On November 14, the Swiss Federal Department of Finance informed that the withholding tax agreement between Switzerland and the United Kingdom will be terminated on January, 1 2017. On the same day, the agreement between Switzerland and the EU on the automatic exchange of information in tax matters will enter into force.
The purpose of the Termination Agreement is to ensure a smooth transition from the Withholding Tax Agreement to the automatic exchange of financial account information between the Contracting States, in application of the Agreement between Switzerland and the EU.
The withholding tax agreement, which entered into force in 2013, allowed the regularisation of assets held in Switzerland by UK taxpayers and the taxation of income generated by these assets based on the Federal Council's financial integrity strategy. UK taxpayers could either pay withholding tax levied directly on their accounts and anonymously transmitted to the UK authorities or opt for voluntary disclosure. With the introduction of the automatic exchange of information between Switzerland and the EU as of January 1, 2017, this model loses its reason to exist.
Switzerland also terminates a withholding tax agreement with Austria when switching to the automatic exchange of information standard with the EU.
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