Swiss threaten French tax treaty over data stolen from bank in Geneva

Thursday, 17 December 2009 14:03

The global crackdown on tax havens has been dealt a blow as Switzerland threatens to postpone the ratification of its new double taxation treaty with France over stolen data.

A former employee at the HSBC Private Bank branch in Geneva handed French tax authorities account data on what could be nearly every client at the financial institution.

Swiss Finance Minister Hans-Rudolf Merz said he is furious. In March Switzerland promised that it would enter into new tax treaties that would allow it to share bank client information in some cases of tax evasion after global pressure mounted against its tax haven status. A treaty was signed with France in August but has not yet been ratified by the Swiss parliament.

Now ratification could be in doubt. ‘Data was obviously obtained by illegal means. We are now reticent in evaluating such a double taxation agreement,’ Merz declared.

French tax authorities confirmed that they have the names of 130,000 clients from numerous countries who had accounts in Switzerland. France could use the data to encourage suspected tax cheats into coming forward with amnesty offers.

The informant, a former HSBC IT, has assumed a new name and is living in southern France under a witness protection programme. He told France 2 television he felt compelled by a sense of duty to hand over the information. ‘If you discover that offshore structures have no other aim than to avoid taxation and that the sole legitimacy of these structures is that purpose, what would you do? You either play ostrich or you try to find out,’ he said.

The French authorities believe it is not a big deal. ‘We have noted this decision and we hope this procedure is carried through. This ratification represents an important change for Switzerland,' a spokesman for the French authorities said.

French President Nicolas Sarkozy is backing the tax authorities. ‘No one can think that the budget minister, who oversees the fiscal service, should consider it normal or moral for people to cheat on their taxes,’ he said. ‘Imagine an administration that receives information and then throws it in the rubbish bin. I can imagine what sort of questions would be raised then,’ Sarkozy added.

Switzerland has only recently adopted the tax sharing principles set out by the Organisation for Economic Co-operation and Development (OECD). These principles will commit Switzerland to disclosing more data about who has money stashed in its banks. Switzerland was on an OECD blacklist. It is now on the grey list of countries committed to better disclosure standards but not yet complying with them.