GENEVA, SWITZERLAND – Trafigura, the world’s third largest commodities trading company, announced it will be moving its legal headquarters from Geneva to Singapore, lured by lower taxes and proximity to China.
Trafigura Pte, a Singaporean incorporated entity will become the company’s headquarters for its trading division later this year, with its chief financial officer, Pierre Lorinet, moving to the southeast Asian city. He will join a team of 150 traders already there. The Financial Times reports that the company will maintain its team of traders in Geneva.
Geneva competes with London, Zug, Dubai and Singapore as the world’s largest commodities trading center, due to it low corporate taxes and access to trade financing. But whilst Geneva and Zug offer trading houses rates as low as 10 percent as compared to 24 percent in London, in Singapore those rates could be as low as 5 percent.
Geneva is the base for other major commodity traders including Gunvor, Vitol and Mercuria.
Links to other sources: Reuters
BERN, SWITZERLAND – The Swiss federal government says the fight against black market labour is showing results, thanks to strong support from the cantons. Inspectors carried out 1,130 checks of companies and checked 33,866 individuals in 2011, a slight drop, according to Bern’s figures, but the government says cantons carried out more in-depth investigations last year.
The law against black market labour is now in its fourth year and the Department of the Economy is preparing a report for the end of the year with long-term recommendations.
Switzerland to share seat with Poland, pledges additional $10 billion to IMF
BERN, SWITZERLAND – Swiss President Eveline Widmer-Schlumpf and US Attorney General Eric Holder met on the fringes of a key International Monetary Fund (IMF) meeting in Washington 20-21 April. Bern’s statement was brief, noting that the two met “in order to discuss bilateral cooperation on tax issues. They agreed to pursue all available options to identify US taxpayers with undeclared accounts in Switzerland.” The US Department of Justice, which Holder heads, did not comment on the meeting.
The IMF received pledges of $430 billion in additional funds for what it calls a “reinforced anti-crisis firewall” from its member states, in an IMFC (Financial Committee) meeting of central bank governors and ministers 20-22 April. Switzerland pledged $10, noting that the “exceptional” boost is “due to the still fragile state of the world economy, [thus] the IMF ministerial committee decided to increase the IMF resources” and insisting that “the additional funds should be made available to the IMF only on a temporary basis.”
Poland and Switzerland to share part of Bretton Woods leadership
Poland and Switzerland, in a new Memorandum of Understanding signed during the Washington meetings, have agreed to Switzerland maintaining “overall leadership of the constituency in both the IMF and World Bank.” The constituency to which they refer is a group of eight IMF member countries that Switzerland has represented since 1992 on the 24-seat councils of the IMF and the World Bank, sister organizations in what are known as the Bretton Woods Institutions. “It will represent the constituency in the responsible ministerial bodies, for example, the IMFC and Development Committee, in which the political and strategic courses are set. However, Switzerland will share its seat on the IMF Executive Board–the IMF’s operating decision-making body–and in future both countries will nominate the executive director for a two-year period on an equal rotation basis.”
The clause concerning the executive director is dependent on the IMF implementing its governance reforms but Bern notes that no leadership changes will be made for the World Bank, where governance reform is not underway.
Story filmed by RTS and BBC airs in UK on “Panorama” tonight
Switzerland’s largest company in lengthy rebuttal says not so
DRC copper mining at Kamatanda, near Likasi in Katanga province (mine NOT owned by Glencore), 17 January 2011 - Photo: Carême/Meinrad Schade
ZURICH, SWITZERLAND – Glencore, Switzerland’s largest company in terms of turnover and reportedly the supplier of 50 percent of the world’s copper, is accused of indirectly buying material from an “artisanal mine” in the Democratic Republic of Congo (DRC) that uses freelance miners as young as 10 years old. The company reacted with a lengthy refutation, not of the Glencore report (pdf) by two Swiss groups, but to a show based on that information, to be aired tonight by the BBC.
Glencore and XStrata are presenting their proposed merger to shareholders in May, prompting closer scrutiny of the Glencore’s reputation in the area of ethical business practices.
The merger would make the new $90 billion company the world’s third largest mining and raw materials group.
Both are based in Zug. Xstrata’s roots lie in a firm called Südelektra, founded in 1926. The name was changed in 2002 and the company went public 10 years ago.
The accusations of child labour and other illegal or at best dubious practices on the part of Glencore are made in a lengthy report issued 16 April by two politically active Swiss charities who are noted for their research “into the causes of poverty that affects large sections of the population”, says Zewo-certified Swiss Catholic Lenten Fund (Carême in French and Fastenopfer in German), which issued the report with Bread for All.
