Go Back   English Forum Switzerland > Help & tips > Finance/banking/taxation  
Reply
 
Thread Tools Display Modes
  #1  
Old 08.03.2013, 11:04
Senior Member
 
Join Date: Feb 2011
Location: Fribourg
Posts: 256
Groaned at 4 Times in 1 Post
Thanked 138 Times in 86 Posts
international has earned the respect of manyinternational has earned the respect of manyinternational has earned the respect of many
News for UK and Austrian tax payers with Swiss bank accounts or securities deposits

Hope this has not already been posted, thought this would be of interest for you - this is the Guidance concerning the agreements between CH-UK and CH-Austria. It is essentially a how-to manual from the Swiss Federal Tax Administration.

A draft of the Guidance on the Agreements on Cooperation in the Area of Taxation with Other States and the Federal International Withholding Tax Act (IWTA) has been published here.

Its just a draft, but the official version will hopefully be coming soon.
Reply With Quote
This user would like to thank international for this useful post:
  #2  
Old 18.03.2013, 23:11
Newbie
 
Join Date: Apr 2011
Location: Zurich
Posts: 6
Groaned at 0 Times in 0 Posts
Thanked 2 Times in 2 Posts
Temblor has no particular reputation at present
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Very handy, thanks for posting this.
Reply With Quote
  #3  
Old 29.06.2013, 17:12
Junior Member
 
Join Date: Apr 2008
Location: Winterthur
Posts: 92
Groaned at 3 Times in 3 Posts
Thanked 43 Times in 29 Posts
Alice K has earned some respectAlice K has earned some respect
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Anyone know if I will be affected by this legislation? I paid the deposit to rent a flat with money from the uk when I first moved here from the uk, it went, correctly into an escrow account held with the landlord. We have recently moved, and are now being asked to pay tax on this money as it is being released, some to us, some to the landlord.
I am unsure as to why I am being asked to pay tax on this money? Anyone have any experience of this?
Thank you
Reply With Quote
  #4  
Old 29.06.2013, 18:48
AbFab's Avatar
Forum Legend
 
Join Date: Sep 2006
Location: Zürich
Posts: 8,114
Groaned at 345 Times in 235 Posts
Thanked 11,643 Times in 4,014 Posts
AbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond repute
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Quote:
View Post
Anyone know if I will be affected by this legislation? I paid the deposit to rent a flat with money from the uk when I first moved here from the uk, it went, correctly into an escrow account held with the landlord. We have recently moved, and are now being asked to pay tax on this money as it is being released, some to us, some to the landlord.
I am unsure as to why I am being asked to pay tax on this money? Anyone have any experience of this?
Thank you
Who is asking you to pay tax? What sort of tax? If there was interest paid, then with-holding tax at 30% will be deducted...
Reply With Quote
The following 2 users would like to thank AbFab for this useful post:
  #5  
Old 29.06.2013, 19:56
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Switzerland
Posts: 21,922
Groaned at 400 Times in 308 Posts
Thanked 16,879 Times in 9,517 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Sigh, all I can see this doing is providing more work/money to accountants and lawyers. Why can't I simply be taxed in the UK on my UK stuff and taxed in Switzerland on my Swiss stuff without all this to-ing and fro-ing? How to make life difficult in one 148 page document.
Reply With Quote
  #6  
Old 29.06.2013, 20:09
jaudi's Avatar
Forum Veteran
 
Join Date: Sep 2007
Location: zurich
Posts: 552
Groaned at 4 Times in 4 Posts
Thanked 478 Times in 222 Posts
jaudi has an excellent reputationjaudi has an excellent reputationjaudi has an excellent reputationjaudi has an excellent reputation
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

But this tax only applies to UK residents....
Reply With Quote
  #7  
Old 29.06.2013, 20:23
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Switzerland
Posts: 21,922
Groaned at 400 Times in 308 Posts
Thanked 16,879 Times in 9,517 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Quote:
View Post
But this tax only applies to UK residents....
No, it doesn't - see page 55, section 8.4 in the withholding tax guidelines for non-domiciled UK residents info.

And as my OH and I recently inherited a house in the UK does that make us resident or not?
Reply With Quote
  #8  
Old 29.06.2013, 21:10
Guest
 
Posts: n/a
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Quote:
View Post
No, it doesn't - see page 55, section 8.4 in the withholding tax guidelines for non-domiciled UK residents info.

