In July 2005 Swiss banks introduced a withholding tax on the interest of some investments owned by clients who live in the European Union. There are no changes to Swiss bank secrecy and clients who live outside of the EU are not concerned by this new tax (known as ESD or ‘EU savings directive’).

Interest-bearing investments owned by residents of the European Union will be taxed at 15% at the source. This tax will increase gradually to reach 35% in 2011. Nobody else is concerned by this tax. European citizens living abroad are not liable either. This is the only change. The tax is paid by the bank to the Swiss government on a no-name basis. Those who wish so can get the tax back if they report their Swiss bank accounts on their tax returns.

This new tax is the fruit of hard bargaining between the EU and Switzerland (not member of the EU). In essence the EU wanted that we would give up Swiss bank secrecy and Switzerland refused and only agreed to a gradual withholding tax to be collected by Switzerland and shared with the EU.

Although we are never happy to see a new tax, the Swiss banking industry see this agreement as the guarantee that Swiss banking secrecy will continue to exist as today.