Switzerland » Tax Research UK

All over for the German – Swiss tax deal?

Feb 072012

It looks like it may all be ove very soon fro the German – Swiss tax deal that broadly replicates the appalling UK – Swiss one. As Tax-News reports:

Social Democrat (SPD) controlled states throughout Germany reportedly plan to block the bilateral tax agreement between Switzerland and Germany in the German Bundesrat, or upper house of parliament, during a crucial vote on February 10.

According to Baden-Württemberg’s Finance Minister Nils Schmid (SPD), German Finance Minister Wolfgang Schäuble will no longer be able to prevent a defeat in the upper house. Schmid warned that it is “highly unlikely” that the agreement will receive the country’s support, arguing that the proposed level of taxation of undeclared German assets held in the Confederation is “simply too small”.

Quite so.

So that would just leave the Osborne / Hartnett UK – Swiss folly standing. Why do both get it wrong so often?

I guess the Swiss think we’re stupid

Banking, Switzerland, Uncategorized 3 Responses »

Feb 072012

I loved this in Bloomberg this morning:

Switzerland’s government will unveil a new “clean money” strategy at the end of this month, SonntagsZeitung reported, citing unidentified people.

Proposed regulations, to be put forward by Finance Minster Eveline Widmer-Schlumpf, will require banks to demand a declaration from non-Swiss clients that all their assets are properly taxed, the Swiss newspaper reported.

Let’s be clear about what this means.

The Swiss know they are harbouring tax evaded funds, or they would not be doing this.

And those who are tax evading will already have signed false statements to their tax authorities as part of that process of tax evasion. The Swiss will know that.

But now, to let themselves off the hook of having to investigate tax evasion they are saying they will take at face value a statement that people are not tax evading without any supporting evidence to validate the claim.

That’s absurd!

Get people to show Swiss banks their tax returns to support the claim or this is nonsense, I say. Without that then any banker has to have suspicion that their client is tax evading if they ask for information not to be disclosed to their domestic tax authority (as will be the case in Switzerland) – and have a duty to report them under money laundering rules as a result. But of course, that’s precisely what the Swiss do not want to do.

The EU makes clear it is at war with Swiss banking secrecy, whatever Dave Hartnett thinks

Banking, Switzerland, Tax evasion 2 Responses »

Feb 062012

Bloomberg has reported this morning that:

Switzerland must eliminate banking secrecy and renegotiate tax accords with the U.K. and Germany that clash with regional initiatives, according to European Union Tax Commissioner Algirdas Semeta.

While Switzerland agreed in March 2009 to meet international standards to avoid being blacklisted as a tax haven by the Organization for Economic Cooperation and Development, bilateral agreements signed in September with Germany and the U.K. allow client identities to remain secret.

“Banking secrecy that allows companies or individuals to hide taxes has no future,” Semeta said in an interview in Brussels.

I wonder which bit of that Dave Hartnett and george Osborne, with their appalling tax deal with Switzerland don’t understand?

Nor come to that, which buit those from Switzerland who defend such deals in comments on this blog don’t understand.

Swiss banking secrecy has to die because it exists to facilitate tax and other crimes. Now let’s move in to kill it.

Swiss whistle blower says era of banking secrecy is far from over

Banking, Switzerland 3 Responses »

Feb 022012

International Tax Review is carrying an exclusive interview with whistleblower Ruedi Elmer in which he talks about his experiences as chief operating officer for Swiss bank Julius Bär at their Cayman Island office. Elmer was dismissed in 2002 after he challenged the bank’s senior management over their failure to enforce normal compliance procedures.

In the interview Elmer talks about his bad treatment by his former employers:

“I was abused as a compliance officer and some criminal clients were not disclosed to me by the local management,” says Elmer. “I was threatened by management and told if I took the bank to court, the bank would ‘finish me’.”

Astonishingly, the Swiss government sided with Julius Bär in trying to suppress Elmer, and to their great discredit, various parts of the Swiss media also aligned with the bank. According to International Tax Review:

“Elmer believes that after the Swiss authorities ignored the abusive practices he had brought to their attention and put him in prison instead, a campaign was run against him in the Swiss media.

