Zurich airport
ZURICH, SWITZERLAND – More morning and evening flights, but fewer flights over southern Germany from Zurich: this is the tradeoff agreed to by Switzerland and Germany, which announced Saturday 28 January they have signed an agreement to reduce noise.
The new accord is expected to go into effect in the summer of 2012.
Noise reduction in the southern German air corridor has been a contentious issue for a number of years and the two governments said in announcing the agreement that they also hope new developments in airplane technology will ease the situation.
Swiss, one of the main airlines using the corridor, has said it will be replacing half of its fleet there by 2020, according to TSR.
Switzerland has said it needs more flexibility for flights in and out of Zurich, particularly in the morning.
Zurich Airport had 20,911 “movements” of planes in December 2012, up 1.7 percent from a year earli.
BERN, SWITZERLAND – The Swiss ambassador to the US and American one to Switzerland have both said in recent days that they hope and expect an agreement to be reached in the near future as the result of discussions between the two governments over US investigations into 11 Swiss banks. The banks are under suspicion for helping wealthy Americans in the US to use offshore accounts to hide money from the IRS, the US tax arm.
But Donald Beyer, the US ambassador to Switzerland, made it clear in an interview with NZZ published 25 December that he has not been present at the negotiating table and that his job as ambassador is to deliver to Bern his government’s expectations and “to explain to my government, that in Switzerland there are clearly defined processes that must be adhered to properly.”
Beyer nevertheless says he hopes to see an agreement reached by the time the Swiss parliament’s spring session meets in March. He also noted that since Swiss bank UBS paid the US for helping “US citizens who have not fulfilled their duty” to the IRS, an agreement “should provide a payment” in the cases of other banks.
Switzerland’s ambassador to the US, Manual Sager, told swissinfo earlier in December that the two countries are “reasonably close” to an agreement, saying that finding one is a priority for relations between the two countries today:
“Clearly, we have to get the issue of tax information behind us. Our main focus has been to avoid a clash of jurisdictions and we have made a lot of progress in the past ten months. We have agreed on a legal framework and a procedure to be followed for the exchange of information. The US side has accepted that Swiss law needs to be adhered to. Some issues remain open, but I’m confident we will find a resolution.”
Meanwhile, a client of a Swiss bank, which Reuters, citing a court official, says is Credit Suisse lost a Swiss court request for more time before the Swiss government can hand over data on the client’s bank account(s).
The Swiss government 29 November published a notice that the beneficial owners of the accounts should declare their assets to the IRS by 20 December.
Credit Suisse is one of the banks under investigation by the US and in November it contacted a number of clients to say their account data was being demanded by the US.
The Swiss government published a 29 November deadline for clients whose accounts are among those Credit Suisse is
In the sights of the IRS, but part of a much bigger picture
BERN, SWITZERLAND – Americans who create offshore shadow companies or foundations, clearly to avoid taxes and with the active help of a Swiss bank, could see their financial information shared with the IRS even if the US tax authority cannot provide their names, if parliament accepts recommendations of the upper house foreign affairs commission.
The commission agreed Thursday 10 November, in a 7 to 3 vote, to an amendment to the new double taxation treaty with the US, which parliament will consider in December. The amendment would allow group requests to be made: bank data could be given to US authorities without the US first providing a name and account number, in a very limited number of cases.
US, Swiss seek global bank solution, sooner rather than later
Meanwhile, the investigation into 11 Swiss banks by the US Justice Department continues. The US and Switzerland have been in talks for some time to find what Mario Tuor, spokesperson for the Swiss Tax Office calls “a global solution for all banks.”
There is no timeframe for finding such a solution, an official who asked not to be named has told GenevaLunch, but both sides say they want a solution sooner rather than later.
Switzerland has “made no offer to the US” over 11 banks
Tuor told GenevaLunch that Switzerland has made no offer for a lump sum payment, contrary to a Reuters “exclusive” story 3 November that mentioned a multibillion dollar settlement. Another Reuters reporter later quoted Tuor as saying Switzerland has not made an offer as part of the talks. He clarified to GenevaLunch Friday that no offer has been made by the Swiss, period.
In fact, says one official,who concurs, saying Switzerland has not made an offer, some people close to the case have discussed figures but these are far smaller than the several billion that Bloomberg and later, Reuters, mention.
