subject: Switzerlands New Beginning? [print this page] Emboldened by the success of the US tax authorities in successfully coercing Switzerlands largest bank, UBS, to hand over details of a large number of American bank accounts suspected of tax evasion as well as securing $780m to settle criminal charges against the bank, many European tax authorities are ramping up their efforts to bring their own errant taxpayers to book.
This is most likely due to the need for several EU nations to increase the level of revenue they receive from taxes as they combat ballooning national debt incurred after years of fiscal profligacy. Undoubtedly, a significant proportion of that debt can be traced to the measures they had to take to soften the blow of the global financial crisis which began in 2007.
The chief casualty of this new drive to increase revenue has undoubtedly been the reputation of Switzerland as the epitome of discrete banking. It was not so long ago that the holder of a Swiss bank account could hold court at any society cocktail party such was the cachet of this most glamorously ostentatious of accessories but, in todays climate, the instant prestige that said holder could have relied upon to secure a listing near the top of even the most bourgeois of socialite guest-lists has vanished, replaced, alas, by a collective sharp intake of breath from fellow invitees and a sympathetic bon mot from a pitying champagne waiter advising that the offending account be closed and its contents relocated . . . post-haste.
UBS suffered the ignominy of being the first bank to be accused of assisting clients in tax evasion by none less than the Americans. Since then, other institutions have been targeted, investigated and subsequently accused of facilitating non-tax compliant activity by its clients. Employees of Swiss banks have reportedly handed over information about account holders to German and French authorities who are painstakingly working their way through the records.
However, considerable change is now underway in Switzerland. No longer is banking secrecy and the tax haven status the main course on the countrys menu. The new, improved image of Switzerland will, according to offshoreresource.com, be based on tax-compliant wealth management.
So what is the main impetus for Switzerland cleaning up its tax haven status?
Many believe that Switzerland has little or no choice but to effect fundamental reform. It has, after all been lambasted by several foreign tax authorities all convinced that its banks are institutionally geared towards helping the wealthy to evade tax. The high profile nature of the US case alone served to undermine the countrys reputation as the place to conduct business.
Nevertheless, the banks are adamant that it is they who are taking the giant steps towards tax compliant wealth management. A shrewd move, if true, since it looks like an act of contrition; an admission of past wrongdoings and a concerted effort to make amends. They cite political hand-wringing and procrastination but, ultimately, they want to regulate themselves rather than wait for the government to do it for them.
Offshoreresource.com advisors believe that it is combination of the two. Banking accounts for just under 12% of Switzerlands gross domestic product and, with so much damage done to its reputation, preserving the status quo is simply not an option.
The relentless rise of the emerging economies and the transfer of wealth to the east from the west, not to mention the prospect of crippling, government-imposed financial regulation in New York and London means that the position of a global centre for transparent and tax compliant wealth management expertise is up for grabs.
