The United Kingdom (UK) is an important economic and political partner of Switzerland. In 2017, the UK was the fifth most important sales market for Swiss exports of goods (CHF 11.4 bn) and the eighth largest source market for imports of goods (CHF 6 bn). Relations between the two countries are also close in the financial sector.
Relations between Switzerland and the UK are currently largely based on bilateral agreements with the European Union (EU). This is also true of the financial sector. On 23 June 2016, the UK electorate voted by a majority in favour of leaving the EU. The UK government complied with their wish by announcing its withdrawal from the EU on 29 March 2017 and thereby activating the two-year withdrawal process. Negotiations between the EU and the UK started in June 2017. Once the UK has left the EU, the Swiss-EU bilateral agreements would no longer apply to the UK. To this end, Switzerland wants to safeguard and, if need be, extend existing reciprocal rights and obligations with the UK as far as possible beyond the date of the UK's withdrawal from the EU (Federal Council's "Mind the gap" strategy).
In the financial sector, the 1989 Agreement between the European Economic Community and the Swiss Confederation on direct insurance other than life assurance would in particular no longer be applicable after the UK has left the EU. In order to ensure a seamless continuation of the current regulations in these areas even after the UK has left the EU, Switzerland and the United Kingdom signed an agreement on 25 January 2019 on direct insurance other than life insurance (UK-Swiss Direct Insurance Agreement). Like the insurance agreement with the EU, it will enable non-life insurance companies (e.g. household, motor vehicle, travel, liability insurers) to establish and operate branches in a country of the other contracting party.
Taking account of further developments between the EU and the UK, there are two scenarios for the entry into force of the agreement between Switzerland and the UK:
- Orderly withdrawal of the UK from the EU: Should there be a transitional period in UK/EU relations, the bilateral agreements between Switzerland and the EU are likely to remain applicable to the UK until the end of the transitional phase. This would also be the case for the insurance agreement between Switzerland and the EU. Consequently, the UK-Swiss Direct Insurance Agreement would not come into force until the transitional period has ended.
- Disorderly withdrawal of the UK from the EU: If the UK were to withdraw from the EU in a disorderly manner on 31 October 2019, the UK-Swiss Direct Insurance Agreement would enter into force on 1 November 2019, as the insurance agreement between Switzerland and the EU would no longer be applicable in the bilateral relationship between Switzerland and the UK from that date.
Texts of the agreements between Switzerland and the UK signed on 25 January 2019:
- UK-Swiss Direct Insurance Agreement
- Accompanying decision of the contracting parties to the UK-Swiss Direct Insurance Agreement
The financial market supervisory authorities of Switzerland and the UK were involved in the work on "Mind the Gap" and for their part took the necessary steps to ensure the existing mutual rights and obligations at the level of the supervisory authority (e.g. by adapting supervisory cooperation agreements).
In the area of taxation, Switzerland and the UK concluded an agreement for the avoidance of double taxation with respect to taxes on income (double taxation agreement or DTA) in 1977. The DTA has been revised several times, most recently by means of a protocol of amendment dated 30 November 2017. This protocol of amendment incorporates the minimum standards set under BEPS measures 6 and 14 into the DTA between Switzerland and the UK. The Protocol of Amendment is currently under discussion in the Swiss Parliament.
In the area of administrative assistance in tax matters, the UK, like Switzerland, is a contracting party to the OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Like Switzerland, the UK has committed itself to adopting the global standard for the automatic exchange of information on financial accounts (AEOI). Switzerland and the EU signed an agreement on the AEOI in 2015. Since autumn 2018, data has been exchanged between Switzerland and the United Kingdom on this basis. Following the withdrawal of the UK from the EU, the AEOI is to be continued on the basis of the OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
Last modification 11.04.2019