On 17th June 2010 the Swiss parliament agreed to allow the hand over of names and details of 4,450 bank accounts belonging to American UBS clients to the US tax authorities. On 24th J
On 17th June 2010 the Swiss parliament agreed to allow the hand over of names and details of 4,450 bank accounts belonging to American UBS clients to the US tax authorities.
On 24th June 2010 the Spanish government announced that it has received details of around 3,000 Swiss bank accounts owned by Spanish taxpayers and that it has started to investigate them.
Banking secrecy may still be enshrined in Swiss law, but it is increasingly proving a surmountable barrier for governments around the world as they seek information on tax evaders.
Spain
Following newspaper reports, Finance Minister, Elena Salgado, confirmed that the government has been informed about the existence of 3,000 Swiss accounts and has begun investigations into them.
In January 2009, the French authorities seized customer data stolen from the Geneva branch of HSBC by a former employee. Details of Spanish owned bank accounts which were included in the data have reportedly been passed onto the Spanish authorities, and these are the accounts now being probed.
HSBC was unable to confirm the report, saying that the bank does have Spanish clients but it does not know if they were included in the stolen data or not and so far it has not received any confirmation from either Spain or France.
Salgado said that the owners of the bank accounts have been notified and asked to confirm that these accounts have been declared to the tax authorities and to provide information on the origin of the funds. She told Spanish television station TVE that the account owners ?know that the fight against them is becoming more intense? and that if they had not previously declared the funds ?of course they will receive the corresponding sanctions and penalties“.
The minister did not confirm the amount of money under investigation, but the business daily Expansion reported that the accounts could hold around ?6 billion.
The following day, speaking on Spanish radio, the head of the Spanish tax office, Juan Manuel L?ez Carbajo, confirmed that the bank account information had come from the French authorities with whom Spain has an information exchange agreement. He said that work being done by international authorities to facilitate the exchange of information with tax havens ?is paying off?. He added:
“The barrier that existed, which has been so appealing for people wanting to hide their money, is crumbling.?
He told Onda Cero radio that Spain had started talks with Switzerland so that in the future this kind of bank information ?would come directly and not through others?.
While there has been speculation that the Spanish authorities may offer an amnesty of sorts to Swiss bank account holders, L?ez Carbajos said that if taxpayers could not clarify their accounts, it would go ?right to the end?.
This latest initiative by the Spanish government is part of its need to increase tax revenue and fight against tax evasion as it struggles to reduce its deficit.
According to Salgado, in recent years the Spanish tax authority has recovered over ?35 billion from tackling tax evasion and ?now we are intensifying our efforts?.
“We are perfecting information-sharing mechanisms with what used to be uncooperative jurisdictions… the countries of the world are determined to do away with tax havens,” she said
The data stolen from HSBC and handed over to the French authorities last year included around 127,000 accounts held by people from 180 countries. With information passed between EU States, we could see other countries use the information to investigate taxpayers who are on the list.
Switzerland to disclose confidential information to US tax authorities
The US has succeeded in its mission to force the Swiss tax authorities to hand over bank account information on 4,450 American clients of UBS bank.
Following the agreement on 17th June, Americans with accounts in UBS were reportedly racing to voluntarily disclose their accounts to the US Internal Revenue Service (IRS) to try and avoid penalties which could include prison sentences.
In order to protect UBS from crippling legal action by the US tax authorities, a deal was signed last August where the bank agreed to hand over the confidential client data by 20th August this year. This followed allegations by the US authorities that the bank had worked to help Americans hide capital away from US tax collectors.
UBS has given the data to the Swiss tax authorities for processing, but Swiss banking secrecy laws had so far prevented it being passed on to the IRS.
After a tough political battle and various votes in parliament, on 17th June Switzerland?s National Council and Senate finally united in their decision not to subject the UBS agreement to a national referendum.
A referendum would have meant UBS could not meet the August deadline and the IRS had already threatened to take UBS back to court if necessary, which would have further shaken client confidence.
The issue had divided political parties. The rightwing Swiss People?s Party had rejected the deal for months saying it would ?castrate? banking secrecy, but in a U-turn it said that while the deal was ?evil?, rejecting it would be a bigger evil.
In recent months, the Swiss government has also vowed to find ways to prevent foreigners from hiding undeclared funds in the country?s banks.
The veil on Switzerland?s banking secrecy is being lifted. It is risky for anyone to rely on Swiss banks to provide complete and long-term confidentiality. The only way forward is through the use of authorised arrangements which allow you to mitigate tax in a legitimate manner. Ask an international tax and wealth management firm for advice on the tax planning opportunities available to you in your country of residence.
By Bill Blevins, Managing Director, Blevins Franks
25th June 2010