The Reuters reporter in New York has qualified the Credit Suisse investigation by the IRS as part of a showdown between the two governments—a statement at odds with the Swiss government’s insistence on including in the new treatment the clarification that group requests can be made under some circumstances. “The move by the two Swiss banks to disclose American client names and account information is the latest event in a showdown between Switzerland and the United States over the withering tradition of Swiss bank secrecy,” according to reporter Lynnley Browning, who covers accounting and tax stories from the US for Reuters.
Browning repeated today, as news, information she says she gleaned a week ago from unnamed US “sources briefed on the matter”—despite it later being flatly denied by the Swiss government to another Reuters reporter in Zurich. Lynnley Browning, who has written articles for the New York Times in the past, frequently pitting the US against Switzerland as adversaries, writes 9 November that:
“Switzerland is trying to craft a deal with the United States that would cover its entire banking industry of some 355 banks. Switzerland had wanted a deal that covered accounts dating back to early 2009, when UBS AG , Switzerland’s largest bank, averted indictment and reached a $780 million deferred-prosecution arrangement with US officials. But the two letters from Credit Suisse and Clariden Leu suggest that US authorities are unwilling to accept a deal that would start with 2009 rather than the January 2002 date cited in the letters.”
Credit Suisse letters sent to clients at gov’t behest
Credit Suisse and its subsidiary bank Clariden Leu, this week sent out letters to some clients warning that their names will be turned over to the IRS, with Swiss government support, as a result of the investigations. Bloomberg reports that
“The IRS sought data for accounts owned through domiciliary companies in which clients are the beneficial owners, according to the letter. The Swiss Federal Tax Administration issued an ‘immediately executable’ order to the Zurich-based bank, which has no right to appeal, according to the letter. Taxpayers can consent to the SFTA handing over their account data to the IRS, or they can use the Swiss legal system to appeal a ruling by the SFTA that their account must be given to the IRS, according to the letter.
“‘Please be advised that Credit Suisse is not able to provide any information on whether or not information with respect to a specific account will be provided to the IRS,’ according to the letter, signed by managing directors Michel Ruffieux and Stephan Gussmann.”
The banks’ moves are being reported by some media outside Switzerland as a breakdown in Swiss bank secrecy but the information in the letters doesn’t reflect a change in practice which is based on the old 1996 tax treaty that allowed some group requests; the US reportedly has gleaned enough information from other cases to find patterns of fraud at 11 Swiss banks.
Catching major tax evaders in the future
Some US media are also incorrectly reporting that the amendment to the new treaty provides for an “automated” process. The treaty would simply clarify that some group requests could be accepted by Switzerland, a feature of the old 1996 treaty. The US is the only country to have such an agreement with Switzerland, according to Swiss officials.
“Tax fraud and the like” includes some cases of tax evasion
A significant change in the new treaty is that it will allow the US to request assistance in some cases of tax evasion and not just fraud.
The Federal Justice Department published a statement 31 March 2010 about the “amending protocol” of the new treaty that parliament will consider in December, noting that it “permits Switzerland to provide treaty assistance in cases not only of tax fraud, but also of continued and serious tax evasion.”
The commission included, in August, the preamble (see text) requested by the Federal Council that explicitly authorizes for the first time judicial assistance in a limited number of cases where American requests do not include a name and address. But there is a clear rider: the requests must be “proportionate” and “practicable”.
In other words, Bern continues to insist, fishing expeditions or mass requests for information are specifically ruled out. Switzerland remains firmly opposed to this, citing Swiss banking laws that protect privacy.
The amendment notes that the US must provide evidence of a “pattern of flagrant” behaviour and of a very serious effort either to defraud or to evade taxes involving “large sums of money”.
Amended treaty doesn’t provide catalog of suspicious behaviours
A minority of the foreign affairs commission called for a catalog of catalog to be drawn up that specifies what behaviour constitutes a pattern and is therefore considered suspicious and what is not, but the commission in the end voted against this. Le Temps in an article Friday morning points out that this could create legal problems in the future.
The amendment would apply only to the agreement with the US and not to other double taxation agreements, the commission’s chairman said Thursday evening.
The next step is for parliament to consider the commission’s recommendation, which calls for the treaty to be approved, with the amendment included.
