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Finance Act 2012

Background Note

45.The UK and Swiss governments signed an agreement on 6 October 2011 providing for co-operation in tax matters. The agreement imposes various levies on financial assets held by and on income and gains arising in Switzerland to UK individuals. In all cases the levy or withholding tax is not levied if authorisation is given to disclose the assets, income and gains to the UK competent authority. This section and Schedule give effect to the agreement (as amended by a protocol signed on 20 March 2012 and mutual agreement signed on 18 April 2012) for UK tax purposes. It is expected that the agreement will take effect on 1 January 2013, but that is subject to the passing of enabling legislation and ratification of the agreement in Switzerland.

46.The agreement provides for a one-off levy on financial assets in Switzerland, for a withholding tax to be deducted from income and gains arising in Switzerland and for a levy on assets on the death of an account holder on or after the agreement comes into force. The Schedule makes clear which UK tax liabilities are satisfied on payment of the one-off levy for the past and sets out the effect of the withholding tax and levy on assets at death for the future

47.Cases in which a retention is made under the terms of the 2004 agreement between the EU and Switzerland (‘the EUSA’) are excluded from the agreement, but the Joint Declaration (contained within the protocol) introduces a tax finality payment to produce an equivalent result to that obtained under the agreement itself. The Schedule sets out the effect of making a tax finality payment.

48.The agreement also provides for enhanced exchange of information by the Swiss authorities to the UK and allows the Swiss authorities to request that a further agreement is made for the provision of information by the UK to Switzerland on similar lines to the approach adopted by the UK with other territories.

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