The report is the result of six months of investigation into the company’s work in the DRC, a followup to an earlier report when Glencore was listed on the stock market in 2011. Among its findings:
- copper from a mine where one-third of the miners are children, working in unsafe conditions, is making its way into Glencore’s supply lines; Glencore owns the mine, which is dormant, and the company says it has been overrun by artisanal miners, industry lingo for freelancers who mine and sell as best they can
- ” In one of Glencore’s processing plants in Luilu, sulphuric acid is discharged untreated into the river of the same name, with devastating consequences for the environment and the people living in the surrounding villages, who have lost an important water source.” The company says the problem pre-dates its ownership and has now been dealt with but film footage reportedly shows otherwise
- Glencore is accused of not respecting labour laws and of using fiscal practices that deprive the country of income that could replace aid money: “Glencore lawfully pays duties in the DRC in the form of licence fees and import/export tax. However, with the company shifting its profits made in the Congo through transfer pricing between its subsidiaries and into tax havens, the Congolese state’s according to calculations of the Swiss Catholic Lenten Fund and Bread for all loss in dividends and tax on profits amounted to around196 million US dollars in the last two years.”
Swiss legal loopholes for overseas subsidiaries targeted
The report notes that
Media charges of tense relations over tax issues denied by both governments
German political world, media reactions mixed
BERN, SWITZERLAND – German and Switzerland signed a “Supplemental Protocol” to their September 2011 tax agreement, Thursday 5 April. Bern issued a statement noting that “The essence of the agreement remains unchanged, that the taxation of German capital assets in Switzerland is ensured for the present and the future and thereby places relations between Switzerland and Germany on a forward-looking basis.” The new protocol and agreement are now ready for the countries parliaments to review.
The German government, like the Swiss government earlier in the week, denied press stories that relations are strained over another tax issue, arrest warrants issued by canton Zurich’s attorney general for three German tax collectors, linked to data that was stolen from a Swiss bank in 2008.
But in Germany, the political left reacted negatively while the media reaction was “more nuanced”, reports Swiss public broadcasting, adding that there is little likelihood yet more concessions on the part of Switzerland would muster support here.
The details of the new agreement, as listed in the Swiss statement, are likely to prove interesting to other governments looking for ways to force their citizens to declare tax money they have hidden in Switzerland:
- “After the agreement has come into force, inheritances which occur will be covered. In the case of inheritance, heirs must consent either to collection of a 50% tax or disclosure.
- “In the case of flat-rate taxation of the past, the size of the tax burden has been increased. Instead of being between 19% and 34% as it was up to now, the tax rate is now at least 21% and no more than 41%.
- “In addition the number of possible requests for information after entry into force of the agreement have been increased from a maximum of 999 to a maximum of 1,300 within a period of two years. This option extends and supplements the exchange of information according to the OECD minimum standard.
- “With the entry into force of the agreement on 1 January 2013, German taxpayers will no longer be able to shift assets out of Switzerland to third countries without notification. The appointed deadline was brought forward from 31 May 2013 to 1 January 2103.
- “It was made clear that interest payments which are covered by the Taxation of Savings Income Agreement with the European Union or will be covered by this in future, will be excluded from the scope of the agreement. In this way, the concerns of the EU Commission regarding compatibility with EU law have been removed as was the case with the tax agreement between Switzerland and the UK.
- “The regulations on the distribution in Germany of the revenue generated will be taken from the tax agreement. Within the scope of a German legislative procedure concerning the one-off flat-rate tax payment a higher proportion of the German Länder and communes will receive payment than would have resulted from the distribution key in the case of tax on investment income.
- “Individual models which come under the anti-abuse provision will now be described. In addition, monitoring implementation of the agreement by the competent Swiss authority and by an independent auditing company and the appointment of German Länder representatives on the so-called joint commission has been specifically laid down.”
BERN, SWITZERLAND – Journalists have been hounding the Swiss government for months about the number of US clients of Credit Suisse targeted by the US Justice department and Wednesday evening the information came out, but through a back door: it was tucked into a budget note from the Federal Council. The number of clients whose data the bank turned over to Swiss authorities in order for the government to share them with US authorities is 650, and the expected cost is CHF4.7 million, a tab the government expects the bank to pick up
In addition, the council is requesting CHF1.1m to cover the end of the work linked to a 2009 agreement between Switzerland and the US concerning tax evaders who were clients of UBS.
What isn’t clear from the budget message is where the US and Switzerland are with a political agreement that would cover all Swiss banks, but it appears that the deadline to review the Credit Suisse cases, which is not provided, is linked to the larger discussion.
The information was part of a request by the Federal Council (cabinet) to parliament to approve 13 additional credits, beyond the basic budget, for CHF90 million. Two of the largest projects are CHF14 million for European research organizations including CHF12.2m for Cern, and CHF60 million to encourage technology and innovation in the face of the strong franc. CHF7 million is earmarked for a new alarm system to alert the population and, last item on the list, CHF5.8 million to “cover the cost of the additional work done for the administrative assistance request from the United States, an extra burden linked notably to the Credit Suisse affair.”
The discreet budget item: a request for CHF5.8m to cover the cost of office space, specialists and other expenses linked to the Credit Suisse affair with the US Justice Department
The budget request notes that the US request for administrative assistance was made 26 September 2011 but that work had already begun a year earlier to prepare for such requests to enable Swiss authorities to move more quickly on grouped requests, based on the experience with UBS.
