BASEL: Switzerland and Austria on November 11 signed an agreement to terminate their 2013 withholding tax agreement as of January 1, 2017.
The agreement reflects plans to introduce automatic exchange of information between Switzerland and the EU as of January 1, 2017, which concerns the 28 member states and Gibraltar.
Under the countries’ 2013 withholding tax agreement, Austrian taxpayers may regularise the taxation of income generated by their assets held in Switzerland by either paying a withholding tax levied directly on their accounts which is anonymously transmitted to the Austrian authorities or opting for voluntary disclosure.
However, with the introduction of the automatic exchange of information between Switzerland and the EU, this model loses its reason to exist.
The termination agreement ensures a smooth transition between the two models, providing rules for the transfer of the last tax amounts and for the forwarding of the last voluntary disclosures to the Austrian tax authorities. The provisions of the withholding tax agreement will continue to apply for all facts and legal rights that materialised during its period of validity. Furthermore, the memorandum of understanding between the two countries on market access issues will remain in force.
It should be noted that Switzerland’s agreement with the EU will also replace the EU-Switzerland taxation of savings agreement that has been in force since 2005. Under that deal, parties will receive, on an annual basis, the names, addresses, tax identification numbers, and dates of birth of their residents with accounts in the other contracting state, along with other financial and account balance information.
