Amended witholding tax on Britons with hidden money in Swiss bank account likely to boost demand for Liechtenstein Disclosure Facility, accountants say
SWITZERLAND AND BRITAIN will from January begin taxing the funds wealthy British after altering the terms of a withholding tax deal to appease the European Commission.
The main points of the agreement signed in October – which from 2013 will see Britons with Swiss bank accounts have their income and gains taxed at rate of 48% – are unchanged. However, the legal structure of the agreement, signed in October, has been altered in response to claims that it was in breach of European Union laws.
Confirmation of UK Swiss deal is expected to encourage more wealthy Britons who owe tax to use the Liechtenstein Disclosure Facility, which allows Britons who come clean about money owed to pay a 10% penalty on undeclared tax liabilities – significantly lower than normal penalties.
Most tax experts reckon that the Liechtenstein facility, which is due to run until April 2016 and is expected to raise about £3bn, offers Britons a better deal than the Swiss tax deal.
“Any UK tax payers with undisclosed Swiss assets who may want to take advantage of the Liechtenstein Disclosure Facility (LDF) will need to start making arrangements asap,” said Fiona Fernie, tax investigations partner at accountancy firm BDO. “In most cases, the LDF will be the more cost effective option for those looking to regularise their UK tax affairs. However, the process can take up to 9 months to see through, from start to finish”.
The Swiss government said in a statement that the amended “respects the protection of bank clients’ privacy applicable in Switzerland but also ensures the implementation of the UK authorities’ legitimate tax claims.”