities and transferred to the UK, maintaining your account confidentiality.
The agreement also allows the UK to request information on certain bank accounts in Switzerland, but only where there are concrete suspicions of tax evasion.
Your bank account will remain confidential, as long as you meet your tax responsibilities through either of the methods described.
How to find out more
This information is a very brief outline of tax collecting procedures, and of course every customer’s situation will be unique depending on the assets they hold.It’s always advisable to get advice from a professional regarding your tax arrangements and your tax authority and bank will be able to give you information too.
Contact our financial advisor or one of our private banking partners to discuss how these agreements may affect your bank account in Switzerland.
