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Old 03.06.2012, 13:58
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Swiss banking agreement with the UK

Can anyone explain to me why Switzerland made an agreement to make payments to the UK government for UK domiciles' bank accounts in Switzerland.
There is no fortune tax in the UK and I don't suppose these bank accounts are paying interest at the moment so there would be no income either.
It is probably very obvious but I don't get it.
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Old 03.06.2012, 17:13
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Re: Swiss banking agreement with the UK

The UK government taxes interest earned. And how much interest is depends not only on the rate. It also depends on how much money and how long it has been in the account. And what the rate was for the whole duration the money was there, not just what the rate is today. And the exchange rate between the currency in which the interest is paid and the taxation currency.

People with small amounts of money don't tend to bother storing it in offshore accounts. People with large amounts of money do. Larger amounts of money earn more interest. And people who don't pay tax (even small amounts) can be pursued not only for the tax due, but also for fines. If you were the (cash strapped) UK government, what would you do?

Last edited by madfuzu; 03.06.2012 at 17:28.
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Old 03.06.2012, 17:19
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Re: Swiss banking agreement with the UK

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Can anyone explain to me why Switzerland made an agreement to make payments to the UK government for UK domiciles' bank accounts in Switzerland.
There is no fortune tax in the UK and I don't suppose these bank accounts are paying interest at the moment so there would be no income either.
It is probably very obvious but I don't get it.
Most Swiss accounts for foreigners do not hold much cash , they are custody accounts which contain Stocks & bonds, which will pay out dividends / interest. It's this income that will be taxed & paid to the UK.
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Old 03.06.2012, 17:22
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Re: Swiss banking agreement with the UK

And the other way round btw. When I lived in the UK (as a Swiss/dual nationality citizen) I always kept the small savings account I had as a child. My parents would put a few CHF in it from time to time for birthdays, Christmas, and for the kids presents (which I would buy on their behalf in the UK). Each year I got a statement of interests, with Swiss tax deducted and paid in CH.
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Old 03.06.2012, 18:43
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Re: Swiss banking agreement with the UK

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And the other way round btw. When I lived in the UK (as a Swiss/dual nationality citizen) I always kept the small savings account I had as a child. My parents would put a few CHF in it from time to time for birthdays, Christmas, and for the kids presents (which I would buy on their behalf in the UK). Each year I got a statement of interests, with Swiss tax deducted and paid in CH.
Odile, had you shown the bank you had deregistered from CH, you account would have been designated as such & 35% withholding tax would not have been deducted.

However you would possibly had a UK liability, which you should have been declaired in the UK. Obviousely you would have had a credit for the tax paid in CH, which in most years would likely have been less than 35%,
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Old 03.06.2012, 18:46
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Re: Swiss banking agreement with the UK

It was NEVER 35 %, but can't remember exactly. I did ask the bank manager once if I had to pay tax in Switzerland. A school friend who knew that I lived in UK, married to a Brit, for yonks, and he said 'yes no choice'. Mind you, the sums involved were hardly worth worrying about (sadly). I never 'deregistered' as such, still had Swiss nationality and right to vote, just lived in the UK and added British nationality.
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Old 03.06.2012, 21:38
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Re: Swiss banking agreement with the UK

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It was NEVER 35 %, but can't remember exactly. I did ask the bank manager once if I had to pay tax in Switzerland. A school friend who knew that I lived in UK, married to a Brit, for yonks, and he said 'yes no choice'. Mind you, the sums involved were hardly worth worrying about (sadly). I never 'deregistered' as such, still had Swiss nationality and right to vote, just lived in the UK and added British nationality.
I have personally had withholding tax (Verrechnungssteuer / impôt anticipé / Imposta preventiva) deducted at 35% by Swiss Banks since I arrived in 1994, I have also had dividends taxed on Swiss stocks at 35% since 1989. I have no idea when the tax started or at what rate it was however I do know it's been 35% for a very long time.

Bear in mind a Swiss tax payer can recover in full & then pay their actual marginal rate if they fill in a tax return.
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