And as my OH and I recently inherited a house in the UK does that make us resident or not?
Owning property in the UK does not, in itself, make you resident. If you are physically resident most of the year in a tax treaty country, and if that has continued for 3 years or more that is your regular and ordinary residence.

Non-domiciled refers to those who do not have a legal domicile in Great Britain or Northern Ireland (basically your father wasn't born there) and who therefore have specific advantages in matters of unrepatriated earnings (although there is now a £30,000 annual charge if your unrepatriated untaxed earnings exceed £2,000 p.a.) and inheritance (actually estate) tax

If you are taxable in Britain and have no income from Swiss investments then irrespective of anticipatory (withheld) tax and any penalty or withholding provided for under the new treaties, you should get that back.

The basic, old rules are here:
http://www.estv.admin.ch/verrechnung...x.html?lang=en (forms for foreign residents to get most of the anticpatory tax refunded upon proof that they declared the income to their home country)

The problem is that the UK tax return insofar as it calls for declaring foreign income does not have any provision (as US tax returns and FBARs do) for declaring assets and account balances. Thus there will be false positives and funds withheld even where a UK taxpayer has declared and paid tax on all earnings. This is something that HMRC will have to learn to deal with.

I had, and declared to my canton and to HMRC since I pay tax to both, Swiss income from rental in 2010-12. I was billed by HMRC on that basis for expected income in 2012-13 but in fact didn't have any. I paid the first instalment and then submitted a tax return online on 6th April and within two weeks had my money back.

It's always seemed clever to me to declare "income" of exactly £1 on foreign accounts even when the actual earnings is zero or under 50p. At least you can show that you declared the existence of the account just as, in the USA, you would check the box on Schedule B, Form 1040 and list "Switzerland" to show you had an account even if it didn't pay any interest and didn't have to be declared elsewhere.

As for Swiss tax, if you are subject to wealth tax the ownership of property in the UK will increase the rate at which you pay (progressive) Swiss wealth tax even though you don't pay Swiss tax on the foreign property itself. You may have to pay 25% withholding tax to HMRC on gross rentals (refunded or credited as appropriate when you file a tax return) although that can be finessed by having a firm or an individual undertake responsibility for payment of tax on the net earnings from rental. I've been doing that for 30 years by arrangement with HMRC; since our rental properties incur mortgage interest there is little tax to pay.
Reply With Quote
This user would like to thank for this useful post:
  #9  
Old 29.06.2013, 21:19
jaudi's Avatar
Forum Veteran
 
Join Date: Sep 2007
Location: zurich
Posts: 552
Groaned at 4 Times in 4 Posts
Thanked 478 Times in 222 Posts
jaudi has an excellent reputationjaudi has an excellent reputationjaudi has an excellent reputationjaudi has an excellent reputation
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Quote:
View Post
No, it doesn't - see page 55, section 8.4 in the withholding tax guidelines for non-domiciled UK residents info.

And as my OH and I recently inherited a house in the UK does that make us resident or not?
"non-domiciled UK residents" - means UK residents who are not UK domiciled....that means you reside in the UK, but your domicile (a concept vaguely like heimatort) is elsewhere.
Reply With Quote
  #10  
Old 29.06.2013, 21:40
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Switzerland
Posts: 21,922
Groaned at 400 Times in 308 Posts
Thanked 16,879 Times in 9,517 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Quote:
View Post
Owning property in the UK does not, in itself, make you resident. If you are physically resident most of the year in a tax treaty country, and if that has continued for 3 years or more that is your regular and ordinary residence.

Non-domiciled refers to those who do not have a legal domicile in Great Britain or Northern Ireland (basically your father wasn't born there) and who therefore have specific advantages in matters of unrepatriated earnings (although there is now a £30,000 annual charge if your unrepatriated untaxed earnings exceed £2,000 p.a.) and inheritance (actually estate) tax

If you are taxable in Britain and have no income from Swiss investments then irrespective of anticipatory (withheld) tax and any penalty or withholding provided for under the new treaties, you should get that back.

The basic, old rules are here:
http://www.estv.admin.ch/verrechnung...x.html?lang=en (forms for foreign residents to get most of the anticpatory tax refunded upon proof that they declared the income to their home country)

The problem is that the UK tax return insofar as it calls for declaring foreign income does not have any provision (as US tax returns and FBARs do) for declaring assets and account balances. Thus there will be false positives and funds withheld even where a UK taxpayer has declared and paid tax on all earnings. This is something that HMRC will have to learn to deal with.

