by Under international pressure, Switzerland removed banking secrecy for foreign residents in 2009. However, laws ensuring bank secrecy for residents of Switzerland remain. Some politicians are now calling for the removal of all banking secrecy laws in the hope that it will increase tax revenue, reported RTS. © Denis Linine | Dreamstime.comWith Switzerland’s federal government budget in the red politicians are looking for ways to improve the bottom line. An estimated CHF 500 billion of bank deposits belonging to Swiss residents are not reported in Swiss tax returns. Several calculations support this figure, according to Marius Brülhart, a professor at Lausanne University. However, some think there is little to be gained from removing bank secrecy. Automatic withholding tax of 35%
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Under international pressure, Switzerland removed banking secrecy for foreign residents in 2009. However, laws ensuring bank secrecy for residents of Switzerland remain. Some politicians are now calling for the removal of all banking secrecy laws in the hope that it will increase tax revenue, reported RTS.
With Switzerland’s federal government budget in the red politicians are looking for ways to improve the bottom line.
An estimated CHF 500 billion of bank deposits belonging to Swiss residents are not reported in Swiss tax returns. Several calculations support this figure, according to Marius Brülhart, a professor at Lausanne University.
However, some think there is little to be gained from removing bank secrecy. Automatic withholding tax of 35% on interest means there is little tax leakage because tax is collected whether the interest is declared or not. Anyone with a marginal tax rate below 35% would potentially pay less tax if they declared the interest in their tax return – withholding tax is offset against any tax due. Withholding tax brought in CHF 6 billion of tax revenue last year.
When wealth tax is included the pendulum might swing the other way – Switzerland levies a small rate of tax on a person’s global net worth.
In the past, parliament has decided against removing local bank secrecy laws. With the federal government failing to balance the books, elected officials might be persuaded to change their minds.
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