Swiss banks may end up losing most of the CHF500 million (US$522 million) guarantee payment they made to the UK government as part of a tax deal, the Swiss Bankers Association (SBA) said.
Under a deal signed on January 1, Swiss banks paid CHF500 million to Britain, which they will only receive back in full if their UK-resident clients pay at least CHF1.3 billion through the anonymity scheme, rather than direct to Britain.
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As per the agreement, UK clients had until the end of May 2013 to decide whether to regularise the past by opting to pay the one-off flat-rate withholding tax or disclosing their assets to the UK tax authorities.
The SBA said that the implementation of the tax agreement is proceeding on schedule but that "less tax than expected is being transferred to the UK by means of the one-off payment".
"First indications from selected banks in Switzerland show that there are fewer untaxed UK assets in Switzerland than had been previously assumed," the statement added.
"This is mainly due to the fact that many clients have resident non-domiciled status. These clients are not liable to taxation in the UK and thus do not fall under the Agreement. Furthermore, numerous UK clients have opted for voluntary disclosure, which comes as no surprise given the latest developments in Switzerland with regard to the announced adoption of a global standard for the automatic exchange of information."
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By GlobalDataThe SBA added that as a result of these two developments, less tax than expected is being transferred to the UK by means of the one-off payment. The possibility can therefore not be ruled out that either none or only a small part of the banks’ guarantee payment of CHF500 million will be recovered.
Credit Suisse has already said that it expects a negative after-tax impact of no more than US$93.8 million, which will be recognized in its second quarter results.
