UK and International Tax news
Amendment To The UK – Swiss Agreement On Offshore Tax Evasion
Tuesday 24th April 2012
Further to our International Tax News Item of 21 March 2012, letters have recently been exchanged to implement the UK’s right under the Protocol signed on 20 March 2012 to have beneficial changes in the operation of the formula which calculates the one-off payment for the past between Switzerland and Germany incorporated into the UK Agreement.
As previously reported, under the terms of the original agreement, funds held by UK taxpayers in Switzerland on 31 December 2010 and still in existence on 31 May 2013, were to be subject to a one-off deduction [regularisation tax] of between 19% and 34% to settle past tax liabilities including income tax, capital gains tax, inheritance tax and VAT liabilities, in relation to the funds in the account. The deduction would not be applied if the account holder instructs the bank to disclose details of the account to HMRC. Following that disclosure, HMRC will seek unpaid taxes with relevant interest and penalties.
The Protocol provides that where the level of the regularisation tax in the agreement between Switzerland and Germany is higher than that currently included in the UK – Swiss agreement, the UK can request the higher rate of tax to apply which it has now done.
In paricular, the one-off regularisation payment is to be calculated in accordance with a revised formula. The applicable rate is 34%. Where the tax charge amounts to 34% or more and the relevant capital amounts to one million pounds sterling or more, the tax charge (applicable on the entire relevant capital) shall increase by 1% for each additional million pounds sterling relevant capital, up to a maximum of 41%. The minimum rate will become 21%.Contact Us