In August 2009, the United States and Switzerland signed an information exchange agreement aimed at US persons, including US citizens and greencard holders living in Israel. After a long period of negotiation and rumor, the UK and Switzerland signed a “Cooperation Agreement In The Area of Taxation” (“the Agreement”) on October 6, 2011.The tax agreement is largely the same as the agreement with Germany that was signed on 21 September 2011.The agreement requires parliamentary approval from both countries and is expected to take effect on January 1, 2013. But the agreement is complex and requires advance planning in relevant cases. Below are a few brief highlights.The main objective of the agreement is to ensure the effective taxation of “United Kingdom relevant persons” (see below).The agreement has “equivalent effect” to an information exchange agreement.In fact, Her Majesty’s Revenue and Customs (HMRC) in the UK will soon start collecting tax from Swiss banks with UK customers in settlement of their UK tax obligations, without finding out who those UK customers are, unless they choose to identify themselves. So UK tax revenues will increase while Swiss banking secrecy will be maintained.A UK relevant person who has Swiss bankable assets on December 31, 2010, and four months after the agreement enters into force (probably April 30, 2013) may choose whether to instruct their Swiss paying agent to: (a) come clean, or (b) pay anonymously, four months after the agreement enters into force, a one-off payment ranging from 19 percent to 34% of the capital deposited, according to a detailed formula.If the one-off payment is made, the Swiss paying agent will certify this and transfer the money to the Swiss Federal Department of Finance (SFDF) for forwarding to HMRC. The certificate means the individual will cease to have liability to UK income tax, capital gains tax, inheritance tax, VAT, interest, penalties and surcharges for all periods before the agreement enters into force (probably January 1, 2013).If funds are switched to a different Swiss institution before 2013, this should not change things. If funds leave Switzerland before 2013, the SFDF will merely report to HMRC the “top 10” destinations.It would be unfortunate for HMRC if those destinations lack a tax treaty or information exchange agreement with the UK.Note that if there are insufficient funds with the Swiss paying agent to pay the one-time payment on the due date, there are rules for granting 8 weeks grace, then disclosing the individual’s identity to HMRC.The following people are not eligible for the one-off payment: those under civil or criminal investigation or contacted personally to participate in a disclosure facility, those with proceeds of nontax crime and certain systemic tax fraud crimes.Under the agreement, Swiss institutions are committed making an upfront payment to HMRC (via the SFDF) of CHF 500 million within a month after the agreement enters into force in 2013.They will continue to hand over one-off payments until they total CHF 1.3 billion.Only then will further one-off payments due to HMRC be offset against the CHF 1.3 billion already paid.The Swiss paying agents are required to levy a “final withholding tax” on income and gains derived by relevant UK persons from 2013, generally at the following rates: (a) 48% of interest income; (b) 48% of other income (interest and dividend substitute payments, investment fund income, etc; (c) 40% of dividend income; or (d) 27% of capital gains.Even higher rates apply to UK nondoms who fail to produce certification of their status (see below).UK relevant persons covered by the agreement are defined in detail. Basically, they include any individual resident in the UK, who: (a) as a contractual partner of a Swiss paying agent is the account holder or deposit holder and beneficial owner of assets, or (b) is, in accordance with the conclusions of a Swiss paying agent drawn in line with the prevailing Swiss due diligence obligations and taking into consideration all the circumstances known to it, the beneficial owner of assets held via various structures.Individuals who have their principle private address in the UK based on the due diligence records of the Swiss paying agent are deemed a resident in the UK for the purposes of this agreement.Individuals presenting a UK passport but declare themselves to be resident in a country other than Switzerland or the UK (e.g. Israel) shall be established by means of a tax residence certificate issued by the competent tax authority in that country. Otherwise, the UK shall be considered the state of residence. The Israeli Tax Authority tends to have difficulty issuing residency certificates to anyone who does not have a tax file in Israel. Specialist advice is recommended in such case.With regard to individuals who are UK resident but non-domiciled on December 31, 2010, watered down rules apply, which reflect their more limited UK tax.But a Swiss paying agent may only accept a relevant person as a non-UK domiciled individual when provided with a certificate produced by a lawyer, an accountant or a tax adviser who is a member of a relevant professional body confirming that the relevant person is not domiciled within the UK and has claimed the remittance basis of taxation for (a) the relevant tax years (b) for the year ended April 5, 2011 or 2012, with regard to the one-off charge. The adviser must also confirm that to the best of their knowledge, the domicile status of the relevant person is not formally disputed by HMRC.The agreement covers Swiss paying agents, namely a wide variety of Swiss institutions, including banks, securities dealers and other natural and persons that pay out dividends and interest exceeding CHF 1 million.The agreement covers all forms of bankable assets booked or deposited with a Swiss paying agent, but not the contents of safe deposit boxes, real property, chattels or insurance contracts.However, “insurance wrappers” are covered by the agreement if they are held in a separate account and the payout is not restricted to death, disability or illness.Interestingly, there is no relevant person “with regard to assets of associations of persons, asset structures, trusts or foundations, if it is not possible to ascertain the beneficial ownership of such assets, e.g. due to the discretionary nature of the arrangement.”This means the agreement may not apply in such cases.The agreement does not provide an amnesty, but HMRC say it is “highly unlikely” they will prosecute those who are eligible for, and choose to apply the agreement.However, before the start of the agreement, relevant persons run the risk of being investigated by HMRC making them ineligible for the agreement. They might consider other more immediate possibilities, such as the Lichtenstein Disclosure Facility in the UK.HMRC are allowed to obtain information regarding up to 500 named persons per year, without specifying which Swiss institution holds their assets.The agreement between Switzerland and the UK is said to be largely the same as the agreement with Germany that was signed on September 21, 2011.It remains to be seen whether other countries closer to home are able to negotiate anything with Switzerland.Israel has a voluntary disclosure program.If a taxpayer approaches their local Israeli tax office, the tax office will first check if that person is under investigation.If not, the taxpayer is free to negotiate (on a named basis) a tax settlement, usually without criminal proceedings ensuing.As always, consult experienced tax advisers in each country at an early stage in specific firstname.lastname@example.org The writer is an Israeli certified public accountant and UK chartered accountant at Harris Consulting & Tax Ltd.