Published: 30 Jan 2013 16:00 GMT+01:00 | Print version
Updated: 30 Jan 2013 16:00 GMT+01:00
Switzerland has given Britain a 500-million-franc ($545-million) advance as part of a special deal that took effect on January 1st aimed at taxing British funds stashed in Swiss banks.
"This advance constitutes a guarantee for Britain that it will recover a minimum sum on British taxpayers' until-now untaxed funds in Switzerland," the Swiss government said in a statement issued on Wednesday
Faced with mounting international criticism that its banking practices enable wide-scale tax evasion in other countries, Switzerland reached agreements last year with Britain, Austria and Germany to limit its cherished bank secrecy.
The accords with London and Vienna took effect on January 1st, but the German parliament ended up blocking that country's deal last year.
Under the agreements, foreigners that deposit undeclared funds in Switzerland maintain their anonymity but are taxed by Bern, which in turn transfers the revenues to the account holder's country of origin.
If the British and Austrian clients do not want their Swiss banks to automatically deduct taxes from their accounts, they can instead opt to declare their account holdings to the tax authorities in their home countries.
The Swiss government said on Wednesday that, in accordance with the deal with London, Swiss banks had handed over 500 million francs to federal tax authorities, who in turn had passed on the money to Britain.
The advance, it said, would progressively be paid back to the banks as soon as they had transferred 800 million francs in withheld taxes from their British account-holders to authorities in London.
The entire advance would be repaid once 1.3 billion Swiss francs worth of taxes had been generated, it added.
"It is worth noting that the Austrian tax deal ... does not call for an advance payment," the government said.
Bern hailed the new tax deals, saying they "resolve the problem of non-taxed funds and allow foreign tax authorities to recover what is due to them and yet preserves the privacy of bank clients."
The deals, it said, mark "a new government policy in regard to financial markets," it said.
Switzerland is also in the process of negotiating similar deals with Greece and Italy.
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