New landmark taxation arrangements are scheduled to come into force next year across Europe which means that people with Swiss bank accounts must provide full details to the taxman of the country where they reside. Switzerland has signed agreements with the UK, Germany and Austria and deals with Italy and Greece are under consideration. Cyprus is the latest country in the European Union to request a deal and others are likely in coming months.
‘The agreements also aim to resolve the long standing issue of undisclosed Swiss bank accounts by taxing undeclared income and assets held in Switzerland by foreign account holders. They fulfil two seemingly paradoxical objectives: Switzerland gets to retain banking secrecy as the tax is paid anonymously, while the other country receives the tax due to it, both past unpaid tax and tax on future earnings,’ said a spokesman for tax and wealth management provider Blevins Franks.
‘All this confirms that there is no legitimate tax planning benefit to holding assets in a Swiss bank account. Governments the world over are determined to prevent tax evasion and any attempts to hide bank accounts and investments away from the taxman will fail in the long run and could have costly repercussions. You should only ever use tax planning arrangements which are compliant in your country of residence,’ he explained.
While some critics object to the fact that under these Swiss deals tax evaders would remain anonymous, many tax authorities, like the UK’s HM Revenue & Customs, view the deals as a pragmatic solution to a seemingly intractable problem. ‘These tax treaties are quite revolutionary and illustrate how offshore financial centres are adapting to international pressure and how much international tax planning has changed. It has become more important to seek professional advice on your tax planning, particularly if you have assets in more than one country,’ he added.
Quote from ExpatForum.com : "Situation: I relocate to France in March 2012 but my family remains in Switzerland until mid-year 2012. I have earnings to be paid in 2012 in Switzerland which relate to activities
in Switzerland prior to moving.
- Will I be required to pay tax in France on Swiss earned income?
- Does it matter when my family moves in determining which country tax rate would apply to Swiss earnedincome within 2012 calendar year?
- I am obligated under French law to declare worldwide income if that income was earned prior to moving to France?"
The new tax agreement between the UK and Switzerland comes into forces on 01 January, 2013, and means that account holders must either provide full details to HM Revenue & Customs (HMRC) or pay over a proportion of the money in their account and a future withholding tax. ‘The days when hiding money in Switzerland in order to evade tax are over. Burying your head in the sand is no longer an option. The only realistic strategy is to talk to HMRC, as quickly as possible,’ said Exchequer Secretary David Gauke.
Jennie Granger, HMRC Director General, Enforcement and Compliance, said that Swiss banks or accountants are writing to people affected by the agreement. ‘Some may be asking customers to close their accounts. If this happens, UK residents must ensure that any outstanding tax liabilities are paid. Anyone in these circumstances is strongly advised to contact HMRC as soon as possible,’ she explained.