The federal Service d’échange d’informations en matière fiscale (SEI), the office within the tax department which handles information requested by other governments, “was reinforced by taking on temporary staff, lawyers and administrative staff, as well as external collaborators (who had already been hired for the [UBS case]. Additional office space had to be hired and the IT infrastructure had to be adapted to handle the new situation. The additional credits requested (CHF4.7m) must cover the extra costs incurred by the administrative assistance request and concern for the most part (CHF2m) the cost of consultants.”
Credit Suisse will be billed for the total cost, says the Federal Council.
Credit Suisse reported to be asking Americans for tax advisors’ names, proof of filing in the US
Swiss flag, more portable than a bank account
BERN, SWITZERLAND – The Council of the Swiss Abroad (CSE) is demanding that the government and Swiss banks find a reasonable solution to the growing banking problems of Swiss citizens who live outside the country, particularly those in the US.
The move by the group that represents the 700,000 Swiss who live abroad, about 10 percent of the total population, comes as Aarguer Zeitung, a Zurich area newspaper, reports that Credit Suisse has sent out some 4,000 letters asking American clients to sign by 23 April that they have filed their 2010 US taxes and asking for the names of their tax advisors.
The newspaper quotes a bank official as saying the request is not linked to new demands by the US but is a precautionary move by the bank. Credit Suisse has been under investigation by the US Justice Department for helping wealthy Americans avoid taxes by hiding their money. The bank is widely thought to have given bank data on about 130 clients to the US early this year.
Two sides of a rough coin
Swiss citizens who live or have lived in the US are finding themselves in an uncomfortable seat that closely resembles that of many Americans in Switzerland. Swiss banks are increasingly turning them down their own citizens as clients, including people who have been with the banks for a number of years and use their Swiss bank accounts to pay mortgages on homes back in Switzerland, for example.
Home away from home, but where's the bank for the mortgage payments?
The cost to a Swiss person of doing regular foreign banking from the US is prohibitive. The same is true for Americans living in Switzerland who try to do regular Swiss banking through a US-based bank, assuming they are allowed to maintain an account. A Swiss person who takes the desperate measure of keeping quiet about a Swiss account by, for example, using a Swiss address, risks getting the client in trouble with the Swiss bank, not to mention tax authorities.
US citizens in Switzerland have been faced with similar tax and banking dilemmas thanks to the rising cost to Swiss banks of showing they are compliant with American laws covering US taxpayers.
UBS in 2008 and now Credit Suisse have been investigated by the US for helpingAmerican citizens resident in the US to hide money in their offshore Swiss accounts.
But even US citizens who live in Switzerland and pay taxes here have been caught by the fallout from the offshore legal battles as banks move to avoid further legal hassles.
At a recent meeting in Geneva of American Citizens Abroad, half of the people in the room, 90 or so, raised their hands when asked if they have had bank accounts closed or been refused bank services recently because of their US nationality.
Greencard holders not spared, new US Supreme Court decision implies
Swiss or other non-US persons who spend more than four months in the US are considered residents and thus liable to US taxes, as are greencard holders.
A 21 February US Supreme Court decision makes it clear that US green card holders who withhold information about bank accounts outside the country risk deportation and face a possible and potentially costly exit tax, tax experts at the Venable Tax Group wrote last week.
BERN, SWITZERLAND – The number of cross-border (frontalier) workers in Switzerland rose by 11.5 percent from the last quarter of 2010 to the same period in 2011, the federal government announced Monday 5 March. Numbers rose 4 percent in one quarter alone. (full report, Fr)
The Lake Geneva region has more than 87,000 workers living in France, of the total 259,000 cross-border workers, making it the area with the largest numbers, but also the greatest percentage. Basel follows, with 66,000 and Ticino has 55,000.
More than half of the cross-border population works in service industries, outstripping manufacturing and agriculture.
The new numbers follow an announcement by Bern 2 March that it will begin to impose sanctions as part of work related to the free movement of labour in Europe. Employers who abuse workers by paying lower salaries or not respecting work condition norms will be sanctioned, as will anyone who claims to be self-employed without showing adequate proof from his or her country of resident, and anyone who employs them.
A fictive self-employment status, sometimes a ploy used by cross-border workers and their employers means that social security taxes and possibly other taxes are not being paid by the employee, in which case the employer is held responsible for trying to avoid announcing an employee to Swiss tax authorities.
Swiss federal customs officers (photo, Swiss Customs Office)
GENEVA, SWITZERLAND – Swiss Customs, working closely with French colleagues under the Swiss-EU anti-fraud agreement, have uncovered a ring of cigarette smugglers who imported some 50,000 cartons of cigarettes into France.
The business is valued at CHF2 billion in lost tax monies.
A number of people have been taken in for questioning in relation to a series of crimes that used UN employees who do not have diplomatic status but faked this to import quantities of the goods tax free.
