Switzerland came a step closer to ending a tax evasion row with Britain when officials from both sides signed an agreement on Thursday.
Swiss Finance Minister Eveline Widmer-Schlumpf and British exchequer secretary David Gauke put pen to paper on a deal that would compel Swiss banks to pay backdated income on the long-standing accounts of British tax cheats.
From 2013, banks would then collect taxes from British account holders in exchange for the continued anonymity of clients. Switzerland signed a similar deal with Germany last month.
Bern and London acknowledged that the system “will have a long-term impact equivalent to the automatic exchange of information in the area of capital income”, according to a Swiss finance ministry statement.
Switzerland will make an upfront payment of SFr500 million ($630 million) to cover retrospective payments at a rate of between 19 and 34 per cent. From 2013 onwards, a withholding tax of 27-48 per cent will be applied.
As a further concession to Britain, the Swiss authorities have agreed to provide assistance on up to 500 tax investigation requests per year if the names of clients are provided, without the need to identify banks. These conditions would prevent so-called fishing expeditions.
Parliaments from both countries have yet to approve the new bilateral tax treaty.
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