Split Outcome On Swiss Tax Deal Vote

by Ulrika Lomas, Tax-News.com, Brussels

05 June 2012

While the Swiss National Council, or lower house of parliament, has approved in principle the tax agreements with Germany, the UK, and with Austria, it has rejected the underlying framework law.

The outcome of the vote follows hot on the heels of the earlier go-ahead given to the bilateral tax deals by the Swiss Council of States. An optional referendum on the agreements is provisionally scheduled to take place on November 25.

Yet in a surprise turn of events, and due to opposition from both the Social Democrats (SP) and the Swiss People’s Party (SVP), the National Council rejected the framework international withholding tax agreement, implementing the tax accords in Switzerland. The bill was narrowly rejected by 89 votes to 85 with 5 abstentions.

The Social Democrats are in favour of ultimately striving towards an automatic exchange of information, and consider that the withholding tax model may serve to prevent this goal. The SVP argues that Switzerland has had to make too many concessions.

During the course of the debate, Swiss Finance Minister Eveline Widmer-Schlumpf once again defended the agreements, underscoring that the previous model of accepting untaxed money is no model for the future.

Based on a withholding tax model, the inter-governmental treaties concluded recently between the Confederation and Germany, the UK, and Austria, are designed to legalize the undeclared, untaxed assets held by wealthy foreign residents in Swiss banks, applicable to both old money and to future investments.

The agreements are due to enter into force following ratification by the relevant treaty partner states on January 1, 2013.

The framework law will now return to the Swiss Council of States for re-examination.