US approach contrasts with German tax collection deal
ZURICH, SWITZERLAND – There is not an official war open against Swiss banks, by the US Department of Justice, but continuing skirmishes, highlighted this week by Le Temps and the Financial Times, make it clear that peace is not around the corner, either. Officials from the two countries appear to be heading for another showdown, writes Zurich-based Haig Simonen at the British newspaper, just as Switzerland and Germany are on the verge of announcing that they have found a way forward with a similar problem of German citizens hiding money from their taxman in Swiss bank accounts.
Switzerland and Germany are expected to announce Wednesday 10 August that they have signed an agreement for the Swiss to withhold tax on Germans’ bank accounts in Switzerland while Swiss banks will pay a lump sum up front for tax revenues lost in the past by Germany. The new agreement would leave Swiss banking secrecy intact by Switzerland turning over the taxes collected without identifying account owners.
The New York Times describes the new agreement, as well as an upcoming one with Britain as putting a squeeze on tax evaders, in an article published late Tuesday.
The US is taking a more aggressive tack to uncover past tax cheats and a 2009 treaty with Switzerland covering a set number of accounts held by Americans at bank UBS looks increasingly like a one-off settlement. The DOJ 4 August announced yet another indictment, this time against Gian Gisler, a former UBS banker who left the company in 2008 and who now lives in Zurich. His indictment follows four against former Credit Suisse senior managers in late July that topped up four other ex-Credit Suisse indictments in February 2011.
According to the DOJ “While working at UBS and at two other Swiss asset management firms, Gisler had more than 38 U.S. taxpayer clients and allegedly opened and/or managed more than 60 hidden accounts on their behalf. Gisler left UBS in 2008 when it became public that UBS was the target of an IRS investigation, and moved to a Swiss asset management firm so that he could continue to assist his US taxpayer clients in hiding their accounts at other Swiss banks. When that firm ceased its private banking business, Gisler left for yet another Swiss asset management firm so that he could continue to engage in the same conduct.”
The Financial Times says six other banks, in Switzerland and Liechtenstein are now being investigated by the DOJ. “The US investigations have taken months to gather pace. But receipt of the names, along with thousands of voluntary self-declarations by US taxpayers, has widened the scope of the US inquiries. Although only 25 US taxpayers with undeclared Swiss accounts have been indicted so far – and the first case dates back to April 2009 – the pace is beginning to build.”
Eveline Widmer-Schlumpf, Swiss minister for justice and police, press conference on UBS settlement
Update 4 23:15, Update 3 16:40, Update 2 16:27, Update 1 16:12
Ed. note: UBS shares dipped slightly during the afternoon, but began to rise slowly on the Swiss stock market during the press conference. In related news, Doug Shulman, the US Commissioner of Internal Revenue, who led comments by the US on the UBS case, took up his duties as the new chair of the OECD Forum on Tax Administration 18 August.
Bern and Zurich, Switzerland (GenevaLunch) - The seven members of the Swiss Federal Council (cabinet) Wednesday afternoon 19 August gave a press conference on the settlement in the UBS case. The government issued the following statement:
Bern, Switzerland (GenevaLunch) – The United Kingdom is the tenth country to initial a revised double taxation agreement with Switzerland, followed Bern’s decision 13 March to follow OECD (Organisation for Economic Co-operation and Development) guidelines for tax treaties. The OECD has given Switzerland until December to initial new agreements with 12 countries in order to be removed from what is known as its gray list of countries considered to not cooperate fully in tax evasion investigations.
The initialing process indicates that the countries have agreed to the negotiated terms in principle.
Bern, Switzerland (TSR, Fre) – The OECD has told Switzerland it must have 12 renegotiated bilateral tax treaties in place by the end of 2009 in order not to be on the organization’s list of “uncooperative” countries in tax matters.
Bern, Switzerland and Washington, DC, USA (GenevaLunch) – US Treasury Secretary Timothy Geithner Monday said that Switzerland and the US would begin 28 April to renegotiate their 1996 tax treaty. The announcement was made as part of a list of US actions that will follow the G20 summit in London in early April. Switzerland, for its part, is making it clear that a new treaty with the US is a top priority. Pre-negotiation talks have apparently been underway since the end of March, as part of Switzerland’s move to begin renegotiating treaties with several countries.
Bern, Switzerland (GenevaLunch) - Switzerland has begun negotiating new bilateral tax treaties with two key partners, the United States and Japan, Swiss President Hans-Rudolf Merz told a press conference Wednesday 25 March. Talks with Japan are 75 percent completed, but discussions with the US will take longer, he noted.