UN employees with diplomatic status do not pay taxes on a number of goods.
An investigation carried out in Switzerland helped French police catch two French citizens driving a van with 1,600 cartons of illegally imported cigarettes.
BERN, SWITZERLAND – The lower house of the Swiss parliament Wednesday gave its blessing to a new US-Swiss tax treaty that calls for Switzerland to provide blocks of data to the US on clients suspected of not just fiscal fraud, but of tax evasion. In a 116-51 vote a large majority backed the treaty, but a final vote was adjourned until Monday, after several right-wing UDC proposed amendments are debated.
The treaty would allow the US to make a request for judicial assistance without supply the names and addresses of the US residents suspected of offshore tax evasion if there is clear evidence that a bank or its employees are suspected of encouraging such evasion or fraud.
In all other cases, bulk requests will not be accepted, as in the past, and the names and addresses of those responsible for accounts under suspicion will be required.
Philipp Mueller, speaking for the commission that examined the treaty for the lower house, told the lawmakers that backing the treaty would allow negotiations to go ahead with the US over 11 banks under suspicion by the US Justice Department of helping US-based clients evade American taxes.
The UDC has fought the treaty, arguing that the treaty unfairly gives concessions to the US that other nations are not provided, and that it weakens bank secrecy. ATS news agency reports that the UDC also argued against the treaty Wednesday because it does not provide a global solution.
The arguments against the US being treated separately were also supported by some Greens. The Socialists are looking to an agreement with the European Union that could in the end provide the same kind of grouped requests. And politicians in the centre rested pragmatic, saying that while the US hardly has an unblemished record itself when it comes to offshore accounts, some concessions are necessary.
Myret Zaki, assistant managing editor of Bilan, was outspoken on Swiss television Wednesday evening, voicing the sentiment of many in the political and business community that no matter whether the treaty is supported or not, the driving force behind it is commercial and not judicial, with the US seeking to expand its share of the market dominated by Swiss banks.
BERN, SWITZERLAND – The Swiss federal government’s budget surplus for 2011 was CHF1.9 billion, well above the budgeted CHF600 million, the Federal Council said Wednesday 15 February. The higher than expected surplus was mainly due to an additional CHF1.8 billion in withholding taxes, while the federal income tax and TVA (value added tax) were higher than budgeted as the economy began to move again.
Expenditures were CHF700 milion less than budgeted, despite CHF800m spent to counteract the effect of the high Swiss franc. Low interest rates and tightly disciplined spending accounts for the nearly CHF2 billion less than budgeted for expenditures.
A curious budget item was the fall in revenues from the tobacco tax, CHF148 million, down 6.3 percent in part due to a tax hike but also to a fall in sales to frontaliers, workers from across the border, due to the high Swiss franc.
GENEVA, SWITZERLAND – Apologies for the confusion; I accidentally posted this briefly on the news page and it has now been moved to its correct home, on the editorial page. You’ll find it here.
Possible overheating in real estate: tighten mortgage requirements, gov’t told
Home sweet home in Switzerland: signs the market is overheating
BERN, SWITZERLAND – The OECD (Organization for Economic Cooperation and Development) 2012 report on Switzerland, issued this week, cautions Bern against allowing consumer debt to build and warns that the real estate market may be overheating.,
The report’s overall assessment is that while Switzerland is weathering the eurozone crisis reasonably well, it remains at risk from the ongoing sovereign debt problems and economic stagnation in the region. The high Swiss franc will continue to pose problems for the export industry, the OECD notes.
“Exceptionally low” short- and medium-term interest rates are contributing to a mortgage boom and high real estate prices, the report states. Some areas are now showing signs of overheating, the report concludes. “Taking into account the high gross debt of households, the risk could increase, for small internal market banks, if there is a sudden rise interest rates.” Household debt in Switzerland is one of the highest in the OECD, it notes, although household wealth is “not negligible” taking into account assets held by the pension system.
Other key points from the report:
- The country’s two big banks, Credit Suisse and UBS, should be required to have higher leverage ratios than the 5 percent proposed by parliament, common equity should play a greater role and the reforms passed by parliament in 2011 should be implemented more quickly than the scheduled completion date of 2019. Parliament’s capital ratio of 19 percent has been praised as going beyond Basel III requirements for banks around the world, but the size of the two big banks in relation to the Swiss economy creates a risk that remains too high;
- Fiscal reforms would encourage economic growth; these should include a higher TVA (value-added tax) with broader coverage to consolidate growth and reduce distortion in the system. At the same time, the tax rate for individuals should be lowered, the OECD recommends, to encourage growth. Switzerland’s tax rates are modest on an international scale, but this is offset by the burden of mandatory health insurance and pensions.
- A number of measures are recommended to reduce CO2 in line with agreed limits by 2020; the OECD recommends an emissions tax on vehicles, saying this is a relatively inexpensive way for the country to reduce CO2 emissions, and it suggests peak traffic and congested area use taxes.
