It couldn't get much clearer than this. Having noted in an editorial this morning that Germany is having second thoughts about signing a tax deal with Switzerland it goes on to say:
They are right to reject the deal — just as the UK, which has concluded a similar agreement, should have done. It cannot be right to exonerate tax cheaters from legal liability as long as they have paid less or given up less information about their tax affairs than what the law exacts from those who keep their money at home.
Indeed, the willingness of the UK — and of Germany's federal government — to sell out on the principle that taxpayers must declare their taxable earnings and assets is of far greater import than the prospect for immediate tax windfalls. Fiscal austerity has created public pressure for improving cross-border tax co-operation, and the battle is now being fought over the shape of a future regime. There is a risk of setting a precedent by which governments give up on better information exchange between tax authorities if banks themselves act as collectors from clients allowed to remain anonymous.
That would suit Switzerland well — no doubt a reason for its current aggressive reaction. Other states, however, should insist that all taxpayers obey the same rules.
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So would you never support any kind of tax amnesty? Surely it is better to bring people into the tax net at a discount to their outstanding liability than to never be likely to catch them and get anything?
Why?
If we demanded automatic information exchange from Switzerland or the extesnion of the European Union Savings Tax Directive we could have this data
But the UK is blocking that
Why?
Richard,
Of course we could demand automatic exchange of information, but we would be laughed off. Even the United States, who have infinitely more leverage than the UK, are not asking for it.
How would the extension of the Savings Directive help? Switzerland is not a member of the EU so it only voluntarily chooses to apply some of the Directive’s clauses. And in any event, it is Luxembourg and Austria and not the UK that are blocking the extenstion.
You never let the facts get in the way of your opinions, do you?
Respectfully – I think it’s you making the wold assertions here
Except thta you don’t factor in the general discrediting of the tax system and the government as a whole. If Sir Moneybags can be let off paying his dues, then why can’t I and why should I not fiddle my taxes to get the same benefits as Sir Moneybags. And why should I behave as a law-abiding citizen? Or why shouldn’t I riot and break down shop windows. Once you decide that some can have aprivilieged exemption from the law because of their welath you undermine the rule of law. What’s the cost of that next to your “discounted tax receipt”?
I typed that too fast and it’s full of typos. Sorry, Richard!
It really does make you wonder what could possibly be there to hide? I remember the MP expense saga, surely not.
Quis custodiet ipsos custodes?
It turns out that Germany never had ‘second-thoughts’ by the way: http://bit.ly/HmjoO6. Good thing nobody in Germany (or anywhere else outside the UK) really pays attention to the FT.
Now there only seems to be a few hold-outs among opposition politicians in the German upper house. But eventually they will be bought out.
Let’s be clear: it’s not been ratified yet
And your term ‘bought out’ is so telling
Corrupt to your core
Jason,
Aren’t you tired of shooting from the hip and hitting your foot? Talk about the one with facts not getting in the way of arguments. LoL
I wouldn’t categorise the entire German opposition who are in the majority in the upper house of parliament as a few holdouts.
Since when did Switzerland voluntarily apply a select few clauses of the EUSD? The ONLY clause Switzerland didn’t apply was regarding residual entities, (Trusts my son) but that has now been clarified in the amendments.
And by the way did you see the amended Rubik agreement says that any interest as per the EU savings tax or its future amendments will be out of scope of Rubik?
Are you remotely aware that more and more capital gains is being defined as interest by the EU Commission. Therefore Rubik will just be a hollow shell.
Get your facts straight about LU / AT blocking the EUSD amendments. Its the mandate to discuss exchange on demand with the 5 3rd party countries that is being vetoed, not the technical improvements of the EUSD.
EU doesn’t have leverage over CH? LoL… EU Commissioner threatened CH with trade and market access. Time for sticks and not carrots, me thinks.
But you will turn a deaf ear to these facts to promote your garbage arguments of how secrecy will prevail.
Mark, your cartoons are good but you are wrong on about everything here.
“I wouldn’t categorise the entire German opposition who are in the majority in the upper house of parliament as a few holdouts”
No Mark, the SPD and the Greens are not in the majority in the Bundesrat. The CDU-led coalition is still in the lead, bout lost its absolute majority last year. If you knew a thing or two about German federal politics, you would know that the Bundesrat is first and foremost a gigantic dealing room to trade in massive fiscal transfers between the Laender. Everything there is for sale at the right price, and this applies to the ratification of the Swiss deal too.
