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Austria will have to wait for around six months before revenues start to flow from the bilateral withholding tax deal concluded with Switzerland.
Based on the tax treaties concluded between Switzerland and the UK and Switzerland and Germany, the Swiss-Austrian tax deal signed in April, 2012, provides similarly for a withholding tax levied on undisclosed assets held by Austrian residents in Swiss banks to regularize the accounts. The agreement also contains plans to impose an annual withholding tax on future investment income.
The treaty entered into force as planned on January 1, 2013.
The Austrian finance ministry is anticipating income from one-off withholding tax payments of around EUR1bn (USD1.3bn), possibly even more, and a further EUR50m annually from the 25% tax on future capital gains, the same rate as applied in Austria.
Despite the fact that the accord entered into force at the beginning of the year, revenues will not flow straight away as Austrians have until May 31 to decide whether to settle the withholding tax due on capital or to elect to report their investments via a voluntary tax declaration. The taxation of illiquid assets, such as shares and bonds, may delay expected income yet further, as this process will undoubtedly prove more complicated.
The withholding tax rates provided for in the agreement vary between 15% and a maximum of 38% for large banking deposits. According to the Austrian finance ministry, the actual rate of the withholding tax imposed will depend in part on whether the money placed in Switzerland since 2003 was the result of a one-off deposit or of continual payments, referred to as "black sources," clearly indicating efforts aimed at avoiding corporation or income tax.
Opponents of the bilateral deal lament the fact that the provisions are too lenient and allow tax evaders to preserve their anonymity.
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