It is widely anticipated that, starting from July 2005, all
the 25 countries of the European Union comply to EU Savings
tax directive, under which all the 25 countries of EU, their
territories will provide automatic exchange of information on
savings accounts held by European Union residents.
Affected Persons:
Natural persons resident in European union member state. It
will NOT affect those
* resident in Switzerland or another third country,
* residents in an associated or dependent territory of the EU.
* legal entities
It doesn't matter where his nationality belongs to, country
of residence is the sole criteria. For example, a French citizen is not affected if he lives in
Switzerland, similarly
a Swiss citizen living in France will comply.
Affected countries:
All of the current 25 EU countries: Austria, Belgium,
Cyprus, Czech Republic, Denmark, Estonia, Finland, France,
Germany, Hungary, Greece, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, Poland, Portugal, Slovakia, Slovenia,
Spain, Sweden, the Netherlands, and the United Kingdom.
The relevant dependent and associated territories of the
EU: Jersey, Guernsey, Isle of Man, Anguilla, Montserrat,
British Virgin Islands, Turks and Caicos Islands, Cayman
Islands, Netherlands Antilles and Aruba.
The good news is Switzerland, Liechtenstein, Austria,
Luxembourg, Andorra, Monaco, San Marino (jurisdictions where
bank secrecy prevails) are expected to sign the agreement by
the end of June 30, 2005 but with a concession that they
maintain client confidentiality, but adopt withholding tax. No
client information will be shared with EU (bank secrecy will
be retained). Instead EU residents will be levied a 'withholding
tax' on interest gained from savings accounts. This
tax will be shared between Switzerland and clients EU country.
It would be interesting to note that, the client having bank
account in Switzerland will have full freedom either to waive
bank secrecy or accept withholding tax by default.
EU Tax directive levied on:
Interest earned on deposits
Interest bearing debt claims, such as bonds issued after
1st of March 2001
Accrued or capitalized interest (zero coupons)
Investment funds with at least 40% of the underlying
investments in interest bearing instruments
Distributions from investment funds which relate to the
interest income of the fund income from the sale,
repayment or redemption of investment fund units.
EU Tax directive NOT levied on:
Insurance companies or insurance income from insurance
policies
Stocks and shares.
currency trading
derivative instruments
bonds issued before 1st march 2001.
equity related structured products.
pension products.
Tax Rates
15% (1 July 2005 to 30 June 2008)
20% (1 July 2008 to 30 June 2011)
35% (1 July 2011 onwards)
EU Directive Taxation example
Say, you had accrued interest of €100.- from your
deposits in Swiss bank account in the year 2005. As a EU
resident, you have a choice of either fully report your
country authorities or not to disclose your financial
information. If you chose to remain shielded with bank
secrecy, as per new EU directive, you are accepting
withholding tax by default. Should that happen, 15% (of
100€) is 15€ will be debited from your account. Out of
15€, 75% will be anonymously directed to EU
member country (where you are resident) and rest 25% will be
kept by Switzerland.
Thus as per the directive 3.75€ goes to Switzerland
and
other 11.25€ goes anonymously to EU member country (3.75€
+ 11.25€ = €15.00).
Prevailing Current situation
It would be interesting to note that at present, Switzerland
is not a country for lucrative interest rates.
Currently, the banks offer only 0.25% as interest on CHF
accounts, and little bit higher for EUR accounts. Again if you
hold your account deposits in CHF currency, you are subjected
to 35% withholding tax on the interest paid from the deposits.
It does'nt matter if you are a resident or non-resident. For
deposits kept in foreign currencies there is no interest paid
at all (except for AUD, GBP). Lets say you accrue CHF 100.-
from your Swiss franc deposits, CHF 35 will be levied, and you
will be paid only CHF 65.- out of the interest income.
Final Outcome of this EU Tax directive
Several popular offshore jurisdictions, like Cayman
Islands, Channel Islands etc are worst affected, with the
threat for exchange of clients information. The only change
brought by this directive is, if you accrue interest in
foreign currency deposits from your Swiss bank account, then
you have to pay 15% withholding tax on the interest gained.
Nevertheless, bank secrecy in Switzerland would be
kept intact and unaffected because of this EU savings
directive.
Note: Switzerland has not yet
signed the agreement with EU, so as Liechtenstein, Andorra, Belgium,
Austria, San Marino, Luxembourg. It is expected that
the Swiss will sign only after getting approval from parliament.
This page reflects only the current understanding
and subjected to change anytime.
We help to open the famous Swiss bank account for as low as
U$D 100!
We make offshore bank account setup easy: Just a copy of your passport
"apostille" or ID required.
Nothing is hidden : our website explains
in detail our services, what you will receive and the
procedures. Our FAQ's page is extremely
detailed.
Our support is second to none : we reply to most emails within
24 hours (even in minutes if we will receive them during
business hours).
Money back guarantee : if for any reason the bank will reject
your application we will give your money back.
The information contained in this Website is
not meant to substitute qualified legal advice given by a specialist knowing
your particular situation. We are not a bank and can’t be held responsible for
any loss or damages whether direct, incidental, indirect, special, or consequential,
among others, relating access to this Web site. Read our Disclaimer
/ Terms and Conditions.
