President, head of bankers’ association, say road ahead rough for bank competivity
Swiss President and Finance Minister Eveline Widmer-Schlumpf
GENEVA, SWITZERLAND – The Swiss financial industry is facing tough times which are not likely to soon be easier, two financial leaders said at separate press conferences Thursday.
Swiss President Eveline Widmer-Sclumpf, who is also the country’s finance minister, met with journalists 12 January in Geneva to talk about the future, but the press conference not surprisingly turned to her hectic first 12 days in office.
The Swiss National Bank’s chairman resigned following a scandal, parliament moved into its new session, tax treaty talks with the US are back on the agenda after a holiday break and diplomatic posts were assigned as new ambassadors, including the European Union one, arrived to present their papers.
The financial sector will be a 2012 priority for the government
Widmer-Schlumpf says one of her top priorities is to ensure the stability and sound reputation of the financial sector. The resignation Monday of Philipp Hildebrand as central banker also left Switzerland without its important seat on the Financial Stability Board, an international body of key central bankers who have great influence over world financial policy.
Germany and the UK initialed tax treaties with Switzerland in 2011, as did several other countries (Uruguay and Taiwan in the past two weeks), and one is under discussion with Italy. The European Union opposes such bilateral agreements and has threatened to fight them. The Swiss president said Thursday that Switzerland is ready to review some of the technical issues.
US tax treaty talks: main points sorted out, more discussion needed
The most difficult discussions may be those with the US. Little information has come from either side about the status of the talks, but Widmer-Schlumpf said today that while the main points have been sorted out more discussions are needed. She qualified the talks today: “They are not easy partners, we know that, but still they are constructive.” She added that she hopes the situation can be resolved while respecting Swiss law.
The US Department of Justice is currently investigating 11 Swiss banks for possibly helping wealthy Americans in the US hide money from the IRS (tax arm) and it appears the US is putting pressure on Swiss banks in other ways, with the latest twist reportedly, according to some Swiss media, a demand for the names of all Swiss bankers who have had dealings with US citizens.
The tax talks are taking place in parallel with another Swiss-US set of negotiations, over American requests for access to Swiss police records as part of the US fight against terrorism.
Private bankers and clients face “tsunami of regulations”
Meanwhile, in Bern, the Swiss Privates Bankers Association held its annual day with the press, where President Nicolas Pictet noted that the financial industry in general and wealth management in particular are facing a “tsunami of regulations” that will increase costs and create a number of problems. Penalizing the entire profession “for the mistakes of a few” must come to an end, he argues. “We must stop making it impossible for clients to have room to breathe” – they are the first to suffer when an excess of regulations exists, with the pretext of protecting them.
Pictet did not comment on the specifics of the bank cases under review by the US. He emphasized, however, that while Swiss banks, like any other, must respect the laws of the countries in which they operate, “applying these outside a country is an unacceptable threat for a small export nation” such as Switzerland.
He was echoing concerns voiced by Widmer-Schlumpf 31 December, on the eve of her presidency, who in a radio interview offered a reminder that while banks the Swiss banks embroiled in problems with the US have not broken any Swiss laws, nor committed any moral wrong-doing, those that have broken US law will have to deal with the consequences of that. Part of discussions between the two countries involves clarifying the legal situation.
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
Germany and Switzerland agree they haven’t agreed on withholding tax details
Bern, Switzerland (GenevaLunch) - Will Swiss banks withhold tax for German authorities or won’t they? Ping-pong answers from both governments in the past week over tax talks appear to show now that a withholding tax on German assets hidden in Switzerland is likely, and it could come soon.
Details are anybody’s guess: the two governments have had media playing a guessing game over a new double taxation treaty being negotiated. Michael Ambuehl, who is leading the negotiations for the Swiss, told Tages Anzeiger newspaper Thursday 21 October that he believes a draft treaty by the end of the month is possible, but this comes just after both governments Monday denied media reports that they have agreed on principles.
Ambuehl told the Zurich newspaper that the two have agreed on principle and formulas.
Swiss officials have said in the past that they favour a withholding tax that would allow the German government to collect money from tax evaders. In April Swiss President Doris Leuthard and German Chancellor Angela Merkel said, after meeting, that they expect a new treaty to be drawn up by autumn 2010.
Details of the treaty – several thorny issues
Germany wants tax money from hidden assets Reuters reports 21 October that the estimated amount of hidden assets is CHF270 billion. Germany reportedly paid euros 2.5 million early in 2010 for bank data stolen from a Swiss bank as part of efforts to track German tax dodgers who hide their money in Switzerland.
