The United Kingdom (UK) is an important economic and political partner of Switzerland. In 2018, the UK was the sixth most important sales market for Swiss exports of goods (CHF 8.8 bn) and the eighth most important source market for imports of goods (CHF 7.7 bn). Relations between the two countries are also close in the financial sector.
On 23 June 2016, the UK electorate voted in favour of leaving the European Union (EU). This decision came into force on 31 January 2020 on the basis of the withdrawal agreement negotiated between the EU and the UK. On 1 February 2020, the transition period set out in the withdrawal agreement began. During this period, the UK remains part of the EU internal market and the customs union, and also remains bound by EU law.
To date, relations between Switzerland and the UK have been largely based on bilateral agreements between Switzerland and the EU. This is also true of the financial sector. With Brexit (i.e. after the end of the transition period agreed between the EU and the UK), these agreements will no longer apply to the UK. For this reason, in October 2016, the Federal Council launched its "mind the gap" strategy, in order to best ensure and, if need be, extend the existing reciprocal rights and obligations between the two countries (Federal Council strategy).
In the financial sector, the 1989 Agreement between the European Economic Community and the Swiss Confederation on direct insurance other than life assurance (EU-Swiss DIA) would no longer be applicable after the UK has left the EU (i.e. after the end of the transition period). In order to ensure a seamless continuation of the current regulations in these areas, Switzerland and the UK signed an agreement on 25 January 2019 on direct insurance other than life assurance (UK-Swiss DIA). 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.
After the UK has left the EU, the basis for the direct insurance agreement will be as follows:
- During the transition period (at least until end-2020), the EU's third-country agreements, such as the bilateral agreements between it and Switzerland, remain applicable to the UK. This is also the case for the EU-Swiss DIA. Therefore, nothing changes between Switzerland and the UK during this period.
- After the end of the transition period, the new UK-Swiss DIA will come into force, seamlessly replacing the previous legal basis in the area of insurance (EU-Swiss DIA).
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 DIA
The Swiss and UK financial market supervisory authorities were involved in the work on the "mind the gap" strategy and have, for their part, taken the necessary steps to ensure the existing reciprocal rights and obligations at supervisory authority level (e.g. by adapting supervision-related 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 actions 6 and 14 into the DTA between Switzerland and the UK. The protocol of amendment entered into force on 19 July 2019.
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. After the UK has left the EU, the basis for the AEOI will be as follows:
- During the transition period, the EU's third-country agreements, such as the bilateral agreements between it and Switzerland, remain applicable to the UK. This is also the case for the EU-Swiss agreement on the AEOI.
- After the end of the transition period, provisionally as from 1 January 2021, the AEOI should continue on the basis of the OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA). For this purpose, the UK (and Gibraltar) will, for the time being, receive information as AEOI partners, in application of the procedure foreseen in such circumstances.
Last modification 03.02.2020