Mitt Romney (photo, Gage Skidmore / Wikipedia)
GENEVA, SWITZERLAND – US Presidential candidate Mitt Romney, whose estimated net worth is $190-250 million, has made public more than 500 pages of tax records after losing the South Carolina primary over the weekend to Newt Gingrich, who accused the former financial investment manager of not coming clean about his wealth. It is the first-ever disclosure by Romney, even though he earlier served as governor of Massachusetts.
Media reaction today in the US to details of the Romney fortune and the couple’s tax record mentions financial accounts in the Cayman Islands and in Switzerland, but focuses on the fact that he is one of the wealthiest candidates ever for the top US office. The Caucas, a New York Times blog, notes that “The Wall Street Journal and financial wire services showed a vast array of investments from a recently closed Swiss Bank account to holdings in Bermuda to the Cayman Islands, all underscoring the breadth and depth of his wealth.”
The disclosure and debate over it are part of growing evidence that a hot presidential campaign topic will be fiscal reform and the disparity between what the rich and other people pay in taxes.
State of the Union address Tuesday night may focus on economic inequality
President Barack Obama will give his State of the Union speech tonight and, according to CBS News, “Economic inequality is emerging as a central theme in the battle for the White House, with Obama trying to harness populist anger at Wall Street and corporations against a backdrop of chronically high unemployment. He plans to call for higher taxes on millionaires in his State of the Union address to Congress on Tuesday night, embracing an idea advanced by billionaire investor Warren Buffett and Occupy Wall Street protesters.”
Media references to the Swiss bank account are generally limited to implying that it is an indication of his wealth and noting that it was closed at the suggestion of political advisors. CBS News reports that “in a conference call with reporters, Brad Malt, Romney’s trustee, called the Swiss account ‘fully legal, fully disclosed’ but said it was closed in early 2010. He added: ‘The income earned on that account is taxed just as any other domestic or other bank account owned by the blind trust.’”
The news channel goes on to note that “pages and pages are devoted to foreign entities in which Romney is invested. Many are located in places like Luxembourg, Ireland and the Cayman Islands, all famous tax havens. None shows much income.”
Reuters, in an article widely picked up, writes 24 January, that “the emerging picture was of a man of great means who contributes mightily to charity. The documents showed he and his wife contributed $7 million in charity over the two years, much of it going to his Mormon church. That represents more than 15 percent of the Romneys’ income for those years”, more than the tax rate paid by the Romneys, with an
GENEVA, SWITZERLAND – Two new wrinkles appeared Monday 23 January in Swiss media stories surrounding the resignation of Swiss National Bank Chairman Philipp Hildebrand. French-speaking Switzerland’s largest circulation newspaper Le Matin Dimanche yesterday picked up on vague suggestions that have been appearing in German-language media since early January that his wife Kashya, who is American, could have problems with US Fbar (Foreign Bank and Financial Accounts) forms.
And Monday the special commission assigned the task of seeing if Hildebrand respected the central bank’s internal regulations confirmed its 21 December findings: Hildebrand was cleared, although the broader issue of moral responsibility for his wife’s currency transaction profits at a time when he was leading Swiss monetary policy remained.
The former chairman resigned 9 January, saying that he could not prove beyond a shadow of a doubt, once and for all, that it was his wife who had made currency transactions called into question by a stolen copy of a bank statement.
The two-person commission mandated by the Federal Council, the director and vice-director of the Swiss Federal Audit Office, Kurt Grüter and Michel Huissoud, reported to the Swiss government cabinet last week that after reviewing evidence they had not had access to earlier, e-mail exchanges between Hildebrand and Banque Sarrasin, they confirmed their previous conclusion that the chairman had stayed within the rules of the SNB.
Hildebrand case provides Swiss political fodder
The Hildebrand resignation has remained in the limelight in Switzerland, largely because the major political parties have been meeting during the past week to prepare their strategies for upcoming popular votes. The information about Hildebrand’s wife’s currency deal was broken to media by Christoph Blocher, former head of the right-wing UDC People’s Party, who last week talked about the affair for the first time, in an address to the party’s annual meeting.
It turned out, after Hildebrand’s resignation, that the most damning document shown to media was in fact several patched together by a lawyer and politician who is close to Blocher.
Blackden is a boutique of Swiss-based financial advisers whose work includes expat mortgages and primary & secondary residences, pensions and taxation. Based in Versoix.
ZURICH, SWITZERLAND – The SonntagsZeitung, a Sunday newspaper that has often revealed political secrets, with a mixed track record for getting them right, reports today that 11 Swiss banks are being offered agreements by the US government similar to the one reached in 2009 with UBS, the country’s largest bank. The agreement reportedly would have the banks turning over, via the federal government, names of bankers, correspondence with clients and more as part of requests for administrative assistance.
Such requests are currently covered by the new (2011) Swiss-US double taxation treaty, which parliament is now reviewing, but the details as described by the Zurich newspaper go well beyond what some in Switzerland consider legally acceptable, given Swiss banking secrecy laws.
