Maltese hold 'Lm39m' in secret Swiss accounts

Tens of millions of euros stashed away by Maltese citizens in Swiss secret bank accounts have been revealed for the first time. Some of the interest from this money, nearly €500,000, will this year end up in Maltese public coffers thanks to an agreement between the EU and Switzerland.

According to estimates given to The Times by Swiss bank sources, Maltese citizens currently have about €90 million (Lm39m) in various Swiss banks. Until a few years ago, Switzerland was notorious for its reputation as a tax haven and many Maltese opted to open bank accounts there.

However, following a savings tax agreement between the EU and Switzerland in 2005, the sacredness of its secret bank accounts has been broken.

A spokesman for the Maltese government yesterday told The Times that as a direct result of Malta's membership of the EU, Malta will be receiving about €0.5 million or 75 per cent of the 15 per cent withholding tax on interest paid to Maltese holders of Swiss accounts last year.

"This is the first time that Malta is getting something out of these secret accounts. The EU-Swiss agreement puts in place new rules which give us more access to information about Maltese holdings abroad, particularly those who are avoiding tax. The net is always closing," the spokesman said.

The EU-Swiss government savings tax agreement has been in force since July 2005. Under this agreement, the Swiss authorities retain a withholding tax of 15 per cent on all interest paid to persons established in the EU and holding an investment in Switzerland.

Of this tax collected by the Swiss authorities, 75 per cent is passed on to the EU member states, while the remaining 25 per cent is retained by Switzerland to cover administrative costs.

Last year, the gross revenue generated from such tax retention amounted to 526.7 million Swiss francs (€372 million). As a result, last April, the Swiss government informed the EU that the amount to be transferred to its member states will be 402.5 million Swiss francs (€245 million), while it will retain 134 million Swiss francs (€81 million).

The amount of money distributed to EU member states is proportionate to the level of investment carried out by citizens of that particular member state in Switzerland. EU sources told The Times that Malta's share of the amount collected and to be paid to the Maltese government for 2006 amounts to €485,000.

Government sources say the amount of tax withheld on Malta's behalf was greater than that of other member states such as Estonia, Finland, Latvia, Lithuania, Slovakia and Slovenia, despite these countries having a much larger population than Malta.

The tax will start being passed on to the Maltese authorities every year.