Swiss Finance Minister Merz confirms no automatic data exchanges

Canada initials agreement, France confirms Davos “understanding”

Bern, Switzerland (GenevaLunch) – Switzerland’s push to build up its stable of bilateral tax agreements in line with OECD standards moved ahead last week. Among other moves, a new agreement with Canada was signed, the same day that a Mafia boss in Montreal pleaded guilty to hiding $5 million in three Swiss bank accounts from the Canadian taxman.

Monday 15 February Figaro newspaper in France published a list of 18 countries that France is calling its black list of governments that are not cooperative in fiscal matters, with the bulk of them in Latin America. Switzerland does not figure on the list.

French companies working in those countries face higher taxes, Paris has warned, according to Le Temps.

Canada initials agreement

Canada and Switzerland Thursday 11 February initialed an agreement that extends administrative assistance in tax matters, making this the 18th such agreement since March 2009.

The Swiss government decided 13 March, under pressure from the OECD (Organization for Economic Cooperation and Development), that it would open negotiations with several countries to include administrative assistance clauses in double taxation agreements. These enable each government to ask for help in pursuing tax fraud suspects, as long as the taxpayer’s actions are considered fraud, and not the lesser crime of tax evasion, by Switzerland. The requesting government must already have clear evidence of likely fraud.

Nicolo (Nick) Rizzuto, age 85 and the father of what CBC calls the “the presumed patriarch of Canada’s most well-known Mafia clan”, Vito Rizzuto, pleaded guilty the same day to charges of failing to declare interest revenues on three Swiss bank accounts in 1994 and 1995. He was ordered to pay C$209,000 in back taxes and fines. It is unclear if the Swiss were asked to help in the case.

French agreement back on the rails, stolen data could go to third countries

French and Swiss finance ministers confirmed, by telephone Thursday 11 February, the details of an agreement that they reached at Davos in January on the interpretation of an already initialed double taxation agreement.

Provisional negotiated contractual agreements are first initialed by governments, but they are not binding until both countries sign them. The Swiss political process calls for political and business groups to be given a short report on the unpublished contents of an agreement, so they can provide their feedback before the government signs.

Switzerland abruptly put the French agreement on hold in December, when it appeared that France was considering using data stolen from an HSBC bank office in Geneva to ask for help in tax fraud matters. The new understanding between the two clarifies this point, according to the Swiss finance ministry, which says in a statement issued 12 February, “France reiterated to Switzerland that none of the data stolen from HSBC in Geneva would be used in requests for administrative assistance. In the case of requests from third countries, the French authorities will notify the Swiss authorities and transmit the requested information to the third countries.”

The new details make it clear that Switzerland will continue to say no to French fishing expeditions:

In cases where a country requesting an exchange of banking information knows the name of the bank holding the account of the taxpayer concerned, it shall communicate this information to the country to which the request is made. If, exceptionally, the requesting authority presumes that the taxpayer holds a bank account in the country to which the request is made, but does not, however, have information allowing it to identify without doubt the bank concerned, it shall supply all information in its possession to enable the bank to be identified. The country to which the request is made will respond to such a request provided that it is in line with the principle of proportionality and does not constitute a fishing expedition.

Swiss, Austrian and Luxembourg finance ministers say no to automatic data swaps

Finance Minister Hans-Rudolf Merz’s office confirmed Sunday that Merz, at a meeting of the finance minister of five German-speaking countries, insisted Switzerland will not accept the automatic exchange of data among tax authorities. Several European Union countries have stepped up pressure for this in recent months, notably Britain, France and Germany. Austria and Liechtenstein also refuse to consider automatic exchanges. Germany and Liechtenstein were the two other countries at the meeting.

Background: GenevaLunch, swissinfo, December 2009

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