Euro govts step up pressure on Swiss over banking secrecy

European governments are keeping up the pressure on Switzerland and its famed banking secrecy laws as the battle to find tax evaders is stepped up.

The Dutch government released data last week showing wealthy savers last year declared more than €2 billion hidden in overseas bank accounts, with a third of the accounts in Switzerland and others in Belgium and Luxembourg.
 
The Netherlands also confirmed it is seeking copies of stolen Swiss bank data on cross-border tax evaders that the German government is considering purchasing from an informant. Belgium also wants copies of the data.
 
These moves put more pressure on banks and regulators over secrecy policies. Switzerland is at the forefront because of its strict rules on client privacy.
 
Nearly £3.74 trillion of wealth is managed in Switzerland, with potentially almost one-third of it undeclared, analysts have said. Bankers fear the latest set of attacks could undermine the country’s entire banking model.
 
Switzerland has also been under fire for not signing a new double tax agreement with France after a row broke out over the theft of client data from HSBC’s Geneva office.
 
However, officials confirmed on Friday that the agreement will be signed. ‘Switzerland and France have formally agreed on the interpretation of the renegotiated double taxation agreement,’ the Finance Ministry said in a statement, adding that the data stolen from HSBC would not be used for requests for administrative assistance from France.
 
‘Due to this agreement, which is binding on both countries, the FDF no longer considers that there is any impediment to the revised double taxation agreement being approved rapidly by parliament,’ the statement added.
 
European offshore centres agreed last March to relax their strict bank secrecy laws and help foreign tax authorities to hunt down tax evaders to avoid appearing on an international black list. However Switzerland is unlikely to rush into changing its laws. Swiss Finance Minister Hans-Rudolf Merz met ministers from Luxembourg and Austria, the only two European Union states that still retain bank secrecy, and the prime minister of formerly black-listed tax haven Liechtenstein behind closed doors on Friday.
 
They were joined for the first time by German Finance Minister Wolfgang Schaeuble, whose determination to hunt down tax cheats even if that means buying stolen data. Despite dining amicably on salmon and beef no decisions were taken.
   
A Swiss finance ministry spokeswoman said the atmosphere had been friendly despite recent tensions between Switzerland and Germany over Berlin’s decision to pursue a stolen CD-rom containing data of Swiss bank clients.
 
The Swiss banking lobby has suggested expanding an anonymous withholding tax system on clients’ earnings to guard privacy while addressing foreign countries’ tax-collecting needs.

But the government is divided over the issue and many leading figures want to seek to secure a sufficiently long transition period so to allow tax cheats to come clean or leave the country.
 
This strategy is in line with the approach so far followed by Liechtenstein, an opaque principality that made a U-turn last year to avoid the collapse of its financial services industry.
 
A poll published yesterday shows that 67% of Swiss favour helping foreign countries chase tax evaders in Switzerland and 55% would do away with the distinction between tax evasion and tax fraud still in force for Swiss residents.