Tax

Swiss Banks Request US Changes Tax Deals - Report

Tom Burroughes Group Editor London 24 October 2014

Swiss Banks Request US Changes Tax Deals - Report

Swiss banks in talks with the US authorities have asked the US Department of Justice to take out a number of demands.

Swiss banks in talks with the US authorities have asked the US Department of Justice to take out a number of demands, according to Bloomberg.

Over a 100 Swiss financial institutions out of Switzerland’s total of over 300 such firms have so far signed up to a US-Swiss pact – inked last August – to state whether they have reason to believe, or not, that they held money that hadn’t been declared to the US tax authorities. The disclosure programme is designed to draw a line under a long-running wrangle between Switzerland and the US over the use by Americans of offshore Swiss accounts.

The news service said lawyers representing 73 Swiss banks wrote on 21 October to object to terms of a proposed non-prosecution agreement that spells out how banks can achieve amnesty. Their letter says the agreement “presents substantial obstacles” and suggests a wide range of changes to the model accord, including a requirement that banks “cooperate fully” with “any other domestic or foreign law enforcement agency” in any investigation.

“This requirement is not found in the program and, indeed, turns a program specifically focused on US tax issues into a global cooperation agreement without any safeguards or guarantees of appropriate consideration of the banks’ cooperation,” according to the letter from 18 law firms obtained by the news service.

The letter suggests that banks fear that any US-Swiss agreement could be used by other countries to go after certain banks. Already, countries such as France, Germany and the UK have targeted Switzerland and sought to put pressure on its historic bank secrecy regime, which in modern form dates to 1934.

The letter suggests the banks fear that the US programme, far from being the final chapter in this story, could open up more attacks.

“Our clients are participating in this program to obtain finality as to their own exposure,” the law firms wrote. “We understand that the NPA does not bind the IRS formally, but it is important to our clients’ continuing participation through the conclusion of the NPA that we receive some form of assurance that the IRS will forebear from any further action,” the letter was quoted as saying.

The report said the banks also object to requirements that they disclose information on parent companies and that they share material with governments other than the US. And they dispute the scope of provisions on breaches of the agreement.

In 2009, UBS settled criminal and civil charges for aiding Americans to evade tax by the use of offshore accounts; part of that settlement, which involved a $780 million fine, also involved the Swiss authorities agreeing to hand over thousands of client account details. More recently, Switzerland’s oldest private bank, Wegelin & Co, has ceased to exist in the US and has been repackaged into a new entity in Switzerland after coming under legal assault in the US. A number of banks, such as Julius Baer, say they no longer offer offshore accounts to US citizens.

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