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Switzerland Transfers Second Withholding Tax Tranche To Austria

by Ulrika Lomas,, Brussels

05 September 2013

Switzerland has transferred the second tranche from the retrospective taxation of assets to the Austrian tax authorities, totaling EUR254.7m (USD335.3m). The Swiss Federal Tax Administration forwarded the first tranche of EUR416.7m to Austria in July.

Switzerland is required to transfer funds under the terms of its bilateral withholding tax accord with Austria, to enable the assets in Switzerland of bank clients residing in Austria to be regularized from a tax viewpoint.

Further tranches relating to the settlement payment are to be transferred on a monthly basis up until June 2014. Furthermore, from March 2014, withholding tax imposed on capital gains derived from the bank accounts and securities portfolios of Austrian nationals held in Switzerland are to be forwarded to the Austrian tax authorities, again in accordance with the bilateral withholding tax deal between the two countries.

Commenting, Austrian Finance Minister Maria Fekter stressed that the second settlement payment is a "significant success" for the country and for all honest taxpayers in Austria. The additional budgetary funds will enable Austria to consistently pursue its fiscal consolidation path towards a zero deficit, Fekter emphasized.

Finance Minister Fekter alluded to the fact that the tax agreement with Switzerland enables the Austrian state to progressively recover the tax due as "an important milestone" to achieving greater tax justice. As a result of the tax treaty, tax flight has become less attractive, Fekter insisted, pointing out that the accord minimizes the incentives for tax evasion. The second settlement payment shows that the joint tax agreement with Switzerland was absolutely the right decision, the Minister ended.

Based on the tax treaty concluded between Switzerland and the UK, 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 provisions 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, and a further EUR50m annually from the 25 percent tax levied on future capital gains, the same rate as applied in Austria.

TAGS: compliance | Finance | tax | investment | tax compliance | tax avoidance | budget | agreements | tax rates | withholding tax | Austria | Switzerland | individual income tax | Tax

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