Switzerland concludes tax deal with Britain

Switzerland and Britain have concluded a tax deal to regularise any hidden assets held by British taxpayers in the alpine state, the Swiss Finance Ministry said in a statement Wednesday.

Switzerland concludes tax deal with Britain
Michael Faes

In future, investment income and capital gains arising from these assets would also be covered by a final withholding tax, at a rate of between 27 and 48 percent.  

Swiss banks would pay 500 million francs ($629 million) to British tax authorities, a sum which would be offset by any voluntary payments by British taxpayers.  

“Today in Zurich, British and Swiss negotiators concluded the negotiations on outstanding tax issues and initialled a tax agreement,” said the ministry.  

“Under this agreement, persons resident in the United Kingdom can retrospectively tax their existing banking relationships in Switzerland either by making a one-off tax payment or by disclosing their accounts,” it added.  

Those who choose to make an anonymous lump-sum payment would be subject to a tax rate of between 19 to 34 percent of the assets. The magnitude of the tax rate would depend on the duration of the account held in Switzerland, as well as the sum of capital.  

The deal is largely similar to another accord struck between Switzerland and Germany on August 10, which also allows German taxpayers to regularise their hidden assets through a one-off lump sum tax payment at the same rates.  

In addition, like the German deal, to prevent new undeclared funds from entering Swiss banks, British authorities would be able to request information on suspected tax cheats.  

The number of requests made “will be in the low to mid-hundreds and not exceed 500 per year,” said the finance ministry.  

With Wednesday’s deal, Britain has also said it does not envisage buying any stolen bank client data in order to snare tax cheats, claimed Bern.  

“The two agreements with Germany and the UK show that Switzerland is serious about implementing its white money strategy,” said Finance Minister Eveline Widmer-Schlumpf.  

“This creates legal certainty and will strengthen the competitiveness and the reputation of Switzerland as a financial centre in the long term,” she added.  

The Swiss Bankers Association welcomed the deal.  

“As a banker, I am especially grateful that clients have been offered a fair solution for regularising their assets,” said Patrick Odier, chairman of the association.  

Unconfirmed estimates of British assets hidden in Switzerland range from 59.6 billion francs to 162 billion francs.  

Switzerland came under intense pressure over its banking secrecy rules following the financial crisis, as governments, reeling in debt, sought to recover taxes from assets hidden by their citizens in Swiss banks.  

Facing a threat from the OECD to put it on a tax haven blacklist, Switzerland finally moved to ease banking secrecy by negotiating several deals with countries to offer cooperation to root out tax evaders.

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What does the UK’s new ‘traffic light’ system mean for travel to Switzerland?

The UK government is bringing in a 'traffic light' system set of rules for travel to different countries. Here's what it could mean for travel between Switzerland and the UK.

What does the UK's new 'traffic light' system mean for travel to Switzerland?
A near empty Heathrow Airport in London in January 2021. picture alliance/dpa/ZUMA Wire | May James

Whether it’s about visiting family or taking a holiday, Brits in Switzerland, as well as people in the UK, are desperate to know how they can travel to and from Britain.

At present the UK rules prohibit travel out of the country for non-essential purposes, meaning holidays to Switzerland (and everywhere else) are not possible. Travel is only allowed for an essential reason.

However, this is set to be lifted from May 17th, and at that stage England’s ‘traffic light’ system will kick in.

This involves giving each country a designation – red, amber or green – based on data including case numbers and vaccination rates in the country.

Currently, Switzerland is listed as an ‘amber’ country. Although coronavirus infections are falling and vaccinations are picking up pace, numbers at the moment are still quite high.

EXPLAINED: The European countries on England’s ‘amber’ travel list and what it means

For comparison, Our World in Data shows that Switzerland has 134.41 daily confirmed cases per million people, while the UK has 33.97.

However, if the trend continues and numbers continue to drop in Switzerland in the coming weeks – it could be placed on the green list some time soon.

