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Withholding tax bombshell

UK holders of Swiss bank accounts are likely to face a 50% withholding tax, I can report today. While I have already reported on the deal and its key features on 29 April, the withholding tax rate is far higher than many experts have anticipated.

Sources that are said to be "close to the negotiations" have confirmed that agreements have been reached with the UK Treasury and Her Majesty's Revenue & Customs and their Swiss opposite numbers. Another feature of the deal not mentioned in my 29 April news report is the imposition of a "one off" levy in lieu of past taxes unpaid. Like the withholding tax this one off payment will allow individuals to keep their anonymity and confidentiality is retained.

UK account holders are not the only people taking a hit as result of this deal between the 2 countries. Lichstenstein have lodged complaints as the Swiss-UK deal impacts on their longstanding agreement with the UK. The Lichtenstein-UK deal has features that include immunity from prosecution and reduced/discounted penalties. The Lichtstenstein Disclosure Facility (LDF) restricts retrospective collection to 10 years and penalties to a relatively low, 10% . There has been a fairly slow LDF uptake since it began in 2009 but the new Swiss-UK deal may see an increase. 

Jon Cassidy, tax investigation partner at PKF is quoted as saying: "Holders of Swiss accounts cannot assume their accounts will remain confidential for ever". He goes on: "An amnesty for accounts based in Switzerland is possible – but there is no guarantee that any future amnesty will be as generous as the current Lichtenstein Disclosure Facility". 

With the increasing hostility toward tax havens, there has never been a better time to review your Off-Shore tax affairs. For solutions specially tailored to your needs check out www.stmworldwide.com/offshore-solutions    

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