The Swiss government has said in the past month that it is talking to the US about an agreement, but for all Swiss banks, to end the piecemeal approach used by the US to date to uncover offshore assets hidden by wealthy Americans.
The story appears to be related to talks between the two governments Friday, but Reuters today notes that Mario Tuor, spokesperson for the Swiss State Secretariat for International Financial Matters, said Friday that this meeting was part of the scheduled and still ongoing talks.
Background story, GenevaLunch, 13 December 2011
St Prex, a Vaud town of 5,100 people, inaugurated its new state-of-the-art recycling centre in 2011, now a busy place
BERN, SWITZERLAND – Batteries over 5kg will be taxed at purchase, rather than when they are recycled, starting 1 January 2012, says Bern. Household and small batteries currently carry a recycling tax, at purchase, but not larger ones, such as car batteries and industrial ones.
The new system is designed to boost the rate of recycling from last year’s 69 percent to at least 80 percent.
The change is also designed to ensure funds for collecting, transporting and recycling batteries, work that the federal government assigns to Inobat, a private organization based in Bern. By law, businesses in Switzerland that sell anything with batteries are obliged to take used batteries from customers; the country has some 11,000 collection points.
Swiss are world champion glass recyclers, some way to go on batteries
Some of the money collected by the revised tax will also be used for consumer education, to increase awareness of the need to recycle batteries and to raise the rate of recycling, 69 percent at 31 December 2010. The federal government has set a goal of 80 percent recycled batteries to preserve Switzerland’s natural resources. The figure is well below those for recycling several other items. The Swiss are world champion glass recyclers, with a 94 percent rate.
Room to grow: Zurich's citizen say it can go ahead with new runways and keep existing flight paths
GENEVA, SWITZERLAND – Swiss voters were back at the ballot box Sunday 27 November, a month after parliamentary elections, to vote on a number of items that differed from one canton to the next.
Here are some of the highlights, as results flow in Sunday evening:
Swiss right loses most runoffs, Geneva rebuffs minimum wage
- The right-wing UDC lost heavily in cantonal runoffs for seats in the upper house of parliament
- Two key federal parliament upper house seats: in the closely watched key Zurich election Felix Gutzwiller and Verena Diener defeated Christoph Blocher; Blocher is a former federal councilor and led the UDC/SVP People’s Party to a dominant position in the last decade until he lost his seat in 2007, and in St Gallen UDC candidate and favourite to win, Tony Brunner, lost to Socialist Paul Rechsteiner
- Canton Geneva has voted against a minimum wage but Neuchatel has voted to include it in the canton’s constitution; Switzerland as a whole does not have a minimum wage
- Canton Vaud: Green Party’s Béatrice Métraux defeated UDC’s Pierre-Yves Rapaz for the cantonal upper house seat left vacant by the death of UDC councilor Jean-Claude Mermoud in September
In German-speaking ares: Zurich airport can grow, Zug taxes down and foreigners get mixed bag:
- Foreigners: they will not be given the right to vote at the communal level in Lucerne, but they were spared stiff requirements pushed by the UDC People’s Party in the city of Basel to require strong language skills in order to be naturalized, and Basel’s citizens also voted 3-1 to place the responsibility for naturalization in the hands of the local government rather than the parliament; in Schwyz, voters agreed, 2-1, to align its naturalization laws with federal law and put responsibility for this in the hands of communal commissions (TSR notes that this was necessary after a scandal in Emmen, Lucerne, where the communal council routinely turned down applications from foreigners from certain countries
- Zurich voted strongly against a motion that would have restricted the airport’s growth; it will now be able to add two new runways to and allow existing ones to be extended; the vote was a sharp rebuke to the officials from several communes who were behind a motion to limit flying over highly populated neighbourhoods and to restrict the airport’s growth
- Zug voted in a number of tax breaks, including doubling the reduction per child for families, from CHF9,000 to 18,000, and cutting the corporate tax rate to 5.75 percent from 6.5
- Lump-sum taxes for wealthy foreigners who reside in Switzerland will continue to be offered by cantons Glaris and St Gallen but the latter’s voters have chosen to tighten requirements.
- Smoking in Basel: voters rejected a proposal by restaurants to adopt less strict federal no smoking laws instead of the cantons, in a close vote with just 200 out of more than 23,000 deciding the issue.
Account holders domiciled abroad must ensure someone is designated as a contact in case of litigation
BERN, SWITZERLAND – US citizens with Swiss bank accounts who are domiciled in the US and who have not clearly designated, in the bank’s files, a representative who can be contacted on their behalf ad litern (in case of litigation) might want to remedy the situation before the end of November. At that point a new amendment to the ordinance covering the Swiss-US double taxation treaty goes into effect. It is designed to “ensure that the procedural rights of affected persons domiciled in the United States remain guaranteed even if administrative assistance requests are submitted based on certain patterns of behaviour”.
