Parliament allows controversial tax assistance
Finance Minister Widmer-Schlumpf defending the reform in parliament (Keystone)
Parliament has approved grouped requests for administrative assistance on tax matters in line with international standards - further weakening Switzerland’s banking secrecy law. The move follows pressure to crack down on tax evasion.
The House of Representatives decided to follow the Senate in giving other countries information about suspected tax dodgers based on patterns of behavior by account holders or financial institutions.
Under the current law, assistance is only granted in individual cases and if suspects are identified by name.
During Wednesday’s debate, representatives of the rightwing Swiss People’s Party warned approval of the new standards was tantamount to giving up banking secrecy rules altogether.
“We are paving the way for random inquiries and thereby drive away the last foreign clients from our financial centre,” said Caspar Baader.
However, supporters of the reform, mainly members of centre-left parties, however argued Switzerland would be blacklisted if it refuses to implement rules decided by the Organisation for Economic Co-operation and Development (OECD) in July.
Green Party parliamentarian Louis Schelbert said there was no point trying to defend banking secrecy in the long run.
The centre-right approved the reform grudgingly. “There is nothing we can do to stop group requests,” said Thomas Maier of Liberal Green Party.
Despite calls to apply the amended law retroactively the house did not discuss such a proposal. It could have helped appease opponents of a planned deal with Germany aimed at recovering untaxed assets in Swiss banks, according to commentators.
Finance Minister Eveline Widmer-Schlumpf said the law would come into force next January and Switzerland would have to adapt some double taxation agreements (DTA) with other countries.
The cabinet initially tried to explicitly exclude group requests, but changed its mind following international pressure.
Peter Kunz, professor of economic law at Bern University, says the decision by parliament leaves some scope both for the government and for the courts.
“German account holders are likely to challenge implementation of the law by January 1,” he says.
Kunz is also wary about the legal definition of group requests compared with random and speculative inquiries known as fishing expeditions.
“There is no clear distinction between the two from a legal point of view,” he told swissinfo.ch.
The Swiss Bankers Association in July welcomed the differentiation.
“Group requests will be subject to specific criteria. In particular, the affected group must be clearly defined and an explanation specifying the concrete facts of the case is necessary in order for a group requests to be made,” a statement said.
The Neue Zürcher Zeitung newspaper welcomed the agreement but cautioned against violating basic legal tenets.
“It is correct to take a pragmatic stance to deal with fiscal legacies. But Switzerland must not ignore its constitutional principles and lose its dignity,” an editorial in Thursday’s edition said.
The newspaper said Switzerland had no choice but to grant Germany the same conditions it had agreed with the United States.
However, the NZZ questioned whether the parliamentary decision will pay off. Be it in Germany, where parliament is still to debate the tax deal with Switzerland, or at a domestic level, where opponents are challenging the accord to a nationwide vote.