“They called me a mentally sick person being full of revenge,” he says.”

Elmer’s actions have involved him in huge personal costs, not least imprisonment in 2010. He nonetheless seems confident that this has been worthwhile, though talk about the end of banking secrecy remains just that, talk:

“While Pascal Saint-Amans, the incoming OECD head of tax policy and administration, has declared that banking secrecy is over, Elmer believes this will only be true if automatic information exchange becomes the global standard procedure among nations. Elmer does agree that it is important that individual privacy is protected through local data protection laws, but argues this cannot be based on secrecy laws because they are mainly abused by financial institutions, multinationals and the rich who use trusts and companies as vehicles in tax havens.”

You can access the full interview Ruedi Elmer gave to International Tax Review’s Salman Shaheen here.

NB: Reposted from the Tax Justice Network blog with permission

How to solve Switzerland’s problem in one short blog

Switzerland 1 Response »

Jan 302012

Reuters reported today that:

Switzerland must tackle the problem of untaxed money in secret accounts and also must ensure the central bank does not become a political pawn, the country’s economy minister was quoted as saying on Saturday.

“The problem of untaxed wealth in Switzerland is a serious problem that we need to resolve. Not only with the USA but also with the Europeans,” Economy Minister Johann Schneider-Amman, of the pro-business Free Democrats (FDP) party, told the German-language Tages-Anzeiger in an interview.

“Banking secrecy wasn’t invented to create an opportunity for doing business with untaxed money,” he also said. “We must find a way of dealing with legacy wealth.”

Well actually, that’s exactly why Swiss banking secrecy was created in 1934: it was all about and still is about facilitating tax evasion.

And there is an easy answer: sign up for the European Union Savings Tax Directive and for automatic information exchange.

What’s the problem?

I couldn’t help but smile

Banking, Switzerland, Tax evasion Comments Off

Jan 272012

I really couldn’t help but smile at this report in SwissInfo:

Switzerland’s oldest private bank, Wegelin & Co, will sell most of its business to the Raiffeisen Group amid a dispute with United States tax authorities.

Wegelin, which was founded in 1741, said on Friday most of its clients and staff would be transferred to a company called Notenstein Private Bank which will in turn become a 100 per cent subsidiary of the Raiffeisen banking group. The sale price has not been made public.

US authorities charged three Wegelin staff on January 3 with conspiring to hide more than $1.2 billion (SFr1.1 billion) in client assets from tax officials. Wegelin said at the time that it was prepared for the “expected quarrel” and the bank had not broken any Swiss laws.

Speaking to reporters on Friday, Wegelin senior managing partner Konrad Hummler said the sale had resulted from “the extraordinarily difficult situation and threat to the bank brought about by the legal dispute with the US”.

Even the suggestion of tax evasion does not pay now.

The Swiss might, at last, be beginning to realise the truth in that obviously true statement.

It looks like the UK Swiss tax deal is in trouble

Switzerland, Tax avoidance, Tax evasion, Uncategorized 13 Responses »

Jan 232012

For the second time this morning, I pick up a significant change in sentiment in a news story that suggests real change is afoot. First it was the NHS, now it is about the UK Swiss tax deal, and importantly, the change in mood music is coming from Swissinfo, which has reported:

The tax deals which Switzerland reached last year with Britain and Germany could yet fail in the face of opposition in Europe and in the countries concerned.

The agreements use the so-called “Rubik” model for dealing with the undeclared billions held by foreign customers in Swiss banks.

It is quick and easy: the countries whose taxpayers have tried to hide their assets get an inflow of money straight away, and Swiss banks remain relatively attractive to the super-rich who prefer to keep a low profile.

It works by levying a withholding tax on the assets held in the banks. In other words, a tax is automatically levied on the interest they earn, and then remitted to the country concerned. But no information about the identity of clients is provided.

And that is the sticking point: the European Union is insisting on “automatic exchange of information”, so that tax evaders can be tracked down.