It also puts the onus on account holders to make sure someone can be officially notified if an account comes under suspicion by the IRS and the US makes a request for administrative assistance to Switzerland.
Swiss banking privacy laws do not allow banks to turn over data until the federal government’s tax office orders them to do so, if the US request meets criteria set out by the 1996 treaty.
Requests will in future be published in the Swiss Federal Gazette, and owners of accounts who are not named, or their representatives, will have 20 days from date of publication to appeal the Swiss decision, before the data is turned over to US authorities.
Insurance was 8.4% in 2009, but cost has risen for past 2 years
Sausage, roesti and great local wine in St Gallen in late October: the Swiss spent CHF460 a month on average of their household budget dining out in 2009, but this includes work canteens and cafeterias as well as restaurants
BERN, SWITZERLAND – Average disposable household income in Switzerland in 2009 was CHF6,650 a month, with 13 percent of that, CHF1,185, going for food, beverages and restaurants. Housing and energy together made up the largest household budget item, CHF1,495 a month.
Transport used up 7.7 percent of the budgets and entertainment 6.7 percent. Clothing: 2.4 percent.
Households were left with, on average, savings of CHF1,160 after all expenses were deducted.
Taxes consumed on average CHF1,125 a month, some 12 percent, or less than what a household spent on food and beverages.
But taxes are only one part of Swiss mandatory expenses, which also include social security payments:
- 10 percent of disposable income that includes AVS and company pension plans (the Swiss first and second pillars)
- the mandatory part of the health insurance system (5 percent)
- and money sent to other households, for example as part of a divorce settlement (2 percent).
These mandatory expenses together with taxes account for 29 percent of household budgets, some CHF2,720 a month.
In addition, the Swiss in 2009 spent 3.4 percent on health insurance not covered by the basic, obligatory plans.
The figures were published by the Swiss Statistical Office Tuesday 15 November.
The office notes three important points: 58 percent of all households had lower revenue than the average, 39 percent had at least two people contributing to the revenue, and revenue here includes salaries but also social security income, pension payouts, interest payments, dividends, income from fortunes and money from other households (notably divorce settlements).
BERN, SWITZERLAND – The Swiss government said Wednesday night 2 November that it condemns Israel for two new measures, voted by the Israeli cabinet Tuesday, shortly after Unesco admitted Palestine as a member.
Bern stopped short of calling the measures retaliatory, but it notes that the decision by Tel Aviv to “speed up construction of several thousand additional housing units in the settlements in and around East Jerusalem” is illegal and constitutes a violation of international law”.
The Swiss Federal Council also says that it is “preoccupied by the Israeli government’s announcement concerning a possible freeze on transferring funds to the Palestinian Authority. Such a decision would be contrary to Israel’s international obligations. Switzerland calls upon the Israeli authorities to continue to turn over the tax revenues collected in the name of the Palestinian Authority. These funds make up a significant part of the Palestinian Authority’s budget.”
Switzerland abstained from the Unesco vote on Palestine, but swissinfo cited a statement Monday night by Rodolphe Imhoof, Swiss permanent delegate to Unesco in Paris: “If Switzerland abstained in the voting, it’s because it believes that this debate should not be held in the context of an organisation whose role is a technical one, such as Unesco,.” Imhoof added that the matter was one for the political organs of the UN to decide.
The Israeli government has denied charges that the two cabinet decisions are retaliatory, but AFP quotes an unnamed Israeli official as saying the measures were a “punishment” for the vote.
Daniel Spitz and Mario Delgado, both of DS Tax Consulting SA will present the upcoming changes in Swiss tax legislation, focusing on double taxation treaties and changes on taxation of employees’ incentive plans.
Location: Swissotel Metropole, Geneva
Link out: http://www.ifma-net.ch
Date: 16 Nov 2011
Start time: 12:00
End time: 14:00
Online tax filing: quick, easy and popular in Switzerland
BERN, SWITZERLAND – A small sampling of the Swiss population, 1,000 people interviewed by phone, has shown the Swiss to be happy with government online services, particularly at the commune level, says Bern.
The results of the study commissioned by the federal government, published 18 October, show that 85 percent of Swiss now have Internet access, with smartphones and private connections growing. Older people are using the Internet more.
The growing use of the Internet is no longer translating into a great use of government online services, however, and there is still a tendency to telephone to contact local authorities rather than to try to reach them by e-mail.
The most popular services are online tax filing and various aspects of voting. Some 44 percent of those interviewed said they would like to see the federal and cantonal governments build a health information service, since two-thirds of people go online to look for medical information, but the rate of credibility for information found is very low.
ZURICH, SWITZERLAND – Credit Suisse said Monday it is paying euros 150 million to settle a tax fraud dispute with the Duesseldorf, Germany tax office, heading off a court case. Switzerland’s other large bank, UBS, is reported to have lost $2.3 billion, higher than initially thought, in the fraudulent trading case that erupted last week when the bank called London police, who arrested one of the bank’s traders.
Oswald Gruebel, the head of UBS, told Der Sonntag over the weekend that he will not resign over the theft incident.
