The Swiss Bankers Association (SBA) is calling for Switzerland’s government to instate a withholding tax on earnings generated by foreign held Swiss bank accounts.

In order to save what remains of Switzerland’s weakened privacy laws the SBA has come up with an alternative to automatic international financial information sharing, as is proposed now. It is envisaged that a withholding tax could be levied on the interest, dividends, investment income and capital gains generated by accounts held by foreigners.

The tax will be levied at the level of the country of origin for the funds. Upon collection the tax funds will be transferred between appropriate banks, with client information only being seen by the institutions. The corresponding governmental bodies will eventually receive the funds, thereby satisfying required tax laws while still respecting the privacy of the involved clients.

The withholding tax proposal has received general acceptance from the Swiss finance industry and is being actively endorsed by the SBA. The idea still requires Swiss governmental approval. Currently it is thought that the withholding tax would be held applicable to European Union citizens and nationals of the 14 countries with which Switzerland holds OECD level Double Taxation Treaties.