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Swiss EU Savings Tax Collections Fell In 2013

by Ulrika Lomas, Tax-News.com, Brussels

04 July 2014


Switzerland withheld tax on savings interest worth CHF510.1m (USD574m) last year under an agreement with the European Union. This figure is down from the CHF615.4m recorded in 2012.

The system, under the framework of the EU Savings Tax Directive, has been in force since July 2005 with a 15 percent withholding tax rate applicable on interest paid by Swiss banks to residents of EU states. On July 1, 2008, this rate was increased to 20 percent, and was hiked again to the current 35 percent rate from July 2011. 75 percent of the tax withheld is passed on to EU member states, while the remainder is retained by Switzerland. About ten percent of this sum is distributed among the cantons.

For the 2013 tax year, CHF382.6m will be transferred to EU member states. Germany will receive by far the largest amount, of CHF108.7m, followed by France, with CHF77.1m. Germany was also the largest beneficiary in 2012, when it received CHF143.8m. Switzerland's share amounts to CHF127.5m. Of this, the Confederation will get CHF114.8m and the cantons CHF12.7m.

The agreement also allows the recipients of interest payments to choose between the retention system and a voluntary declaration to their home tax authority. Approximately 98,000 declarations were sent in 2013, compared with 61,000 declarations in 2012.

In December, the Swiss Federal Council adopted a mandate for negotiations toward a revision of the agreement. The agreement will be changed to reflect changes, expected this year, to the EU's Savings Tax Directive, which the European Commission is seeking to prevent the use of intermediary companies or certain financial instruments to circumvent the taxes on interest income under the agreement.

TAGS: compliance | tax | European Commission | tax compliance | interest | ministry of finance | tax authority | tax planning | tax rates | withholding tax | France | Germany | Switzerland | revenue statistics | European Union (EU) | Europe

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