Following threats of infringement proceedings, a Protocol to the UK/Swiss Agreement has been signed to satisfy EU concerns.
The Agreement, which will come into force on 1 January 2013, targets UK residents with bankable investments in Switzerland, including fully compliant taxpayers. The Agreement remains unchanged in essence, but:
- for the future withholding, where interest payments are subject to retention tax in accordance with the EU Savings Directive (at 35%) then only a further payment amounting to 13% will be due;
- inheritance tax is now covered - where a person to whom the Agreement applies dies the Swiss paying agent must freeze the deceased’s relevant assets until it receives a certificate confirming the deceased was non-dom and not deemed dom (and so not subject to UK inheritance tax on non-UK assets). If the agent does not receive a certificate within 1 year the agent must withhold 40% of the relevant assets unless it has been authorised to disclose details of the assets.