BERN, SWITZERLAND – Switzerland and the UK initialled, as expected, a tax agreement Wednesday 24 August, under which the Swiss will collect a withholding tax in future, and transfer the money to the UK government. The agreement echoes the one drawn up between Switzerland and Germany, initialed 10 August 2011, which allows Swiss banking secrecy and privacy laws to be respected while the other governments are able to collect tax revenues.
“Both sides acknowledge that the agreed system will have a long-term impact that is equivalent to the automatic exchange of information in the area of capital income,” the Swiss statement on the agreement says.
The agreement contains special rules for non-UK domiciled individuals: persons living in the UK who do not have their permanent home there.
Swiss banks will pay a CHF500 million guarantee, to ensure UK tax authorities “a minimum income from the retrospective taxation of existing banking relationships as well as to state their resolve to implement the agreement”. “The funds advanced by the banks will be offset by the incoming tax payments and refunded to the banks.”
Capital gains of British clients subject to withholding tax
Geneva, marked by much coming (growth) despite the going (exodus): companies, individuals
GENEVA, SWITZERLAND – Geneva comes out looking pretty but at a price, in the latest “location quality” comparison drawn up by bank Credit Suisse for Swiss cantons. The report issued 22 June says Geneva’s growing economic success is thanks in particular to the availability of high quality labour and its easy accessibility. Geneva’s growth rate from 1995-2008 was the strongest in French-speaking Switzerland.
Victim of its success leads to greater regional cooperation
The canton is nevertheless a victim of its own success, the report notes, with companies and individuals moving to neighboring canton Vaud and across the border to France. A growing regional cooperation is developing as a result, the report notes.
Geneva is one of the country’s smallest cantons, at 282 square kilometres but it is ranked fourth for dynamic economic performance by the bank after Zurich, Zug and Aargau, wth the last two benefitting from their proximity to Zurich.
Geneva’s strength comes from its mixed role as a home to international organizations and as Switzerland’s second international financial centre plus main centre for private wealth management, but it has also been growing rapidly as a trading centre for raw materials. It is gradually going through a transformation from cutting edge industries to cutting edge value-added business, which means that measuring by the value created per employee is one of the country’s highest.
Disposable income in Geneva is by far the lowest in Switzerland
The downside is that Geneva has the tax rates, corporate and personal, that are among Switzerland’s highest, with some of the most costly housing in the country. As a result, Geneva’s regional disposable income, or RDI, used to calculate the financial attractiveness of cantons for residence, is by far the lowest in Switzerland.
Credit Suisse points to the exodus towards France and neighbouring towns, notably Nyon, Rolle and Morges, as the direct result of these high costs, both for companies and individuals.
BERN, SWITZERLAND – A Swiss spokesman for the new State Secretariat for International Financial Matters (SIF), Mario Tuor, has confirmed that Switzerland and the US have been holding “informal talks” to explore solutions to the problem of undeclared assets held by Americans in Swiss bank accounts, but he told Reuters Friday 10 June that many of the details appearing in the media jump the gun and can’t be confirmed.
The rumours have been flying for the past two days, with Reuters, Bloomberg and the New York Times vying for scoops and exclusive information and ultimately giving credence to the stories. The newspaper quotes three unnamed sources; US government officials leaked the information to the newspaper that the two countries were expected to come to an agreement in July: “As part of the agreement under discussion, known as a global resolution, US government agencies would invite the banks to pay a fine, exit their undeclared offshore banking businesses for Americans, and turn over client names to the Internal Revenue Service (IRS) and the Justice Department.” In exchange, says the paper, In exchange, “the agencies would drop an ongoing investigation into the banks.”
US officials have often in the past used the New York Times to leak information and their position, in advance, on Swiss-US tax and financial discussions.
Tuor told Reuters that “the two sides had exchanged ideas but that he could not confirm the July date, whether the two sides were eyeing a multi-bank solution, or any other details mentioned” in an article published Thursday by Reuters. “‘There were several sets of talks, one of which was on the sidelines of the IMF’s spring meeting and was about the Fatca, though ideas were also exchanged about finding a solution for the past,’” Tuor told the news agency.
Fatca is the Foreign Account Tax Compliance Act adopted by the US at the end of 2010, which goes into effect in 2013, and which will require non-US banks to provide the US with considerable data on the accounts of Americans and foreigners with US assets. The goal is to catch people who are illegally avoiding pay US tax.
A side effect of the US adopting Fatca, however, has been a growing reluctance on the part of banks in Switzerland in particular, but also banks elsewhere, to keep US citizens or foreign residents in the US as clients. Some accounts have been closed, creating a string of financial management problems for people who are not hiding from the IRS.
Swiss judiciary police in action - Photo GE police
Neuchatel, Switzerland (GenevaLunch) – The overall crime rate fell by 1 percent in Switzerland in 2010, but the picture was mixed, figures released by the federal government Monday 21 March show.
Juvenile crime fell by 8 percent and penal code infractions were down 5 percent. But numbers for drug-related crimes and the foreigners illegally entering the country were up, 4 percent for the first and 7 percent for the second.