Not being on the green list doesn’t mean that travel isn’t allowed – it just means that people will have to quarantine and test on arrival in the UK.

Red list – arrivals have to quarantine in specially-designated quarantine hotels for 10 days. The traveller is liable for the cost of these, which is up to £1,700 (around €1,967), plus the cost of testing after arrival. A Covid test is required to enter the country.

This is expected to be reserved for the highest-risk countries including India, Brazil and South Africa.

Note that it could be the case (as is currently) that anyone who’s not a British/Irish national or resident will be refused entry if they are coming from a red country.

Amber list – arrivals have to quarantine for 10 days but can do so in a location of their choice including the home of a friend or family member.

Arrivals also have to pay for travel-testing kits which cost around £200 (around €232) per person. A Covid test is required to enter the country. Essentially, this the regime currently in place for most arrivals.

Green list – no quarantine is necessary, but a Covid test is required to enter the country, plus another test on or before day two of their stay. 

Note that the current travel rules for entering the UK say that an antigen test meeting a certain quality standard is allowed for entry into Britain rather than only PCR tests. We don’t know if this will be allowed under the new travel rules so make sure to check the UK Government’s site before travel.

The list as published applies to England only.

The devolved nations of Scotland, Northern Ireland and Wales have not announced when they will lift travel restrictions but have not so far indicated that they intend to impose different rules to England’s.

What about Switzerland’s travel rules?

Currently, there are no entry restrictions for people arriving from Schengen and EU countries or from the small European states like Andorra, the Vatican, Monaco and San Marino.

Therefore, arrivals from these countries are allowed to enter Switzerland.

There are however still some restrictions in place, even for tourists from “safe” areas: the quarantine.

The Federal Office of Public Health (FOPH) periodically places nations with a high virus incidence on its quarantine list.

In this case, even if you come from a EU / Schengen state, you will have to quarantine for 10 or seven days if that region is on FOPH’s list.

FOPH updates it roughly every two weeks, so some regions may be off the list, and others on it, depending on the time of travel.

As it stands, it appears that Switzerland will relax the quarantine rules for vaccinated people at the end of May

An updated version of the list can be seen at the following link. 

UPDATE: Which countries are currently on Switzerland’s quarantine list?

More information about the current rules for entering Switzerland is available here. 

UPDATED: Who can travel to Switzerland right now?

Does that mean people from the UK can enter Switzerland?

No, unfortunately not – unless they hold a citizenship or residency of Switzerland or an EU/EFTA state. 

Travellers from the UK have been banned from entering Switzerland since December 21st, due to the new virus strains originating in that country. 

Since then, while arrivals from the UK have again been allowed to enter Switzerland in some circumstances (Swiss citizens, residents, etc), tourist travel has been restricted. 

The website of the UK Embassy in Switzerland states that “due to COVID-19 restrictions, UK nationals and other non-Swiss / EU / EFTA citizens arriving from the UK or a ‘high risk country’ are not permitted entry to Switzerland”.

Although EU citizens are given certain rights to enter Switzerland, this has not been possible for UK citizens since Brexit was finalised. 

More information is available at the following link. 

UPDATE: When will Brits be allowed to travel to Switzerland again?

What about travel for vaccinated people? 

Switzerland will wind back its quarantine requirement for vaccinated people and those who can prove they have recovered from the virus at the end of May.

However, this only applies to arrivals from countries from which entry is allowed – or for people who are allowed to enter (i.e. citizens and residents). 

Also, while Switzerland is currently in the process of developing its vaccine passport, neither Switzerland nor the UK as yet have vaccine passport systems up and running.

That means that, for the moment, even fully vaccinated people will have to abide by the testing and quarantine rules.

READ ALSO: How will the EU’s ‘Covid passport’ work for tourists in Europe?

Please keep in mind that this article, as with all of our guides, are to provide assistance only. They are not intended to take the place of official legal advice.