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Zurich (pte039/01.07.2005/14:17) - Wealthy Europeans who have chosen Swiss banks, rather than their homelands, to stash their cash in will have to rethink their strategies. After years of detailed discussion, Bern and Brussels have now reached an agreement on taxing savings accounts on EU residents on their governments' behalf, effective from 1st July.
For decades the non-EU country Switzerland has been the haven for many a wealthy person taking advantage of Swiss banking secrecy laws.
A spokesman from the Swiss Bankers Association http://www.swissbanking.org said: "This is the first time in the world that banks have agreed to levy a tax on behalf of a foreign country." About 300 million Swiss francs was spent on setting up the computer systems needed to levy the EU tax.
Swiss banks will now levy a 15 per cent withholding tax on the interest earned on EU citizens' savings. The rate will rise by five per cent in 2008 and a 35 per cent levy will be introduced in 2011.
A quarter of the levy will be kept by the banks to cover costs, and the rest will be handed over to the home country of the saver.
Switzerland has long had a system of banking secrecy that has fuelled the country's prosperity. Although there exist no official statistics for how many EU residents invest money in Swiss bank accounts, the total amount managed by Swiss banks last year sits at about one-third of global private assets: 3.546 trillion Swiss francs (2.292 trillion euors, 2.768 trillion dollars).
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