I had, and declared to my canton and to HMRC since I pay tax to both, Swiss income from rental in 2010-12. I was billed by HMRC on that basis for expected income in 2012-13 but in fact didn't have any. I paid the first instalment and then submitted a tax return online on 6th April and within two weeks had my money back.

It's always seemed clever to me to declare "income" of exactly £1 on foreign accounts even when the actual earnings is zero or under 50p. At least you can show that you declared the existence of the account just as, in the USA, you would check the box on Schedule B, Form 1040 and list "Switzerland" to show you had an account even if it didn't pay any interest and didn't have to be declared elsewhere.

As for Swiss tax, if you are subject to wealth tax the ownership of property in the UK will increase the rate at which you pay (progressive) Swiss wealth tax even though you don't pay Swiss tax on the foreign property itself. You may have to pay 25% withholding tax to HMRC on gross rentals (refunded or credited as appropriate when you file a tax return) although that can be finessed by having a firm or an individual undertake responsibility for payment of tax on the net earnings from rental. I've been doing that for 30 years by arrangement with HMRC; since our rental properties incur mortgage interest there is little tax to pay.
Yes, but both our parents were born in the UK.

At the moment the house isn't rented out as we're deciding what to do with it so no UK income, although we do have some bank accounts in the UK on which we pay/report interest when we get any. Up to now that's been it for UK reporting, but with the house thrown into the mix I've got to sort that side out this year. The only reason we do self-assessment returns is because we have a dormant UK business and as directors we're required to file.

Luckily our Swiss wealth tax is a negative figure at present so adding in the UK property won't have too great an effect on our finances.
Reply With Quote
  #11  
Old 30.06.2013, 09:37
Guest
 
Posts: n/a
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Quote:
View Post
Yes, but both our parents were born in the UK.

At the moment the house isn't rented out as we're deciding what to do with it so no UK income, although we do have some bank accounts in the UK on which we pay/report interest when we get any. Up to now that's been it for UK reporting, but with the house thrown into the mix I've got to sort that side out this year. The only reason we do self-assessment returns is because we have a dormant UK business and as directors we're required to file.

Luckily our Swiss wealth tax is a negative figure at present so adding in the UK property won't have too great an effect on our finances.
Then you are almost certainly domiciled in some part of the United Kingdom. For practical purposes this means only that your estates upon your death will be subject to a claim for iHT by HMRC even if it is also taxed elsewhere. (The usual conflict occurs with Canada which taxes "deemed sale at death" with capital gains tax. HMRC will then tax the net value after payment of Canadian CGT.) Should you be held to have acquired a domicile of choice outside the UK (harder to accomplish once you own property there) only your real estate, UK bank account and other assets located in the UK would be taxed.

It's not clear why you are reporting UK income tax on your non-real estate income. At current interest rates you'd need a huge amount of savings to collect any meaningful interest. And the UK-Swiss Tax Treaty addresses such conflicts. You are unlikely to face the issue that Gaines-Cooper faced, and lost in the courts: settled in Seychelles he was held to have maintained sufficient contacts with the UK to be subject to income tax. Switzerland isn't a tax haven in that respect.

If you look at the archives you'll see that the most pressing issue facing expatriate workers from the UK is whether to make voluntary Class 3 National Insurance contributions to try to maximise their State Pension (30 years' credits). At around £700 a year it is considered good value.
Reply With Quote
  #12  
Old 30.06.2013, 10:43
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Switzerland
Posts: 21,922
Groaned at 400 Times in 308 Posts
Thanked 16,879 Times in 9,517 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

As I said 5thSwiss, it's because we're UK company directors and must fill in a tax return every year even if all the figures are zeros. Bank account interest was all we reported on for years because that was it, until my father-in-law died and we inherited his estate. But there's no income from the property as it's not rented. We're still deciding whether to try and rent it out or sell it and be done with it. I'm for selling, the OH is leaning towards renting but I think it needs too much work (new kitchen/bathroom/gas boiler) to bother with trying to rent it out. Plus it's a hassle trying to deal with the bills for it standing empty when we're not in the UK. Some companies will accept a foreign address for sending bills to, but others won't which means they have to be forwarded all the time. I've managed to set up some to deal with on-line, but not all.

I want to lose the UK company as well, it's sitting doing nothing and if he does want to start it up again I think it would be easier to do here in Switzerland without adding the UK into the mix as it would just add to the tax confusion.

