(Updates with comment from U.K. government in third paragraph.)
Oct. 6 (Bloomberg) -- Switzerland and the U.K. signed an agreement to settle a dispute over tax evasion by wealthy Britons holding offshore accounts with Swiss private banks.
When the accord comes into force in 2013, Swiss banks will pay 500 million Swiss francs ($537 million) to the U.K. government to cover the failure by their clients to disclose undeclared money in the past, according to the agreement signed today. The banks will later be reimbursed from taxes paid by their customers.
“Working with the Swiss government we have delivered a highly effective solution which will benefit both countries and recover billions of pounds of unpaid tax for the U.K.,” David Gauke, the U.K. Exchequer Secretary, said in a statement.
The settlement, which requires the approval of parliaments in both countries, follows a similar accord between Switzerland and Germany last month. It comes after Switzerland agreed in March 2009 to meet international standards to avoid being blacklisted as a tax haven by the Organization for Economic Cooperation and Development.
Under the accord, Swiss banks will levy a withholding tax of 48 percent on interest income and 27 percent on capital gains earned by Britons with offshore accounts, according to the two governments. Revenue generated will go to the British Treasury, while client identities remain secret.
To prevent new, undeclared funds from being deposited in Switzerland, U.K. authorities can submit requests for information that must state the name of the client, though not necessarily the bank’s name, the finance ministry said. The number of requests will be limited to 500 a year and so-called fishing expeditions aren’t allowed.
Switzerland also agreed to give the U.K. information on the top 10 jurisdictions to which Britons with Swiss bank accounts transfer assets, the accord said.
By contrast, the U.K. government agreed that it won’t “actively seek” to buy client data stolen from Swiss bank.
The U.K.’s revenue and customs authority, known as HMRC, previously received data from its French counterparts concerning clients of HSBC Holdings Plc, Europe’s largest bank. Herve Falciani, a former software technician at the firm’s Geneva- based private bank, stole details on at least 24,000 accounts and passed client records to French government investigators.
--Editors: Dylan Griffiths, Keith Campbell.
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