The commission also recommended that parliament approve nine other double-taxation agreements as they stand, including those with France and the UK
Swiss federal government timeline of the UBS case and the double taxation treaty with the US
European leaders meet in Brussels to save Greece and the euro - Photo: The Council of the European Union
GENEVA, SWITZERLAND – The leaders of the 17 eurozone countries reached an agreement in the early hours of Thursday 27 October to deal with the growing economic crisis.
Stock markets are being watched closely by analysts of the situation, for market reactions; in early trading in Europe and in Asia markets were moving up, and by 09:00 Swiss time the euro was trading $1.40 higher.
Three key ingredients of the deal are:
- write off half of Greece’s sovereign debt
- ensure that Europe’s banks are better capitalized to be able to face any future government loan defaults
- raise the eurozone’s bailout fund to $1.4 trillion.
Additionally, governance of the eurozone will be tightened and the role of the European Central Bank is under review.
Further details of the agreement, reached after difficult negotiations, will be hammered out later.
Le Monde in France refers to the “forceps” deal which will increase social costs for its employers. Banks will be recapitalized to the tune of $106 billion, amid fears voiced by banks that they will be less competitive as a result.
The news was greeted in Switzerland mainly with relief that the ministerial meeting which closed at 04:00 had resulted in an agreement after weeks of talks, and with hopes that calming the crisis will at the least ease pressure on the over-valued Swiss franc. TSR public television refers to it as a last-chance summit.
Links to other sites: BBC, Financial Times, Le Monde (Fr)
GENEVA, SWITZERLAND – Swiss watchmaking giant Swatch has ended its three-year-old joint venture with Tiffany, US jewelry company, citing contractual problems. The Swiss company accused Tiffany of continually blocking development of the Tiffany watch project.
“This action became necessary following Tiffany & Co’s systematic efforts to block and delay development of the business”, the Swatch Group said in a statement issued 12 September. “Within the framework of the long-term partnership agreement, in spring 2008, Swatch Group founded Tiffany Watch Co. Ltd, which was responsible for the development, production and distribution of “Tiffany & Co.” branded watches. Worldwide sales were handled through points of sale operated by Tiffany & Co., by The Swatch Group Ltd and by independent retailers.
“Tiffany Watch Co. Ltd. will be permitted to wind down current business over the course of two years following effective termination of the cooperation contracts.
“Swatch Group and Tiffany Watch Co. Ltd. will press claims for damages against Tiffany & Co., New York, in compensation for the loss of planned long-term future business.”
The contract was to last for 20 years, with an option for an additional 10.
The end of the affair is a quick turn-around from the upbeat tone of the 2008 announcemet of the project by the Swatch Group. “The enormous prestige of the Tiffany & Co. brand and the Swatch Group’s watchmaking expertise and experience in the luxury segment form a powerful platform on which to build one of the world’s top luxury watchmakers.”
At 14:45 Monday the shares were down 2.35 percent, in line with the overall Swiss stock market decline.
Some German residents may now opt to walk openly through the front doors of Swiss banks
BERN, SWITZERLAND – A Swiss-German tax deal has been reached, and the details, which have provoked much speculation in recent weeks, were made public Wednesday morning by the two governments. The much-touted likely “fine” of CHF2 billion that Swiss banks would need to pay Germany turns out to be a refundable guarantee:
“In order to ensure a minimum income from the retrospective taxation of existing banking relationships as well as to state their resolve to implement the agreement, the Swiss banks have undertaken to pay a guarantee in the amount of CHF 2 billion. The funds advanced by the banks will then be offset by the incoming tax payments and refunded to the banks.”
Bern and Bonn initialed the agreement on “outstanding tax issues” Wednesday 10 August. Key features of the agreement include:
- Persons resident in Germany can retrospectively tax their existing banking relationships in Switzerland either by making a one-off tax payment or by disclosing their accounts
- Future investment income and capital gains of German bank clients in Switzerland will be subject to a final withholding tax
- Proceeds of the withholding tax will be transferred to the German authorities by Switzerland
- A safety mechanism is being set up to allow Germany to request some information in order to avoid new, undeclared accounts from being opened
- A solution to the problem of the possible prosecution of bank employees is included.