The Duesseldorf case brings to an end a saga that began with Credit Suisse offices in 13 German cities being raided after German officials from one state in 2010 bought stolen data from a Frenchman who had worked in the information technology offices of HSBC in Geneva.
Bank Julius Baer earlier in 2011 agreed to settle a similar case with Duesseldorf, for euros 50 million.
BERN, SWITZERLAND – The Foreign Affairs Committee of the Swiss upper house Monday 5 September rejected a new tax assistance treaty with the US, saying that it has been kept informed by Federal Councillor and Finance Minister Eveline Widmer-Schlumpf of discussions with the US over possible Swiss bank involvement in tax fraud cases.
The committee says a repeat of the treaty between the two countries over the case of UBS in 2008 is “not an option”, with that treaty based on emergency legislation. The US must respect existing Swiss law in settling differences over how the American government requests and obtains Swiss judiciary assistance in tax fraud cases.
A negotiated agreement to work out tax issues is the way forward, the committee insists.
Bank UBS paid the US $780 million to settle a case brought by the US Justice Department, which demanded data from 52,000 bank accounts. The Swiss government and tax authorities spent a year reviewing the US requests and agreed to hand over data on 4,450 accounts that met agreed criteria for likely tax fraud. Switzerland made a number of changes to its financial supervisory system and took steps to safeguard Swiss banking secrecy while agreeing to work more closely with other governments in the wake of the UBS crisis.
It was also under pressure from the OECD to bring its judicial assistance programme into line with OECD standards and in the past two years it has negotiated new tax treaties with more than a dozen countries, based on those standards. Among them were treaties announced in August, with the UK and Germany, that call for Switzerland to charge a withholding tax on foreign accounts without revealing the names of the account holders.
Background: “US versus Switzerland over bank details: new round opens”, 5 September, GenevaLunch
DSK release, May 2011 (cartoon ©2011 Patrick Chappatte, Globe Cartoon)
Update 23:45 GENEVA, SWITZERLAND – The rape charges in criminal court against former IMF (International Monetary Fund) head Dominique Strauss-Kahn have been dropped: an appeals court refused to appoint a special prosecutor, allowing a judge’s decision to drop charges, earlier in the day 23 August, to go ahead.
The prosecution had requested that charges be dropped on the basis that they were “no longer convinced of the defendant’s guilt beyond a reasonable doubt”.
The prosecution said in its filing in New York that there was evidence that Strauss-Kahn and Nafissatou Diallo, a maid at a New York hotel, had engaged in a sexual encounter, but whether it was consensual or rape was less clear.
The prosecution noted that Diallo, who has allowed her name to be used, had not been entirely truthful in tax documents and in her application for asylum from Guinea, and the case with a jury would rest on their ability to believe she was telling the truth.
Her lawyers argued that the prosecution was ignoring strong physical evidence.
Strauss-Kahn, who has been under house arrest since soon after his arrest in May, will be free to return to France. He was considered a leading candidate from the Left for the French presidential elections in 2012. Le Monde late Tuesday, in reporting on the charges being dropped, noted that his candidature has been “definitively compromised”, although the New York Times says that his political career is far from over.
Diallo has filed a civil case against the former IMF head, but since these are not criminal charges they will not keep him in New York. France does not allow its own citizens to be extradited, so once on French soil DSK, as he has become known since the case started, would not be obliged to return to the US.
Strauss-Kahn motion to dismiss, NY court (pdf)
Commentaries:
Guardian, “DSK walks, but Nicolas Sarkozy will run”
Le Monde (Fre), “Malgre le non-lieu, une affaire ‘impitoyable’”
New York Times, “End of Rape Case Brings the French Relief, and Political Questions”
Winner takes all, if it’s under CHF1,000
LAUSANNE, SWITZERLAND – A happy winner of the Loterie Romande has an extra CHF2.8 million in his pocket after winning with 2, 3, 7, 18, 33 and 45 (the “complémentaire” number: 16). The announcement Wednesday 17 August came just as the Swiss Federal Council announced its support for legal revisions recommended by parliament that allow lottery winners to keep their first CHF1,000 without paying tax.
Ninety-five percent of Swiss lottery winnings are under CHF1,000, for a total of CHF40 million. The change to the law will not mean of loss of revenues for the government.
Loterie Romande applauded the change to the law, saying it will cut administrative costs, since withholding tax currently must be collected on any gambling wins over CHF50, an amount that has not changed since 1945.
It also makes it easier for the non-profit organization, whose earnings are distributed to charity and community projects, to compete with casinos, where winnings are tax-free, and illegal Internet gambling, where withholding tax is clearly not collected. And of course, it points out, it’s good news for small winners, who keep what they win, as long as it’s uner CHF1,000.
Casinos will deduct a lump sum federal income tax of 5 percent for each lottery win, with a ceiling of CHF5,000. The money goes to the federally-backed programme to prevent addiction to gambling.
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.
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.”
