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Through the 2004 Agreement on the taxation of savings income, Switzerland supports the Eu-ropean Union system of taxing cross-border payments of interest on savings to natural persons. Swiss paying agents such as banks deduct withholding tax on income from savings in Switzerland of persons liable for taxation in an EU member state (similar to the ordinary Swiss withholding tax). This withholding tax of 15 per cent was increased to 35 per cent in July 2011. Three quarters of this amount goes as tax revenue to the country of domicile of the recipient of the interest, the other quarter remains in Switzerland. At the express demand of the recipient, the withholding tax can be replaced by voluntary notification of the interest payment to the tax authorities of the country of residence.
Experience shows that the Swiss withholding tax model has been working efficiently since the Agreement came into effect on 1 July 2005. Compared with the automatic exchange of infor-mation between fiscal authorities, it has the advantage of better efficacy and simplicity. For the fiscal year 2011 a total of CHF 506 million was withheld. Three quarters of this sum (CHF 380 million) went to EU member states, while a quarter (CHF 127 million) remained in Switzerland.
Status June 2012
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