“The ONLY clause Switzerland didn’t apply was regarding residual entities, (Trusts my son) but that has now been clarified in the amendments”
Wrong again Mark. The EU-Swiss agreement differs from the ESTD in that the withholding regime was meant to be permanent. Also, there is no automatic review clause in the EU-Swiss treaty, unlike in the ESTD, meaning that if the EU wants Switzerland to adopt some of the amendments, it had better ask nicely and offer something meaningful in return, because there is no guarantee that the Swiss will agree.
“Are you remotely aware that more and more capital gains is being defined as interest by the EU Commission. Therefore Rubik will just be a hollow shell”
Oh Mark dear, now we move on to the mighty EU Commission. You should really know better, shouldn’t you. The Commission can come with any definition it wants, it is largely irrelevant, because the Commission has no power in tax matter. Because of the requirement for unanimity on tax decisisons, the power is with ECOFIN, which has taken the habit recently, not only on ESTD amendments, but on a range of other tax-related issues (FTT anyone?) to tell the Commission to get lost.
“Get your facts straight about LU / AT blocking the EUSD amendments. Its the mandate to discuss exchange on demand with the 5 3rd party countries that is being vetoed, not the technical improvements of the EUSD”
Sure Mark, you are technically correct. But the fact is that the amendments have been on the table for 5 years, and nothing, I mean absolutely NOTHING has happened because Austria and Luxembourg (with the occasional help of Italy and Germany) have made sure they do not proceed.
“EU doesn’t have leverage over CH? LoL… EU Commissioner threatened CH with trade and market access. Time for sticks and not carrots, me thinks”
Of course Mark, I bet that Switzerland is terrified of the powerful Algirdas Semeta. They must really be shivering! Seriously Mark, don’t you remember that the Swiss Finance Minister cancelled her meeting with him during her penultimate trip to Brussels because he is a mere Commissioner and she is a Head of State. And during her latest visit 10 days ago, she issued a press release announcing the signing of the amended UK-Swiss deal about 30 minutes before walking into his office. Does this look to you like the behavior of someone who is terrified?
Maybe we should break you some news: Semeta has NEITHER the authority NOR the mandate to do any of the things he would maybe like to do to Switzerland around market access, etc. That would have to originate from the Member States, and there is ONLY one of them that Switzerland fears: Germany. So Switzerland has bent over backwards to accomodate the German demands around their tax deal, but they are unlikely to go to the same lengths for other nations.
Happy to discuss this in more detail if it helps you.
One thing Jason. Your replies are always worth a hearty laugh. Better than any of my cartoons.
Firstly, bear in mind I have never been a supporter of AEI. I am happy that the 35% tax applies where all loopholes are closed.
Now.. “unlike in the ESTD, meaning that if the EU wants Switzerland to adopt some of the amendments, it had better ask nicely and offer something meaningful in return, because there is no guarantee that the Swiss will agree”.
Sure. That’s why teh Rubik was forced to be amended to say it won’t touch interest where the EUSD OR ITS FUTURE AMENDMENTS apply. So much for Semeta not having much power. It was he, and he alone that forced the mighty Swiss / DE / UK coalition to drop half the Rubik like a hot potato. LoL. Now that certainly seems like a guy without power. LoL
Also the Swiss agreement does include the revision clause. Its all over the place including in the memorandum of understanding. You are so wrong here. Just a 1 minute google search of EU Swiss savings tax agreement will confirm. See clause 13 (vs 18 in the EUSD)
Opposition is majority in German Parliament else Rubik would be ratified.
“But the fact is that the amendments have been on the table for 5 years, and nothing, I mean absolutely NOTHING has happened because Austria and Luxembourg (with the occasional help of Italy and Germany) have made sure they do not proceed.
Again, this has to do with automatic exchange of info.. not the EUSD technical improvements. Now that UK has agreed to withholding tax as a permanent solution, I expect EU Commission will drop the AEI demand and concentrate on getting the tech improvements passed… Something that CH has not objected to in the least.
And let me make clear – any system without AIE is a crooks charter
Mark – I have just picked this on your site (http://bit.ly/HwYZ9Q).
“Foreword 8 of the EU Savings tax directive of 2003 says The ultimate aim of this Directive is to enable savings income in the form of interest payments made in one MEMBER STATE to beneficial owners who are individuals resident in another MEMBER STATE to be made subject to effective taxation in accordance with the laws of the latter MEMBER STATE.
However, foreword 9 says the ultimate aim of bringing about effective taxation of interest payments in the beneficial owner’s MEMBER STATE of residence for tax purposes can be achieved through the exchange of information concerning interest payments between MEMBER STATES”.
Mark, do yourself a favour. Open a geography book with a map of the European Union. There is a not-that-big hole in the middle (you and Sahxson actually should know, you live in it). That is Switzerland, and it is NOT a MEMBER STATE. That is not that difficult to understand.