Specifically, on the withholding tax, Bern says in its statement, “Final withholding tax for the future: future investment income and capital gains should be directly covered by a final withholding tax. The single tax rate has been set at 26.375%. This is in line with the current flat-rate withholding tax in Germany. The final withholding tax is a tax at source. After it has been paid, the tax obligation towards the country of domicile will generally have been fulfilled.”
German authorities will be able to submit requests for information in order to prevent new, undeclared funds from being deposited in Switzerland “in the context of a safety mechanism that must state the name of the client, but not necessarily the name of the bank. The number of requests that can be submitted is limited and there must be plausible grounds. The number will be within the range of 750 to 999 requests for a two-year period; an adjustment will then be made based on the results. So-called fishing expeditions are not permissible.”
Germans can pay lump sum back taxes anonymously or own up to accounts
The agreement notes that “To retrospectively tax existing banking relationships in Switzerland, persons resident in Germany should be given one chance to make an anonymous lump-sum tax payment. The size of this tax burden will vary from between 19% to 34% of the assets in question, and will be determined based on the duration of the client relationship as well as the initial and final amount of the capital.” Alternatively, “those affected should also have the possibility of disclosing their banking relationship in Switzerland to the German authorities.”
Germany to streamline Swiss banks’ access to German market
Switzerland has been keen to gain better access to German financial services markets and the agreement notes that “mutual market access for financial services will be improved.” In particular, “the exemption procedure for Swiss banks in Germany will be simplified, and the obligation to initiate client relationships via a local institution will be eliminated. Likewise, the problem of purchasing data relevant for tax collection purposes has been resolved.
Bern says it expect the agreement to be signed by both governments in coming weeks and notes that it “could enter into force at the start of 2013″.
Michael Ambühl, State Secretary, Swiss Federal Department of Finance, and Hans Bernhard Beus, State Secretary, German Federal Ministry of Finance, were the lead negotiators, who initialled today’s agreement.
GENEVA, SWITZERLAND – Five years of Chinese-Russian talks and the promise of a nearly done deal were not enough to put ink on paper and seal what would be “one of the largest energy deals in history” worth billions of dollars, as the Moscow Times puts it. The two appeared so close to agreement that it was to be at the centre of the St Petersburg International Economic Forum, which ended 18 June, and a four-day visit by Chinese President Hu Jintao to Moscow.
Officials from both sides are now saying more talks are needed. Russia’s “Gazprom sold pipeline gas to Europe in the first half of 2011 for an average of $346 per 1,000 cubic meters and may raise the price for long-term contracts to $500 per 1,000 cubic meters by December on the back of high oil prices. China is seeking a discount on the price at which Gazprom sells gas to its European customers”, reports the Moscow Times.
Bloomberg quotes the head of Gazprom, interviewed last week, as saying a deal should still be feasible in 2011.
Bern, Switzerland (GenevaLunch) – A revised double taxation agreement between the UK (Great Britain and Northern Ireland) will go into effect 1 January 2011, based on OECD standards that cover the exchange of information. The new agreement is one of several Switzerland has been signing since mid-2009 to be compliant with the standards in the area of tax fraud and tax evasion. The new agreement with the UK includes a clause on arbitration that notably allows the two countries to work directly together to reach an amicable settlement in cases where a taxpayer appeals that he or she is being taxed unfairly under the terms of the agreement.
The agreement entered into force 15 December but the provisions covering the exchange of information apply in the tax year that follows, thus 1 January, Bern notes. The arbitration provisions enter into force two years later, 15 December 2013.
Switzerland has double taxation agreements with about 70 countries.
Links to other sites: HM Revenue & Customs page on Switzerland, New Swiss/UK double taxation agreement (Fre)
Barry Callebaut and Kraft are stepping out together (A green shoe of pure chocolate from the 2009 Paris Chocolate Salon. E Wallace)
Zurich, Switzerland (GenevaLunch) - Swiss company Barry Callebaut, the world’s largest supplier of high-quality cocoa and chocolate products, has signed a long-term agreement with USA-based Kraft Foods to become the American company’s global cocoa and industrial chocolate supplier.
