The controversial deal to tackle tax evasion by UK residents holding secret accounts in Switzerland has been revised. A protocol signed in Brussels yesterday will modify the deal so it is compatible with existing EU laws on evasion, the Financial Times reported.
But the European Commission has not yet considered the revised agreement, according to tax justice campaigners who have warned that the deal preserves anonymity for British investors who decide not to own up to tax evasion.
HMRC published a protocol yesterday to the agreement signed last October. The Financial Times quoted Dave Hartnett, HMRC’s Permanent Secretary for Tax, as saying: ‘What was already a highly effective weapon to tackle offshore evasion has been further strengthened through the new provision to deter the evasion of inheritance tax.’
However, the Tax Justice Network reported that the European Commission, when asked whether the revised agreement was compatible with EU law, said: ‘For the moment we don't have a reaction, because we were only informed about the revised agreement being signed at midday today. So we'll have to see the exact wording first.’
An EC spokeswoman told the TJN that a press release issued by the Swiss government was ‘its own interpretation’ of the situation: ‘It's not for the Swiss government to profess the Commission's position.’
The TJN claimed that the UK government had ‘decided to bury this story by announcing it just ahead of the Budget, when UK economic journalists' attention will be elsewhere’. No press release accompanied the brief announcement on HMRC’s What’s New page yesterday, and HMRC was unavailable for comment when contacted by Tax Journal as the Chancellor prepared to deliver today’s Budget statement.
Delivering his Budget statement later, George Osborne said: ‘This week, we have signed a further agreement with the Swiss to stop UK residents from evading tax.’
The TJN also quoted the EC President, José Manuel Barroso, as saying: ‘On the tax question I want to tell you one thing – the Commission will never accept a bilateral agreement by a member state with a third party like Switzerland if it does not fully respect community law. So we will look at these agreements and we will make sure that community law is fully respected.’
EC concerns ‘removed’
The Swiss government said in a statement that the protocol was signed in Brussels by Dave Hartnett and Michael Ambühl, State Secretary in the Federal Department of Finance.
‘The agreement remains unchanged in essence. Interest payments will be excluded from the agreement's scope. At the same time, it will be ensured that UK taxpayers can discharge their tax liability on interest payments. Effectively, nothing will change for bank clients; their tax obligations will be fulfilled. Only the legal structure will change.
‘The concerns of the EU Commission regarding compatibility with EU law have been removed. Inheritance is now also covered by the agreement in order to eliminate a loophole. In the case of inheritance, the heirs must consent to either collection of a tax or disclosure.
‘The agreement not only respects the protection of bank clients' privacy applicable in Switzerland but also ensures the implementation of the UK authorities' legitimate tax claims. In addition, mutual market access for financial services will be improved. The agreement requires the approval of parliament in both countries, and should enter into force at the start of 2013.’
German-Swiss agreement ‘stalled’
The European Parliament website reported yesterday that MEPs had asked what the Commission knew about a number of Member States negotiating tax agreements with Switzerland bilaterally and ‘to what extent the Commission considered this legal’.
‘[Taxation Commissioner Algirdas Semeta] insisted that any such bilateral deals needed to respect EU competences,’ the report said. One MEP noted that ‘the planned German-Swiss agreement was "effectively stalled" for the moment’.
The controversial deal to tackle tax evasion by UK residents holding secret accounts in Switzerland has been revised. A protocol signed in Brussels yesterday will modify the deal so it is compatible with existing EU laws on evasion, the Financial Times reported.
But the European Commission has not yet considered the revised agreement, according to tax justice campaigners who have warned that the deal preserves anonymity for British investors who decide not to own up to tax evasion.
HMRC published a protocol yesterday to the agreement signed last October. The Financial Times quoted Dave Hartnett, HMRC’s Permanent Secretary for Tax, as saying: ‘What was already a highly effective weapon to tackle offshore evasion has been further strengthened through the new provision to deter the evasion of inheritance tax.’
However, the Tax Justice Network reported that the European Commission, when asked whether the revised agreement was compatible with EU law, said: ‘For the moment we don't have a reaction, because we were only informed about the revised agreement being signed at midday today. So we'll have to see the exact wording first.’
An EC spokeswoman told the TJN that a press release issued by the Swiss government was ‘its own interpretation’ of the situation: ‘It's not for the Swiss government to profess the Commission's position.’
The TJN claimed that the UK government had ‘decided to bury this story by announcing it just ahead of the Budget, when UK economic journalists' attention will be elsewhere’. No press release accompanied the brief announcement on HMRC’s What’s New page yesterday, and HMRC was unavailable for comment when contacted by Tax Journal as the Chancellor prepared to deliver today’s Budget statement.
Delivering his Budget statement later, George Osborne said: ‘This week, we have signed a further agreement with the Swiss to stop UK residents from evading tax.’
The TJN also quoted the EC President, José Manuel Barroso, as saying: ‘On the tax question I want to tell you one thing – the Commission will never accept a bilateral agreement by a member state with a third party like Switzerland if it does not fully respect community law. So we will look at these agreements and we will make sure that community law is fully respected.’
EC concerns ‘removed’
The Swiss government said in a statement that the protocol was signed in Brussels by Dave Hartnett and Michael Ambühl, State Secretary in the Federal Department of Finance.
‘The agreement remains unchanged in essence. Interest payments will be excluded from the agreement's scope. At the same time, it will be ensured that UK taxpayers can discharge their tax liability on interest payments. Effectively, nothing will change for bank clients; their tax obligations will be fulfilled. Only the legal structure will change.
‘The concerns of the EU Commission regarding compatibility with EU law have been removed. Inheritance is now also covered by the agreement in order to eliminate a loophole. In the case of inheritance, the heirs must consent to either collection of a tax or disclosure.
‘The agreement not only respects the protection of bank clients' privacy applicable in Switzerland but also ensures the implementation of the UK authorities' legitimate tax claims. In addition, mutual market access for financial services will be improved. The agreement requires the approval of parliament in both countries, and should enter into force at the start of 2013.’
German-Swiss agreement ‘stalled’
The European Parliament website reported yesterday that MEPs had asked what the Commission knew about a number of Member States negotiating tax agreements with Switzerland bilaterally and ‘to what extent the Commission considered this legal’.
‘[Taxation Commissioner Algirdas Semeta] insisted that any such bilateral deals needed to respect EU competences,’ the report said. One MEP noted that ‘the planned German-Swiss agreement was "effectively stalled" for the moment’.