“Will the EU Commission hold foreword 13 against Germany and UK finalizing withholding tax instead of automatic exchange of information.”
Mark, the Commission can’t and won’t do that because Foreword 13 of the ESTD is irrelevant. Do yourself another favour and open the 2005 Swiss-EU Savings Tax Agreement that you linked above, and look (bot not too hard) for Foreword 13. See, it does not exist, there is no foreword, no preambule, nothing.
This is so basic stuff Mark. How can you advertise yourself as an expert and not KNOW this?
And how can you be so stupid as to think such matters are mere contract?
Alien,
You doth make me laugh. Look again at the Swiss agreement I linked to. The fact that Swiss must be involved with the amendments is in Clause 13.. not Foreword 13.
Article 13
Review
1. The Contracting Parties shall consult each other at least
every three years or at the request of either Contracting Party
with a view to examining and — if deemed necessary by the
Contracting Parties — improving the technical functioning of this
Agreement and assessing international developments. The
consultations shall be held within one month of the request
or as soon as possible in urgent cases.
2. On the basis of such an assessment, the Contracting
Parties may consult each other in order to examine whether
changes to this Agreement are necessary taking into account
international developments.
3. As soon as sufficient experience of the full implementation
of Article 1(1) is available, the Contracting Parties shall
consult each other in order to examine whether changes to this
Agreement are necessary taking into account international
developments.
4. For the purposes of the consultations referred to in paragraphs
1, 2 and 3, each Contracting Party shall inform the other
Contracting Party of possible developments which could affect
the proper functioning of this Agreement. This shall also
include any relevant agreement between one of the Contracting
Parties and a third State.
Also this is repeated in other agreements signed with the Swiss. When Ive got the time, ill post them here..but believe me, the swiss have to adopt the amendments. They know this themselves… And why you getting into such a spin on this trifling matter? The Swiss keep mentioning that they will adopt the mendments, they just waiting for the eu Commission to arrive (You know,those powerless pawns loL)
Mark, you really are an entertaining charlatan, aren’t you.
A year ago on this blog it was me who actually had to explain to you that Switzerland, as a non-member state, is not subject to the ESTD but instead to a parallel agreement that mirrors some, but crucially not all of the ESTD terms. (the blog is here http://bit.ly/HtsoQV).
Now you are lecturing some other poster giving you a run around on the very same topic. How really cheeky of you.
But you still don’t get, do you. The Article 13 of the Swiss-EU agreement Only commits the parties, including Switzerland, to consult about potential amendments to the agreement, primarily of technical nature. In short it is a commitment to, er, talk, but nothing else.
With advisers like you to the service of the Commission, the Swiss really have little to be concerned about.
Mark,
Semeta’s ambition was to stop the entire agreement(s) and at that he has miserably failed. More importantly, he has completely marginalised himself and the Commission and has lost so much political capital that the entire project of the amendments is at best seriously delayed. When Austria, Greece, Italy, the Netherlands, Sweden and Spain negotiate their own Rubik(s) with Switzerland, they won’t even bother to involve the Commission. My guess is that Semeta will be gone before Lithuania takes over the presidency of the Council in the second half of 2013.
Article 13 of the EU-Swiss Agreement and Article 18 of the ESTD are fundamentally different (just read and compare the two texts, it is obvious). The latter is an automatic review clause, the former is only a commitment to technical adaptations. If the EU-Swiss agreement contained an automatic review process, the Commission would not need a mandate from ECOFIN to start negotiating these amendments with Switzerland, would it?
Regarding automatic exchange, you first write (on your blog) that the Commission will impose it on Switzerland through the ESTD amendments, but “now that UK has agreed to withholding tax as a permanent solution, [you] expect EU Commission will drop the AEI demand”.
Would it be too much to ask you to make up you mind?
Also, may I kindly remind you that your record of predictions regarding the ESTD amendments has been rather poor. It is almost exactly a year ago now that you predicted that the amendments would be passed within weeks. That is a memo that has not been translated into Luxemburgisch yet!
You assume tree will be more Rubiks – the fact is that when no tax appears the backlash on Switzerland will sweep it away
This may be a battle won
The war is far from over – only tax will talk here – and Swiss banks have no intention of collecting it
Then wait the collective anger
Darren
Only muppets don’t realise the ultimate impact Semeta had when he forced the Germans and Brits to drop interest in Rubik like a hot poato. Ha, they didn’t even try a 5 minute defensive argument. So much for EC being marginalised and powerless.