Kraft is the world’s second-largest food company after Nestle, which is based in Vevey, Switzerland. The agreement, which includes some of the Cadbury liquid chocolate deliveries under a current Kraft outsourcing agreement, is expected to more than double Barry Callebaut’s existing business with Kraft Foods.
Update 16:35 Bern, Switzerland (GenevaLunch) - The upper house of the Swiss parliament Thursday voted 31-11 in favour of the agreement between the US and Switzerland that will allow the Swiss to provide judicial assistance for 4,450 UBS bank account holders. The vote moves the treaty a step closer to approval: the lower house votes Monday. A yes vote faces a tougher time there.
The upper house (Conseil des Etats) vote is retroactive and applies to the specific cases where requests have been made. It does not apply to future requests, which would require legislative changes. The upper house also voted against putting the treaty to a popular vote and it refused to debate the government’s plans to put in place regulations for “too big to fail” banks.
Background, GenevaLunch
Links to other sites (Fre): Le Temps, RSR, Tribune de Geneve
Update 17:45 Geneva, Switzerland (GenevaLunch) – Prague, Czech Republic, is the likely host for the signing of a historic new agreement in early April between Russia and the US, to reduce nuclear weapon stockpiles. National Public Radio in the US reported earlier that the two countries have apparently reached an agreement, information that was tempered by a Thursday briefing at the White House in Washington with spokesman Robert Gibbs. NPR had reported that “The U.S. and Russia reached a breakthrough agreement Wednesday for a historic treaty to reduce the nuclear arsenals of the former Cold War rivals, the most significant pact in a generation and an important milestone in the decades-long quest to lower the risk of global nuclear war.” But Gibbs refused to confirm the report, saying that “we are, I think, very close to having an agreement on a START treaty and — but won’t have one until President Obama and his counterpart, Mr. Medvedev, have a chance to speak again.” The two would talk soon, within days, he noted, but he reporters could not get him to be more specific.
Geneva has been hosting the talks since the two countries agreed in March 2009 to step up their efforts to replace the old Start treaty, which ended in December 2009. NPR notes that Prague has, however, announced that it will host the signing and that officials in Washington were called in to be briefed on the agreement.
Bern, Switzerland (GenevaLunch) – The Swiss government has suspended its 20 August 2009 agreement with Libya designed to improve relations and is restricting visas issued to Libyans. The Federal Council (cabinet) noted in a press release Wednesday 4 November that Tripoli has refused all collaboration and that “the two Swiss citizens, who were taken in violation of international law, are still being held in an unknown area. The Libyan authorities refuse to allow anyone to visit them.”
Swiss President Hans-Rudolf Merz
Update 16.10 Bern, Switzerland (GenevaLunch) - Libya has named Saad Jabbar as its representative on an independent tribunal that is part of its 20 August agreement with Switzerland, which is designed to end a diplomatic impasse. Jabbar is a British lawyer who reportedly worked with Libya in the Lockerbie bomb affair. The move is the first sign this week that Libya intends to respect the agreement.
The Swiss Federal Council (cabinet) said Wednesday afternoon 2 September that it will respect the agreement signed with Libya, despite Libya’s failure to release two Swiss citizens by the end of August, also part of the agreement. The government says it will insist that Libya, too, hold up its end of the bargain.
Shares up; Swiss bankers hire US lobbyist
Zurich, Switzerland (GenevaLunch) - It may be no more than rumour based on several unnamed sources being cited, but the financial world is now expecting the Swiss and US governments to sign on Wednesday an agreement involving Swiss bank UBS. The bank’s shares have continued to climb most of this week, reaching the level they were at in December 2008 before the bank agreed to hand some names to the IRS tax authority, in early February. UBS shares closed in Zurich at CHF16.90 Tuesday 19 August.
Once the agreement is signed by both parties, details can be released. Widespread speculation by industry observers and media has UBS delivering some 5,000 clients’ details to the IRS, but the figure could take on a new aspect with the IRS specifying Tuesday 19 August that it is now investigating for criminal activity 150 of the 252 client names provided to it by the bank in February 2009.
Bern, Switzerland (GenevaLunch) – The European Free Trade Association (EFTA), of which Switzerland is a member, and Russia have agreed to start negotiations in September for a free trade agreement. The announcement follows a preliminary study by the two groups. The other members of EFTA are Iceland, Liechtenstein and Norway.
