Switzerland has signed a landmark tax
agreement with Germany that has gone a long way to matching the
demands of the Swiss private banking industry including giving it
mutual access to Germany’s financial markets.
The agreement gives German residents the
chance to declare any untaxed assets in Switzerland via an
anonymous one-off lump retrospective tax payment or by disclosing
their accounts.
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Speaking to PBI last month, Yves Mirabaud, managing
partner and a member of the executive committee at Mirabaud and
former chairman of the Geneva Private Banker’s Association, said
Swiss authorities had four objectives as part of its discussions
with German regulators.
- Find a settlement for the past
- Be tax compliant for the future
- Keep the privacy of clients
- Gain access for Swiss banks to European markets, allowing Swiss
banks to have access to onshore clients in other markets with a
custodial bank in Switzerland
Fishing expeditions off limits for
regulators
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By GlobalDataThe agreement will go some way to protecting
client confidentiality – one of the key discussion points for Swiss
private banks.
So-called ‘fishing expeditions’, whereby
regulators make multiple requests will not be permissible and
German authorities can submit requests that must state the name of
the client, but not necessarily the name of the bank.
The agreement is scheduled to be signed by
both governments in the next few weeks and to be implemented at the
start of 2013.
Key points
The key points of the agreement include:
–
Retrospective taxation; German residents can make
an anonymous lump-sum tax payment, varying between 19% and 34% of
their Swiss-based assets in question. The proposed percentage is to
be determined by the duration of the client relationship as well as
the initial and final amount of the capital. Alternatively, those
affected will be able to disclose their banking relationship in
Switzerland to the German authorities.
– Final
withholding tax, going forward; future investment income
and capital gains should be directly covered by a final withholding
tax, which single rate has been set at 26.375%.
–
Preventative measures; both countries agreed to
ease mutual market access for financial institutions. Particularly,
the implementation of the exemption procedure for Swiss banks in
Germany will be simplified and the obligation to initiate client
relationships through a local institution will be abolished.
Furthermore, the Swiss banks agreed to pay a
CHF2bn ($2.7bn) guarantee, in order to ensure a minimum income
from the retrospective taxation as well as to state their resolve
to implement the agreement.
Swiss authorities have been in high-level
discussions with both German and UK governments since October 2010
and became the basis for negotiations.
The Swiss Ministry of Finance said
negotiations with the UK should be concluded shortly.
