LDF and Swiss-UK Tax Agreement
sights. In any event, Swiss banks are not allowed to support the clients in this case. The only efficient
solution to eliminate this loophole would have been to freeze the assets of all bank clients from the UK
and Austria as soon as the agreement became public. Naturally, this would have at least breached the
principles of free movement of capital within the European Union's internal market.
4 Juxtaposition of the Agreements
As shown in the cases and explained in the legal analysis, UK citizens with untaxed assets in Switzer-
land are able to use either the Swiss-UK tax agreement or the LDF. A blanket statement on which
agreement is better is not possible, since that is dependent on what is understood as "better ".^? There-
fore, on the following pages some aspects of the two agreements are compared.
Comparisons between the LDF and the Swiss-UK tax agreement have already been made by Goek-
men, Hosp & Langer and Schaad. Goekmen introduces the LDF and briefly compares it with the
Swiss-UK tax agreement. He sees the LDF as “the best and probably cheapest route" to becoming tax
compliant.*® Hosp & Langer compare the LDF and Swiss-UK tax agreement most deeply. They have
no clear favourite but give situations which favour one agreement. For instance, the LDF should be
461 involved with the
preferred if the rate of return on assets is low, whereas the narrower timeframe
Swiss/UK tax agreement may reduce the tax liability significantly."? Schaad evaluates the advantages
and disadvantages of the LDF and Swiss-UK tax agreement, with a focus on the privacy aspects of
the agreements. From this perspective, he concludes that “the Swiss model has points in its favour
well worth considering" ^9
4.1 Tax Load for Regularisation
The Swiss UK Agreement with its anonymous regularisation method uses a mix of the assets and
gains to calculate the tax, whereas the LDF with its disclosure method only focuses on the income and
gains on the personal tax rate or the composite rate. Thus the tax bases and rates are quite different. In
the LDF, interest income, dividends and capital gains are the source of taxes, which are then taxed at
the relevant person’s ordinary tax rate or using the Composite Rate Option.
In contrast, the Swiss-UK tax agreement uses a formula to calculate the tax rate; two-thirds of this is
based on the estimated income and gains for the years 2011 and 2012 and the remaining third is based
^? Schaad, 2012, p. 69.
^9! Goekmen, 2012, p. 51-53.
^*! Back to 2002 for the Swiss/UK tax agreement as opposed to 1999 for the LDF
^? Hosp & Langer, 2011 (2), p. 908-917.
^65 Schaad, 2012, p. 69-71.
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