Michael Ambuehl meets US press at end of two-day visit
UBS agreement and new tax treaty were on the agenda
Michael Ambuehl, Switzerland's State Secretary for International Financial and Tax Matters
Washington, DC, USA (GenevaLunch) – Switzerland’s new Head of the State Secretariat for International Financial Matters in the Federal Department of Finance Michael Ambuehl Tuesday concluded two days of meetings with a number of high-level US tax, treasury, justice department and foreign affairs officials in Washington. The US-Swiss double taxation treaty and the treaty covering the UBS agreement were on the agenda, Bern said Tuesday evening.
Ambuehl met with US reporters at the end of his visit and said that if the Swiss parliament rejects the agreement with the US over the UBS case, a new legal battle between Switzerland the US would be likely, and the double taxation treaty would also be at risk.
The latter could have major repercussions for Switzerland as a place of business, he noted.
Bern said in a press release issued late Tuesday that:
Swiss government able to continue checking 4,200 UBS client accounts requested by IRS
New protocol buys gov’t time before Parliament’s vote on new tax treaty
Update 21:15 Bern, Switzerland (GenevaLunch) - Switzerland and the US Wednesday 31 March both signed an “amending protocol” to their 19 August 2009 agreement whereby the Swiss promised to issue final decisions on some 4,450 UBS bank clients whose account information was requested by US tax authorities. The new protocol has the same legal weight as the double taxation agreement between the two countries, which must be approved by the Swiss parliament.
New protocol outweighs old tax agreement, could take precedence over new
It means, according to Bern, that “the UBS Agreement now takes precedence over the older and more general convention, and permits Switzerland to provide treaty assistance in cases not only of tax fraud, but also of continued and serious tax evasion.” It goes a step further, according to the statement issued by Bern.
Bern, Switzerland (GenevaLunch) – “There is no guarantee that the IRS will have 4,450 names” when Switzerland finishes reviewing the 4,450 UBS bank accounts identified according to the criteria established by the United States and Switzerland, Folco Galli of the Swiss Federal Justice Department told GenevaLunch Wednesday 18 November. There is also no reason to believe the number will be close to this – or, on the other hand, far smaller. The US ambassador to Switzerland, Donald Beyer, last week commented that he expects the number to be far smaller, while the New York Times appears to have erroneously implied 17 November that Switzerland must turn over this many names to the IRS.
“At the moment, no one knows,” Galli says, because the accounts and names are being reviewed, a process that will take a year. And no one knows how many, if any, of the 14,700 individuals who came forward to the IRS under the amnesty programme, are part of the group of 4,450 UBS accounts, since those account holders are currently all known only to the bank itself. UBS, as part of the agreement, is filtering the identified accounts based on the governments’ criteria in order to turn data over to the federal administrative review.
Hans-Rudolf Merz, Swiss president
Bern, Switzerland (GenevaLunch) – Switzerland is ready to revise its double tax treaty with Germany, Swiss President Hans-Rudolf Merz told Peer Steinbrueck, the German finance minister, when the two met in Berlin Monday 22 June. Merz says the Swiss government wants to quickly implement its 13 March decision to bring Swiss tax law into line with international standards, but that Switzerland expects Germany to allow unhampered access by Swiss financial service providers to its markets and an agreement on taxation of Swiss airline employees who work in Germany, the government announced in a communiqué. Both men after the meeting played down the recent spat caused by Steinbrueck’s comments on Swiss banking secrecy.
Bern, Switzerland (GenevaLunch) – Switzerland and the United States “initialed” a revised double taxation agreement (DTA) in Washington, DC 18 June. According to the US government, “Official signing of the protocol is expected in the next few months.” A new agreement was necessary following the Swiss government’s decision 13 March to adopt the OECD’s (Organisation for Economic Co-operation and Development) Model Convention standard under which countries provide each other with tax assistance.
The decision followed pressure on Switzerland from other OECD member countries to ease its strict banking secrecy laws. The OECD has told Switzerland it must have 12 new bilateral tax agreements in place by the end of 2009 if it does not want to appear on a “gray list” of countries that are considered non-compliant.
Paris, France (Le Temps, Fre) – Switzerland and France Friday signed a new tax treaty that could go into effect as early as January 2010, which for the first time promises the French more help in catching tax evaders.
Bern, Switzerland (GenevaLunch) - Timothy Geithner, US Secretary of the Treasury, and Hans-Rudolph Merz, president of Switzerland, Tuesday 28 April met as part of negotiations for a new tax treaty between the two countries, but no news filtered out of the meeting and it is not yet clear if any statements will be issued.
Berlin, Germany (TSR, Fre and Tribune de Geneve, Fre) – The director of the Swiss Bankers Association, Urs Philipp Roth, presented Switzerland’s case for banking secrecy during a three-hour hearing by the financial commission of the German Bundestag (parliament), a meeting Swiss observers later qualified as “respectful.”
