The UK could announce
the terms of its tax treaty with Switzerland over undeclared assets
as soon as week ending 19 August. This follows Germany’s landmark
settlement on 10 August.
A spokesman for the UK’s tax
ministry, HM Revenue & Customs, said an announcement was
expected this week, but negotiations were ongoing and terms were
still being finalised.
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“Constructive discussions are
continuing with the Swiss authorities, and we hope to conclude
these as soon as possible. Any further details will be announced in
due course,” the spokesman said.
The Swiss/German 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.
But the Swiss tax agreement
does not come cheaply. The Swiss Bankers Association (SBA)
estimates that the implementation of the measures could cost Swiss
banks CHF500m ($638m).
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By GlobalDataAgreement protects
privacy
Speaking to PBI to last month, Yves Mirabaud, managing
partner and a member of the executive committee at Mirabaud and
former chairman of the Geneva Private Bankers’ Association, said
Swiss authorities had four objectives it wanted to achieve 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.
Switzerland’s tax agreement with
Germany has gone a long way to matching these demands. The treaty
includes avoiding an automatic exchange of information and giving
it mutual access to Germany’s financial markets.
The agreement will go some way to
protecting client confidentiality – one of the key discussion
points for Swiss private banks.
“The SBA expects that the EU
proponents of an automatic exchange of information will now have a
less ideological position on this issue,” the SBA said in a
statement.
Fishing expeditions off
limits
So-called ‘fishing expeditions’, in
which regulators make multiple requests, would not be permissible,
and the requests submitted by German authorities would have to
state the name of the client, but not necessarily the name of the
bank.
SBA chair Patrick Odier said that
the tax agreement was positive, and was an important milestone for
the Swiss financial centre.
“I am especially grateful that
clients have been offered a fair solution for regularising their
assets. As promised, the Swiss banks have abided by their duty of
fiduciary responsibility to their longstanding clients,” said
Odier.
The agreement is scheduled to be
signed by both governments in the next few weeks and to be
implemented at the start of 2013.
Furthermore, the Swiss banks have
agreed to pay a CHF2bn ($2.7bn) guarantee, in order to ensure
a minimum income from the retrospective taxation, as well as to
underline the banks’ resolve to implement the agreement.
Swiss authorities have been in high-level discussions with both
German and UK governments since October 2010.
