GENEVA: Switzerland collected more than CHF3.9 billion ($4 billion) in taxes from European Union bank clients in the first decade of a controversial treaty dealing with tax evasion. The CHF127 million handed over to EU countries last year was well below the average, but far more clients are now opting to declare their Swiss-based assets to their domestic tax authorities.
Last year, Switzerland collected CHF169 million in taxes from its EU bank clients. Under the terms of the agreement, 75% (or CHF127 million) was distributed to various EU countries. Switzerland keeps the remainder to cover administrative costs.
The amount of taxes collected for EU states on the interest earned (35% since 2011) on Swiss bank accounts in 2015 fell well below the CHF357 million average over the life span of the agreement. In 2008, the agreement netted CHF554 million for the EU.
The decrease in withholding tax payments can be explained by the growing numbers of EU citizens who are voluntarily declaring their Swiss-based assets to their home countries. Last year, 328,000 people listed Swiss assets on their tax declarations. In 2005 this number stood at 35,000.
This is because the EU has introduced a system of automatic exchange of tax information (AIE) between countries. Whenever an EU citizen opens an account in many other states, their home country will automatically be informed of that fact.
AIE has also been adopted by many other countries worldwide, making it far harder for tax cheats to hide their assets.
Switzerland has also signed up to the AIE system. If approved by parliament this year, it will replace the EU withholding tax deal from 2017.
The 2005 treaty was, in any case, widely criticised for containing too many loopholes. Most notably, people could escape withholding tax by hiding their assets in a trust fund that obscured the owner of those assets.
