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Balázs Békés |
The Hungarian government recently announced that it wishes to start talks with Switzerland and obtain data on Hungarian individuals' Swiss bank accounts. The government wants to impose a 35% withholding tax on Hungarian funds held with Swiss banks. As a new trend, Austria, UK and Germany have already negotiated on specific "Rubik agreements" with Switzerland, addressing information exchange and taxation of undisclosed funds. According to such treaties, bank account holders are free to choose one of the following options: Firstly, they may grant an authorisation to the bank to deliver the information; secondly, they may maintain their anonymity but, in this case, they must pay a flat tax withheld at source; thirdly, they may decide to withdraw from Switzerland and close their bank accounts.
The information disclosed by the Hungarian government gives a signal that Hungary may want to enter into a similar treaty with Switzerland. Calculating with an effective tax rate of 39% for private individuals' income from undisclosed sources under Hungarian domestic law, the proposed 35% tax rate may be realistic.
Hungary also aims at renegotiating its double taxation treaties signed with other states – about 70 -, and extending the sections on information exchange according to the new OECD model. The Hungary-Switzerland double tax treaty still has the old text, having a very limited scope.
Balázs Békés (balazs.bekes@wolftheiss.com)
Faludi Wolf Theiss Attorneys at Law
Tel: +36 1 4848 800
Fax: +36 1 4848 825
Web: www.wolftheiss.com
