SBA CEO Urs P Roth

Zurich, Switzerland (GenevaLunch) – EU citizens with bank accounts in Switzerland will pay a withholding tax on income from all investments, not just on savings income as at present, if a proposal from the Swiss Bankers Association (SBA) goes ahead. The group, at its annual meeting in Zurich 17 September suggested that the money collected would be transferred to the respective countries’ tax authorities without disclosing the name of the bank customer. The SBA proposal would extend withholding tax on EU citizens to include dividend income generated by stocks and mutual funds, as well as capital gains.

Switzerland has levied a withholding tax on its own and EU citizens since 2005, but it covers only income from certain types of investment, principally from bonds.

The agreement to do so was made in accordance with the EU’s Taxation of Savings Income Directive. The money is handed over to the account holder’s tax authority. In 2008, more than CHF 500 million was transferred to the EU. Chief Executive Officer Urs P Roth suggests that  the proposal “would generate tax revenues while respecting the privacy of bank clients and it would represent an efficient alternative to a system of automatic information exchange.”

The proposal was originally made by the Association of Foreign Banks in Switzerland and taken up by the SBA, which represents 360 Swiss banks. The Swiss government said Thursday that it welcomes the proposal, which the finance ministry has been studying.

Swiss President and head of the finance ministry Hans-Rudolf Merz said Thursday that his department is closely studying the proposal. He spoke at the bankers’ meeting. “We aim to prevent the automatic exchange of information in administrative assistance and to optimize the agreement on the taxation of savings income with the EU. That is why last December, the Federal Council signaled its willingness towards the EU to enter into discussions with regard to adapting the agreement on the taxation of savings income. In addition, this spring, the Federal Council commissioned my department to examine in detail the question of a tax at source. This idea was also picked up by the Banker’s Association as part of its ‘Rubik’ project. I assure you that work on this question will be pursued keenly by my department.”

He added that “our goal is to adjust the financial centre as smoothly as possible to the new framework conditions of the international financial markets. Our goal will ultimately be to achieve internationally compatible, lean, but nevertheless efficient regulation.”

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