I'm a only a couple of years off getting my State pension anyway, but it might be worth considering the pension top-up for the OH half as he still has a few years to go before he retires.
Reply With Quote
  #13  
Old 30.06.2013, 10:50
Guest
 
Posts: n/a
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Quote:
View Post
As I said 5thSwiss, it's because we're UK company directors and must fill in a tax return every year even if all the figures are zeros. Bank account interest was all we reported on for years because that was it, until my father-in-law died and we inherited his estate. But there's no income from the property as it's not rented. We're still deciding whether to try and rent it out or sell it and be done with it. I'm for selling, the OH is leaning towards renting but I think it needs too much work (new kitchen/bathroom/gas boiler) to bother with trying to rent it out. Plus it's a hassle trying to deal with the bills for it standing empty when we're not in the UK. Some companies will accept a foreign address for sending bills to, but others won't which means they have to be forwarded all the time. I've managed to set up some to deal with on-line, but not all.

I want to lose the UK company as well, it's sitting doing nothing and if he does want to start it up again I think it would be easier to do here in Switzerland without adding the UK into the mix as it would just add to the tax confusion.

I'm a only a couple of years off getting my State pension anyway, but it might be worth considering the pension top-up for the OH half as he still has a few years to go before he retires.
If you decide to rent the property you can assign responsibility to your limited company as agent. That converts a small part of your rent (10-15%) into pensionable earnings for you as the company can pay that out as salary to you. We did that for a number of years, following an exchange of letters with Inland Revenue (as it then was), both when we were resident and non-resident.

I leave aside the Swiss tax consequences as we were not subject to Swiss taxes when I worked at GATT in Geneva.

Normally bank interest is paid gross to expatriates unless it's connected with an active UK business. On the other hand interest is so close to zero as not to be worth exempting.

Setting up a Swiss limited company is not generally a DIY project the way it is in England and (I suppose) Scotland and NI.
Reply With Quote
  #14  
Old 30.06.2013, 11:03
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Switzerland
Posts: 21,922
Groaned at 400 Times in 308 Posts
Thanked 16,879 Times in 9,517 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Interesting idea on the company and rent 5thSwiss. Will have to think about that.

What usually happened when we did get interest was that the bank paid the tax and then we got it back later from HMCR once we'd filed. But our account no longer earns interest due to the bank's change in policy so it's been a zero return for the last few years.

No, I know it's harder here for company set-up which is why I think it's not really worth him pursuing unless he wants to go full-time and flat out at it. Still, we'll see what the future holds. He works full-time at present and that isn't likely to change any time soon.
Reply With Quote
  #15  
Old 01.07.2013, 10:34
Junior Member
 
Join Date: Apr 2008
Location: Winterthur
Posts: 92
Groaned at 3 Times in 3 Posts
Thanked 43 Times in 29 Posts
Alice K has earned some respectAlice K has earned some respect
Re: News for UK and Austrian tax payers with Swiss bank accounts or securities deposi

Our situation was that we paid our deposit on our flat in Switzerland just before we moved here. So at the time were UK residents, but only for a couple of weeks.
We have received no correspondence about tax from Credit Suisse, who held the flat deposit. We moved in February (within Switzerland), so the money has been removed from the account, and the account closed. We received a registered letter from CS to our new address asking for 30% of the deposit. We only got this letter as there were insufficient funds in the CS account to cover the tax demand. According to CS they would have taken the money, had it been available.
So had we not moved, we would be none the wiser! Due to the nature of the circumstances we are, according to CS, not liable to pay the tax, but we need to explain why in writing. Basically explain what the account was for and include copies of our permits.
We are probably not the only ones in thus situation, worth checking if you are affected, and soon. Tax should have been paid on the 31st May.
Reply With Quote
This user would like to thank Alice K for this useful post:
Reply

Tags
austria, tax agreement, united kingdom, withholding tax




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
UK to tax Swiss Accounts Island Monkey Finance/banking/taxation 1 11.12.2012 17:20
UK bank deposits Luisete General off-topic 14 06.10.2012 14:39
French/Swiss/UK bank accounts jnwyatt Finance/banking/taxation 18 13.07.2012 09:32
Foreigners with Swiss Bank Accounts Cashboy Finance/banking/taxation 33 30.08.2011 23:14
Swiss bank accounts - monthly limit and overdraw jarod_w Finance/banking/taxation 21 24.07.2011 17:20


All times are GMT +2. The time now is 13:50.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2021, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0