Switzerland is by far the most popular country for Irish residents who have money on deposit in countries that agreed to apply a withholding tax as part of the EU’s European savings directive, introduced in 2005.
The directive allows for the swopping of information about bank accounts between tax authorities in the EU. Some EU member states did not initially opt to take part in the scheme, and instead imposed a withholding tax.
So too did a number of dependent territories, such as Jersey and the Isle of Man, and third countries such as Switzerland and Liechtenstein.
In the period 2009 to 2013, Switzerland paid €3.6 million to Ireland arising from withholding tax applied to accounts in Switzerland belonging to Irish resident individuals.
The total paid by the 10 jurisdictions that paid the tax was €6.7 million, with Jersey paying the second-largest amount (€1 million).
The tax paid to Ireland equals 75 per cent of the tax levied, as the taxing jurisdiction keeps 25 per cent to cover expenses.
The total tax levied in Switzerland on interest income over the period earned by Irish account holders was €4.8 million.
The tax rate is 35 per cent, so the total interest earned was €13.7 million. During the period, Swiss interest rates, which historically tend to be low, were particularly low because of the global financial crisis.
If an average rate of 1 per cent is chosen, then the amount on deposit was €274 million.
If an average interest rate of 2 per cent is chosen, then the amount on deposit in Switzerland was approximately €137 million.
The Isle of Man began swopping information on accounts, as against applying a withholding tax, in 2012, while Guernsey did so in 2013, and Belgium in 2010.
