Swiss Government Claims Data Shows EU Withholding Tax System Works
The first official figures on withholding tax revenues collected in Switzerland
under the European Savings Tax Directive have been published, and the Swiss
Ministry of Finance has claimed that the data shows the system is working. Up to the expiry of the registration deadline on 31 March 2006, the Federal
Tax Administration had received approximately CHF138 million ($107 million)
for the 2005 collection period, the Finance Ministry announced Wednesday. Of this, approximately CHF103 million will be transferred to the beneficiary
EU member states, and Switzerland will receive approximately CHF34 million as
recompense for its additional operating expenses. Approximately CHF31 million
of this amount will be retained by the Confederation, with around CHF3 million
going to the cantons. "The amounts received show that the Swiss system of tax retention works,"
the ministry stated, no doubt in an attempt to rebuff recent speculation that
withholding tax revenues would be well short of what was expected. The ministry
also stated that it was too early to carry out an analysis of revenues given
the short time that the system has been in operation. The system of tax retention applies to all interest payments covered by the
agreement, made by a paying agent on Swiss territory to an individual resident
for tax purposes in an EU member state. Initially the rate is set at 15%, rising
to 35% from 2011. Three-quarters of the revenues from this system of tax retention
go to the beneficiary member states, the remainder goes to Switzerland and the
cantons. It has been estimated that the banks spent up to CHF300 million on introducing
the tax retention scheme. A comprehensive report in our Intelligence Report series examining offshore confidentiality is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report1.asp
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