European Tax Savings Directive

IrishMark

Hi, just a quick question. I know George Osborne last week declared a deal with Swiss Banks about wealthy tax evaders. My question is does this deal automatically exempt the UK fromthe EU Tax Savings Directive? Or had the UK withdrawn from the directive prior to this, or are they still bound by it? Will non-doms have to declare their off-shore tax savings to the UK government? As far as I can tell from reading about it, their deal with the Swiss banks supercedes EUSTD, but I can't find any reference to it doing so any website or any news site. Please help.

andrew

This is more of a European politics thread, so I think you'll get better answers over at the European politics forum . Thread moved.

Scofflaw

My understanding of this is the UK-Switzerland tax deal is separate from the Savings Tax Directive, and is not covered under the existing implementation of the Directive, which was last amended in 2008. However, like the German-Switzerland deal which immediately preceded it, it undermines the current negotiations on the Directive, which was to have been amended to cover Switzerland, Andorra, Liechtenstein, Monaco and San Marino. Austria and Luxembourg, within the EU, have been opposed to giving up their own banking secrecy unless Switzerland in particular does so.

Unfortunately, the move towards this expansion of the Directive, which has been pushed by the Hungarian Presidency, has recently been resisted by Italy, which has been pushing for sanctions against Switzerland in this respect.

Switzerland has sought these deals with the UK and Germany to undermine the push within the EU to have Switzerland included within the Directive, by offering another route with a lower tax rate. The EU Directive rate is 35%, the bilateral deal rate is likely to be 25-26%, but in the case of the Directive, a quarter of the tax goes to the country passing on details - so if Holland passes over details of French citizens using Holland to avoid tax, Holland gets quarter of the 35%, France the rest.

More importantly, from Switzerland's point of view, the deals are anonymous, allowing them to keep their banking secrecy intact. So it's a traditional gambit - offering bilateral deals which undermine the multilateral deal, and which are shorn of the elements objected to by one of the countries.

None of this changes the UK's adherence to the current Savings Tax Directive, which does not cover Switzerland.

Some sources: http://ec.europa.eu/taxation_customs/taxation/personal_tax/savings_tax/savings_directive_review/index_en.htm

http://www.taxresearch.org.uk/Blog/category/eu-std/

http://taxjustice.blogspot.com/2011/02/uk-germany-connive-with-austria.html

cordially,
Scofflaw