The last two increases could be due at least in part to better policing, given that these arrests are the result of police investigations, while property crimes are generally recorded as a result of victims posting complaints.
Switzerland’s crime rate is relatively low, compared to other countries, but recent, accurate comparisons are hard to come by and not widely considered accurate.
The Federal Statistical Office in Neuchatel cautions that 2010 is only the second year when police departments from all cantons provided harmonized statistics, some cantons that joined the nationwide crime statistics programme in 2009, the first year, were still adapting their own reporting systems. Comparison should be made with some reserve, the federal agency notes.
Most crimes were against property
The total number of crimes reported was 656,858 for a population of some 7.7 million. Eighty percent of the crimes were against property, 14 percent involved drug laws, 4 percent were illegal presence in the country and 2 percent involved breaking “other” federal laws.
Foreign criminals disproportionate to non-Swiss population
Huge money-laundering “pyramid” operation uncovered
Police seek local Tamils who were victims to give evidence
Bern and Geneva, Switzerland (GenevaLunch) – Ten members of LTTE, the Sri Lankan Tamil independence movement, who are resident in Switzerland were arrested Tuesday 11 January after police in several cantons raided 23 locations across the country. The sweep, coordinated by the Swiss Federal Prosecutor’s office, is the culmination of investigations that began in 2009 into money laundering operations and extortion of Tamils living in Switzerland.
The 10 have been charged with threatening behaviour, extortion, forgery of a document, money laundering, membership of, and aiding and abetting, a criminal organization. Victims in Switzerland were put under severe pressure, threatened, or subjected to extortion, according to Bern.
Police have set up a special phone line for victims and witnesses:
“who have knowledge of the operating methods of some members of the LTTE or similarly acting organizations. A special toll free phone line 0800 10 20 60 has been established for receiving relevant information. This number must only be used for relevant information in the aforementioned proceedings.”
The federal prosecutor’s office has provided a description of how the group worked, collecting millions of francs that were then used for their personal gain as well as to buy arms for Tamil Tigers, through what Bern calls an effective pyramid scheme in Switzerland:
“The money was obtained through various methods and involving different companies. The accused persons forced their fellow countrymen to borrow excessive amounts of money and to hand over the funds to the LTTE. The loans were mostly taken out based on falsified salary statements and the loan amounts considerably exceeded the actual financial means of the individual borrowers. Those who refused to help with the raising of funds were threatened and faced the prospect of reprisals. The bulk of the money, totalling several million Swiss francs, was transferred to Sri Lanka, primarily with the help of couriers via third states, or in small amounts through bank transactions. To disguise the true origin of the funds, they were invested in companies with connections to the LTTE conducting legal business.”
The raids took place in cantons Graubuenden, Zurich, St Gallen, Lucerne, Solothurn, Bern, Fribourg, Vaud, Geneva and Basel.
But who will take our money to finance the mortgage?
Update 25 July 07:20 Switzerland (GenevaLunch) - Two well-known Swiss cooperative banks, Migros and Bank Raiffeisen, have made changes in recent weeks to their policies concerning customers who are US citizens, or who are resident in the US. Specifically, both banks refuse all contact from the US. The steps taken by the banks, who are best known for mortgages and retail banking to middle-class customers, are a clear indication that US pressure is having an impact on the Swiss banking system. The moves are part of a trend that saw UBS in July 2008 alert non-US citizens who were resident in the US that their accounts would be closed as it reduced its US business.
Ironically, it is Americans trying to lead normal lives and pay their bills through their banks who are most affected – not the infamously wealthy and stealthy people the Internal Revenue Service (IRS) is hunting down. Also affected: Swiss citizens living in the US and people of other nationalities who have at some point lived in both countries. These are not the mythical secret, numbered accounts made famous by the likes of James Bond, but typical Swiss bank accounts covered by data protection laws in Switzerland.
The problem is complicated for US citizens and residents living outside the US because, according to American Citizens Abroad, a Geneva-based group, US banks are increasingly applying “due diligence” rules to refuse banking services outside the country.
Zurich, Switzerland (GenevaLunch) – Swiss bank UBS will close or transfer Wednesday 1 July, a month early, all US resident bank accounts that are not declared to US tax authorities, an unnamed official of the bank has told Swiss financial news agency AWP (20 Minutes and romandie.ch). The information could not be confirmed Tuesday evening, 30 June.
The report refers to account-holders who were earlier informed by the bank that it would close their accounts if they did not wish to transfer the money to a dollar-based account in the United States.
Chances are: 20.8% are foreigners
Neuchatel, Switzerland (GenevaLunch) – Switzerland’s resident foreign population continued to grow in 2008, but the makeup of it shifted, a reflection of stronger ties with the European Union (EU). The total foreign population was 1.64 million on 31 December 2008, of which 1.03m came from the EU and Efta (European Free Trade Association). The increase from EU and Efta countries was 6.8% while only 0.4% from other countries.
