Swiss banking secrecy in the news again as germany seeks data

by Linda Beale

Swiss banking secrecy in the news again as Germany seeks data

The Swiss are fighting hard to maintain their edge in providing tax evasion services for the euro zone and the US. In spite of the modest changes to the US-Swiss tax convention, we can expect difficulty in acquiring information from Swiss banks that should be turned over routinely. Germany is experiencing the same problems. But, as many will have read, a whistleblower offered Germany more data on Swiss bank accounts, for a price. And Germany bought it last month for $3.5 million, gleaning the names of 1500 account holders and other information (information that may also be shared with other countries such as the US and provide additional ways to hone in on US tax evaders with secret accounts).

Now starts the internecine wrangling between the two EU countries. Before the deal was finalized, the Swiss authorities and a German Taxpayers Association complained that the German deal would reward a criminal who had engaged in industrial espionage. See, Is It Right to Do Business with Criminals? Feb. 2, 2010.

And now that the deal is done, the Swiss are considering how to get even. See Dempsey, Battle over Tax Data Heats Up between Switzerland and Germany, NY Times Feb 15 2010. At least one Swiss lawmaker has proposed a law that would have Switzerland releasing the names of all German politicians who have secret bank accounts in Swiss banks. Hmmm. That might be a very good idea. The trifle of a breach to the wall of Swiss banking secrecy would be a good start towards a law that does away with it altogether. Having German politicians exposed for speaking out of both sides of their mouths–those who have secret Swiss accounts but are publicly making a big show about Germans who are using the accounts to escape German taxation–might provide enough Schadenfreude to help shame the system back into greater compliance. And once people realize that Swizterland is still intent on maintaining its tax evasion services no matter what it has agreed to in its newer tax treaties, maybe countries will get even tougher on the country and insist on real tax information sharing.

But note the result mentioned for one of the German account holders identified in the earlier LIchtenstein bank information. A court awarded the holder millions of euros, on a finding that the bank should have warned him about the release of his information so that he could have voluntarily come forward to the German authorities. The account holder obviously knew that he had created a secret account and that he was evading German tax lawyers. The bank, of course, must have known that it was facilitating such evasion. The court apparently assumes that the bank owed its co-conspirator notice that its role in the conspiracy had been compromised. That’s a pretty strong dose of due process protection, when an aider of your tax evasion is required to inform you when it can no longer perform as expected, so that you can call short your tax evasion with the least possible damage to yourself! Ends up rewarding the tax evader with the damages. I must admit that seems to challenge common sense. Tax evasion is one “venture” where the co-venturers should all be at risk if one of them falters…..

Switzerland has facilitated tax evasion for decades. It’s time to end this farce and force the Swiss to close down their tax sheltering business.

[editorial comment: sorry for being offline most of the last week, folks; I’ve been ill but now am much better so hopefully can return to regular postings.]
crossposted with ataxingmatter