Switzerland Collects 500 Million of Withholding Tax

May 28, 2012 Taxation in EUTaxation in Switzerland

Swiss BankBERN – Last year EU citizens with Swiss bank accounts paid more than half a billion franc in withholding taxes, and approximately CHF 379.5 billion of the collections were passed on to tax authorities in other EU countries.

On May 25th the Federal Tax Authority of Switzerland revealed that over the course of 2011 collections of withholding taxes on interest payments to Swiss bank accounts belonging to EU citizens rose by 17 percent compared to last the previous year, reaching approximately CHF 506 million.

The withholding tax is levied under the conditions of bilateral agreement between Switzerland and the EU, which allows bank account holders who receive interest payments to choose between paying a withholding tax in Switzerland or having details of their assets released to tax authorities in their country of domicile.

In 2011 approximately 47 000 bank account holders chose to not to pay the tax and instead allowed the Swiss tax authorities to disclose details of their accounts.

One quarter of the tax collected by Swiss tax authorities is transferred to the Swiss federal government, while the remainder of the payments are passed to the governments of the countries in which the bank account holder resides. Germany received the largest portion of the payment, obtaining CHF 122 million in in 2011. Italy and France received the second and third largest pay outs, at approximately CHF 66 million and CHF 55 million respectively.

The tax was originally instated in 2005 and was levied at a rate of 15 percent. By the start of 2010 the withholding tax had risen to 20 percent, and was hiked to 35 percent in June 2011.

Photo by marcokalmann