LDF and Swiss-UK Tax Agreement
500m payments. In an important final step, the Swiss tax authority has to report the top ten jurisdic-
tions that received assets from relevant persons by 31* April 2014 to HMRC.‘”
The top ten jurisdictions and the number of individuals will only be disclosed to HMRC and not made
public. Although the ten jurisdictions will not be surprising, it would be interesting to gain an idea of
the scale of the money drain.
3.4.4 Withholding Tax Levied by Swiss Paying Agents
3.4.4.1 Withholding Tax
In future, Swiss paying agents will retain taxes. The tax on interest income and other income is 48%,
the tax on dividends is 40% and the tax on capital gains is 27%.*” When the withholding tax is paid,
the relevant person has no further tax issues in the UK and all interest penalties or surcharges lapse for
this amount. No other taxes are affected.*® The tax rates will be adapted if the rates change in the
UK.^* There is also no effect on the Swiss anticipatory tax." Other taxes levied at source are credited
against the withholding taxes if they are from a third-party state, in accordance with the double taxa-
tion agreements." A relevant person choosing this option does not have to declare the income and
gains on the Swiss account or deposit on his UK tax return.^*
This solution is also very simple for clients and requires only a modicum of advisor advice. The tax
rate is based on the normal tax rate for individuals taxed ordinarily in the UK. However, the effort
required by banks is greater, and this may increase costs for UK clients. Classifying each income or
gain requires time. Furthermore, investment strategies must consider the expected tax rate for the in-
vestment class, since this has a large impact on the final outcome. Finally, someone must check each
account carefully before the tax payment can be made to the Swiss authority.
3.4.4.2 Voluntary Disclosure
There is also the option of a voluntary disclosure for income and gains. Relevant persons can choose
this option by submitting in writing to the Swiss paying agent."? The process is analogous to the vol-
^? CH-UK Tax Agreement, 2011, art. 18.
^5 CH-UK Tax Agreement, 2011, art. 19, para. 1.
^^ CH-UK Tax Agreement, 2011, art. 19, para. 5.
45 CH-UK Tax Agreement, 2011, art. 20, para. 1 & 2.
^5 CH-UK Tax Agreement, 2011, art. 21, para. 1.
^" CH-UK Tax Agreement, 2011, art. 21, para. 2 & 3.
“8 Urtz, 2012 (1), p. 60 & 61.
^? CH-UK Tax Agreement, 2011, art. 22, para. 1.
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