As a result of recently-agreed revisions to the Double Taxation Convention, originally signed in 1977, a UK-based firm, for example, must now hold a minimum of only 10 per cent of a Swiss-domiciled company to gain exemption from the Swiss 35 per cent-rate withholding taxes on dividends. Previously, a UK firm would have to hold at least 25 per cent of a Swiss firm’s stock to pay a withholding rate of 5 per cent.

A Swiss company receiving a dividend from a UK company of which the Swiss company owns at least 10 per cent would receive that dividend without any UK withholding tax if the UK had imposed a withholding tax under its domestic law. In fact, the UK does not have a general withholding tax on dividends so the question does not arise anyway.

A number of other changes affecting personal tax also came into effect, possibly increasing the attractions to UK nationals of working in Switzerland at a time when non-domiciled UK residents have already been hit with a new £30,000-a-year tax charge, and when the UK government has proposed introducing a new, higher-rate income tax band.

The UK does not currently apply withholding taxes on dividends, with the exception of UK-registered real estate investment trusts.

Meanwhile, UK pension schemes receiving dividends from Swiss-registered companies qualify for complete exemption from Swiss withholding taxes as a result of the changes to the Convention.

On the personal tax side, a UK national working in Switzerland who wishes to pay money into a UK-based pension scheme can obtain tax relief based on Swiss, rather than UK income tax rates, and the reverse benefit applies to a Swiss citizen working in the UK.

In December, Switzerland removed its internal borders with European neighbours by signing the Schengen Agreement. A total of 25 countries have so far signed it, with Switzerland being the latest entrant. The agreement provides for common standards on issues such as asylum, cross-border policing and visa requirements.