Now that the EUSD has full responsibility over interest, the EC will expand the definition of interest until all Rubik will be responsible for is tax on pure equities. Other than that all gains on funds, insurance, entities, complex instruments, etc. is DEEMED as interest with a minimum the debt threshold.
Secondly, Rubik wasn’t going to touch Paying Agents Upon Receipt but now EUSD will trap trustees of discretionary trusts, foundations, establishments,etc. And all the other Rubik loopholesare closed. As for.. “If the EU-Swiss agreement contained an automatic review process, the Commission would not need a mandate from ECOFIN to start negotiating these amendments with Switzerland, would it?” The mandateec seeking is mostly to do with exchange on demand. The meeting with the Swiss on the technical improvements is merely a courtious formality which will be rubber stamped by the Swiss. Nowhere have the Swiss objected to the technical improvements. In fact the amended Rubik now contains a clause about all future EUSD amendments.
Regarding AEI. Regarding automatic exchange, “you first write that the Commission will impose it on Switzerland through the ESTD amendments, but “now that UK has agreed to withholding tax as a permanent solution, [you] expect EU Commission will drop the AEI demand”. Not once in any of my blogs will you find me pushing for AEI. My work involves purely the technical aspects. In fact I am the lone ranger in the EC to recommend a delay and separation of the issues regarding AEI and the technical impovements.
But keep this in mind. I guarantee you that the EC will eventually force AEI onto Switzerland via the EUSD. That is why Semeta won the war when he got DE and UK to acquiesce to the EUSD.
As an avid supporter of Rubik, I note you, Alien and other ilk have never once highlighted how many loopholes Rubik is riddled with. Considering Rubik doesn’t touch trusts, it doesn’t take a rocket scientist to figure out why you’re enamored with that dreck piece of legislation.
Mark,
As you know very well, Swiss law does not allow for the separation of economic and legal ownership. So all the structures you are referring to when moaning about the loopholes in Rubik are almost always established and documented outside of Switzerland, often in territories under EU jurisdiction.
Tough to blame Switzerland for that.
Then why do Swiss banks use them, en masse?
Is it massive criminality on their part?
Please tell
Oh dear darren.
Even though Rubik has loopholes, the EUSD closes them.
Separation of legal & economic ownership mumbo jumbo. It was 100% my work to blow all that fluff away in the EUSD – if there is no identifiable immediate beneficiary then the individual who initial contributed the assets, directly or indirectly according to the anti money laundering directive is deemed the beneficial owner. And if this individual i snot identifiable (e.g. deceased or use of circular structures) then the trustee must keep track of interest earned and apply the EUSD when an individual comes entitled (not distributed, merely entitled) to either the interest or the assets that produced that interest, no matter the form of distribution.
Try get out of that one!
“Only tax will talk here — and Swiss banks have no intention of collecting it”
I agree that tax will talk.
But what makes you so sure that Swiss banks would be so much keener to collect tax under the amended ESTD than they are under Rubik.
I rather think the opposite: the Swiss will do anything to not let Germany down under Rubik. They would be far more relaxed if the other party were the EU Commission.
Names and addresses would solve all that
my question remains – why do you promote crime?
why does Switzerland set out to handle stolen property?
Richard,
How exactly do you expect to get the names and addresses? What makes you think that Swiss banks would volunteer the identitity of their account holders under any circumstances other than if compelled to do so by a Swiss court?
Three letters tell me they will
They are USA
What do the USA have to do with the ESTD amendments?
Now you are truly losing it.
What the Swiss can or will give the US they can give us
Try to keep up
Richard,
The UK does not have a tenth of the leverage that the USA can apply on Switzerland. We will never by a few light years play in the same league. The Swiss will simply laugh if we even try.
The EU as a whole is, as with about everything else, deeply divided and as a result useless. The only country in Europe with some ability to force Switzerland into concessions is Germany.
You often advise people on this blog to try and deal with reality. Time for you to follow that advice.
There is no reason at all why the EU could not do FATCA
Reject the ESTD and I have no doubt that’s next
And we’ll throw out swiss banks if you don’t like it
Richard, it is an interesting idea. However you forget that the EU remains deeply divided on these and many other issues. The probability of this ever being agreed and implemented at EU level is extremely low. Just look at the amendments to the ESTD; there is no major disagreement about their substance, and yet after five years of trying we are still far from seeing them implemented.
Relying on the EU will always be a rather desperate strategy.
btw, who is the “we” in “And we’ll throw out swiss banks if you don’t like it”?
You are stuck in a paradigm
It is ending
Your perverted view of tax will end with it
The pace of change will be far faster than you can imagine