EU Threatens Swiss deal

At the end of August we reported on the historic Swiss-UK tax deal which was designed to put an end to tax evasion via Swiss investments whilst maintaining the cherished secrecy of such accounts. This deal was structured to include a one-off payment from Swiss banks to the UK followed by a regular collection of taxes by the Swiss authorities with those taxes being repatriated to the UK without revealing identities.

In September Germany signed a similar agreement with the Swiss authorities. However, the EU authorities have threatened the validity of these agreements, saying that they contravene European Law. Essentially the EU position is threefold in that:
a) The agreement is not as tough on tax evasion as the EU expects
b) The agreement is not compatible with EU rules on secrecy
c) The agreement is not in line with the existing EU-Swiss agreement and countermands the EU savings directive

The UK and German negotiators face a stark choice. On the one hand continuing with the treaties as they stand will result in the EU issuing a writ against the countries. On the other, should the Swiss not agree to a further relaxation on matters such as secrecy, the treaties could become void, resulting in the loss of £billions in uncollected taxes.

Earlier this week the EU tax commissioner announced that “The European Union is working with Germany and the U.K. to resolve their tax deals with Switzerland”. The Commissioner, Algirdas Semeta, went on to add “I see a strong willingness of both member states to solve the problem.”

Newshams will continue to take a keen interest in the progress of these negotiations and will advise their clients accordingly. Pending a resolution there may be some constraints on the advice given as to the advisability of investing in or withdrawing investments from Switzerland in view of this fresh level of uncertainty.

As tax mitigation specialists Newshams are able to give advice on how overseas investments may affect a tax planning strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about the potential tax implications of investing overseas or e-mail us at and we’ll get straight back to you.
07 December 2011

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