Scott Michel Quoted in Epoch Times, Swiss Banks Stand to Lose Hundreds of Billions
Hundreds of billions of dollars could be moved out of Swiss banks as clients attempt to flee a coordinated crackdown on tax evasion, UBS's Jürg Zeltner told magazine Schweizer Bank on Sept. 17. The crackdown will likely cost Switzerland its tax-haven status.
Switzerland is likely to lose its tax-haven status because of several breakthroughs European countries and the United States have made in prosecuting tax evaders.
Germany was able to procure the names of tax evaders by buying the data from bank employees for a fee ranging in the low single digit millions. A compact disc with the names of 35,000 tax evaders obtained by the state of Lower Saxony in 2010 is expected to yield 1.8 billion euros in repayments ($2.35 billion), according to German magazine Der Spiegel. In addition, many tax evaders have self-indicted themselves, hoping that they will get away with a fine and not be criminally prosecuted.
These investigative breakthroughs have ultimately led to the signing of a German-Swiss tax treaty last September. The treaty will have "black" German assets taxed retroactively at a rate of 21 percent and Swiss banks will apply the standard capital gains rate of 25 percent in the future. On the other hand, Germany will abstain from obtaining more records—a transaction that is illegal in Switzerland and has been prosecuted there—and will facilitate market access for Swiss banks in Germany.
The deal still has to be ratified by the German Parliament and some opposition parties claim that the tax rate is too low and that Switzerland should disclose the names of people who shifted funds from Switzerland to other tax havens since the signing of the treaty.
Other European countries, including Britain have signed or are in the process of signing similar treaties, which have one important caveat: Switzerland will withhold taxes, but it won't disclose the names of account holders and tax evaders, another act that can be illegal under Swiss banking secrecy laws.
While some German parliamentarians might think Switzerland and German tax evaders are getting away too easily, the United States is increasing the pressure to get its own tax agreement with the Alp republic. The United States is pushing for the disclosure of the names of account holders, including historic data, reaching as far back as 10 years.
"The European countries are preparing to accept money on an anonymous basis and the U.S. is not prepared to do that," Scott Michel, president of law firm Caplin & Drysdale told The Epoch Times.
Bruce Zagaris, who is a partner at the law firm, Berliner, Corcoran, and Rowe in Washington, says that the European accord was a "gentle" solution.
Michel, a veteran tax lawyer who follows U.S. and Swiss negotiations closely added: "The U.S. is trying to get account information from these banks, going back probably 10 years," and that "I do think this retroactivity issue is quite important to [the Swiss]."
Visit The Epoch Times to read the entire article on the effects the coordinated crackdown on tax evasion is having on Swiss banks.