Swiss Banks Pay Further Millions To UK, Austria As Part Of Tax Agreement

Stephen Little

6 September 2013

The Swiss tax authority has transferred a further SFr525 million ($560.3 million) to the Austrian and UK tax authorities as part of a tax withholding agreement which aims to clampdown on tax evasion.

The Federal Tax Administration said that the UK had received £146.7 million ($229.7 million), while €254.7 million ($336.6 million) was transferred to Austria.

The transfer of money between the countries is the second in a series of payments to be made this year to the UK and Austria following long-running pressure on Switzerland to solve the problem of untaxed funds.

In July, the first transfer to the UK amounted to £258.3 million, while €416.7 million was transferred to Austria.

Around SFr12 billion of assets held in Swiss bank accounts were also disclosed.

The Federal Tax Administration said it recorded 14,789 declarations for the UK concerning the disclosure of £4.5 billion of assets and 13,592 declarations for Austria concerning assets totalling €4.4 billion.

Further tranches relating to the payment of compensation will now be made monthly until June 2014.

Austrian finance minister Maria Fekter said the deal was an "important milestone towards greater tax fairness", and that tax evasion was becoming increasingly unattractive as a result.

She also pointed out that the agreement had reduced the incentive for people to store their money in Swiss bank accounts and that the second payment showed that the treaty was the right decision.

The tax treaty between the Alpine state and the UK and Austria came into force on 1 January 2013 as part of an agreement to address the issue of non-payment of tax on assets held or managed in Switzerland.

UK and Austrian taxpayers with funds deposited in Switzerland were given the option to disclose their account details to their country's tax authorities, or have their accounts taxed by the Swiss government, who would then transfer the funds without naming account holders.

Withholding tax on capital income generated on bank accounts or securities deposits after the entry into force of the agreements will be forwarded from the end of March 2014 onwards.

In other recent news, last week the US and Swiss governments signed a joint statement in Washington DC designed to draw a line under a prolonged tax dispute between Swiss banks and US authorities. For more on this story, click here.