Apologies to them for a lengthy quite but it’s necessary to get a sense of how Swiss sentiment is changing. And changing it is because this deal is beginning to look dead in the water.

It contravenes EU laws in the European Savings Tax Directive.

It undermines EU solidarity against tax evasion.

It helps preserve the concept of Swiss banking secrecy that was designed to assist tax evasion, and still does so.

And it’s very obviously a tawdry deal.

Osborne and Hartnett went for it. But it looks like the EU will kill it, as a very few of us suggested possible. And that will be good news for the EU as a whole.

Swiss bankers may not be honest?

Banking, Corruption, Switzerland, Tax evasion 3 Responses »

Jan 052012

The Guardian reports this morning that:

Switzerland’s central bank was embroiled in an insider trading scandal after bank chief Philipp Hildebrand was accused of speculating on currency transactions only weeks before he instituted dramatic policy changes that shifted prices in his favour.

The accusations, which have rocked the Swiss banking industry, were made by Swiss weekly newspaper Die Weltwoche.

First it has to be said these are allegations, and from a source with an axe to grind. But what really amused me is not the substance of the issue, but the fact that a Swiss banker may be dishonest has “rocked the Swiss banking industry”. The whole Swiss banking sector is built on the basis of dishonesty. Indeed, much of the Swiss economy is built on dishonesty. As I noted in 2009:

Tax havens handle stolen property. This is not by accident, this is by design. The tale of the creation of Swiss banking secrecy says it all. As noted in a letter in the Financial Times today, Swiss secrecy laws date back to 1934. They were not created to protect German Jews and trade unionists from the Nazis as the Swiss like to claim.This is a big myth.

The reason bank secrecy was strengthened in 1934 was a scandal two years earlier, when the Basler Handelsbank was caught in flagrante by the French tax authorities facilitating tax evasion by members of French high society, among them two bishops, several generals, and the owners of Le Figaro and Le Matin newspapers.

Rather than risk their clients being found to be breaking the law again the Swiss introduced banking secrecy and the notorious numbered bank account system to ensure that customers of Swiss banks could evade their tax at will.

Tax evaded funds are money claimed by fraudulent means. they are stolen property. tax havens have, following in the wake of Switzerland, set out to handle that stolen property.

In March 2009 a Swiss banker quoted in the Financial Times said he believed that half of all funds deposited in that country would leave if bank secrecy was abolished – implying they must be tainted by tax evasion – and that the bankers know it.

This is what Swiss banking is all about. So why be surprised that a Swiss banker might be dishonest?

There’s more on Swiss banking secrecy and its creation here.

UK tax deal with Switzerland is already being renegotiated – another Hartnett debacle

Switzerland, Tax evasion 58 Responses »

Dec 282011

I have commented often on the UK – Swiss tax deal that Dave Hartnett negotiated and which was initialled by both parties in October. My objections to the deal are numerous, some being summarised here and others here.

Now Bloomberg has noted:

Switzerland is discussing “technical adjustments” to tax agreements with the U.K. and Germany, SonntagsZeitung reported, citing Andre Simonazzi, a spokesman for the Swiss Federal Council.

The changes aim to counter criticisms of the accords from the European Union, the Zurich-based newspaper reported. The talks are on revisions to distinguish between the EU-Swiss tax on interest and a separate withholding tax, Simonazzi was cited as saying.

Similar stories have appeared in the Swiss press.

I think three observations follow. The first s that those who said the opinion of the EU on this issue did not matter are clearly wrong: it does, very much.

Second, this renegotiation seems to confirm that others will not go down this route and the hopes of Luxembourg that they might use the deal as a mechanisms to shatter the upgrade to the European Union Savings Tax Directive – a hope, I suspect shared by George Osborne in support of UK tax havens – look like they may be shattered.

Last, yet again we see the gross incompetence of Dave Hartnett at work - seemingly doing deals irrespective of their legality to keep his political masters happy, whatever the cost. I just wish I had the confidence he was being replaced by someone better.