Ellis Financial Launches Swiss Withholding Tax Software Solution

Tax software specialist Ellis Financial has launched a software solution for use by finance and investment professionals who manage the calculation and reporting requirements of the new tax treaty agreements between Switzerland and the UK, and between Switzerland and Austria, which both came into force on 1 January 2013.

“Prior to launching our solution, we have factored in the complex and subtly-changed requirements published in the various sets of guidance iteratively provided for each of the treaties,” said David Kelly, chief executive officer (CEO), Ellis Financial. “We are, therefore, confident that our software can meet the challenges arising out of the treaty agreements between the Swiss tax authorities and their counterparts in the UK and Austria, both of which are now in force.

“While it has taken some considerable time for these agreements to be put in place and ratified, the impact of their implementation is imminent and time is running out for those who have not yet taken steps to be ready to deal with what is going to be a profoundly altered landscape.“

Kelly added: “Our solution also fully covers the terms of the Swiss-German agreement which was due to launch on 1 January, but which is currently on hold following the German parliament’s non-ratification of the treaty earlier approved by its federal legislature. Should this go ahead in the short-term as expected, our solution is already developed and ready for deployment.

“Further countries, such as Greece and Italy are reported, to be in discussion with the Swiss authorities and it is likely that a number of further agreements will be reached with Switzerland and other so-regarded ‘tax havens’ in the short-medium term.”

Background to Final Withholding Tax (FWHT)

The firm also issued a commentary on Switzerland’s final withholding tax (FWHT), which it said will present a significant challenge to professionals working in the global financial and wealth management industries.  The scope of the initial agreements covers resident individuals with relevant assets in Swiss accounts, including bank accounts, securities, shares, options, futures and all assets that can be readily valued.

It is based on a set of client identity/residence rules similar to the European Savings Directive (ESD) rules. There are also special rules for UK resident non-UK domiciled individuals. There are two aspects to the requirements: ‘taking care of the past’ and ‘taking care of the future’.

In terms of ‘taking care of the past’, relevant clients can choose to either pay a one-off levy covering accounts and other relevant assets held in Switzerland for up to the last 10 years, or to make full disclosure of these accounts and assets. Non-UK domiciled individuals can also choose to either make a limited disclosure based on remittances or to opt out.

For future receipts and relevant transactions, including gains on disposals of assets, relevant clients can choose to make a voluntary disclosure of their income and gains, or to pay a final withholding tax assessed on their income and capital gains.

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