Taxation of savings income

Switzerland supports the EU system of taxing cross-border interest payments to individuals under the Savings Tax Agreement. Swiss banks operate a system of tax retention (similar to Swiss withholding tax) on interest income earned in Switzerland by persons subject to EU taxation, currently at a rate of 15% (to be raised incrementally to 35% by July 2011). This system of tax retention ensures that the EU interest taxation system cannot be evaded by switching to Switzerland, while at the same time ensuring that Swiss laws and banking secrecy are upheld.