The voluntary declaration by EU residents of income earned from interest on assets in Swiss banks, has more than doubled in 2015 compared to the year before. The authorities believe that the forthcoming automatic exchange of tax information (AEI) treaty, is responsible for the rise.This content was published on July 25, 2016 - 15:36
According to information released in July by the Federal Tax Administration, the number of voluntary disclosures increased from 149,508 in 2014 to 328,860 in 2015. Switzerland’s neighbours Germany, France and Italy were the most cooperative making up the top three. Other significant information sharers were Spain and the UK.
At the same time, the amount of withholding tax collected from a virtually defunct deal between Switzerland and the EU has dropped off dramatically. Last year, Switzerland handed over CHF127 million in tax on interest earned from Swiss bank accounts. This is significantly down from the CHF238 million handed out in 2014 and the high water mark of CHF554 million in 2008.
The contrasting sets of figures mark a changing set of realities for tax dodgers in the last few years. The withholding tax treaty, which came into force in 2005, allowed people to make anonymous tax contributions to their home countries whilst keeping their Swiss bank details secret.
But in 2014, the Swiss government signed up to an international treaty to share information on all financial transactions with other participating countries on a reciprocal basis. Seeing the writing on the wall, EU holders of undeclared Swiss bank accounts have started to come clean to their home countries.
That AEI deal was passed by parliament in December 2015, and will come into operation in 2018 following a year of data collection. It will replace the Swiss-EU withholding tax agreement.
However, the Swiss parliament will have to approve information sharing under this treaty with each country on an individual basis. So far, Switzerland has signed agreements with the EU and nine other countries, with parliament approving two of the deals – the European Union and Australia.
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