United Kingdom


  • Service: Tax, Personal Tax
  • Type: Business and industry issue
  • Date: 08/07/2014

Additional Protocols 

20 March 2012


On 20 March 2012 the UK and Switzerland signed a Protocol to the original Tax Agreement. There are two principal effects of this protocol.

Firstly there is clarification of the relationship between the Agreement and the EU Savings Agreement (EUSA) with Switzerland. Where a relevant person has suffered withholding tax under the EUSA the agreement now provides for an additional 13 per cent 'tax finality payment' to settle all UK tax liabilities chargeable on those interest payments. This achieves the same effect as the 48 per cent withholding tax levied under the original terms of the Agreement.


Secondly a new Inheritance Tax levy is introduced which applies on the death of a relevant person. The levy is 40% of the relevant assets at the date of death. This levy will not apply if the personal representatives authorise the Swiss bank to disclose the account details to the UK. Also it will not apply if it can be certified that the deceased person was not domiciled within the UK and was not considered as deemed domiciled for IHT purposes in the UK.

18 April 2012

The Protocol signed on 20 March 2012 also included a clause which gave the UK the right to amend the UK/ Swiss Agreement for any beneficial changes to the Agreement between Switzerland and Germany in respect of the operation of the formula which calculates the one-off payment for the past.

Following an amendment to the Germany/ Switzerland Agreement, the UK exercised that right on 18 April 2012. Consequently, the original rates for the one-off deduction were amended as follows:

  • The minimum rate payable increased from 19 per cent to 21 per cent. 
  • Where under the original formula the tax rate applied in a specific case would have been 34 per cent and that rate would have been applied to at least £1 million in relevant assets, then the tax rate applied will increase in steps of one percentage point for each additional £1 million, up to a maximum of 41 per cent. This means that the rate payable on £7 million or more will be 41 per cent.


Derek Scott

Derek Scott
+44 (0)20 7311 2618