Swiss leaders call for data exchange standards

Finance minister Eveline Widmer-Schlumpf has yet to look at the fine details of the report produced by Aymo Brunetti Keystone

The government says it wants to take an active role in developing global standards for the automatic exchange of banking information to avoid clashes with other countries over tax issues.

The move confirms a statement made by Finance Minister Eveline Widmer-Schlumpf last December, but stops short of scrapping banking secrecy.

At a news conference in the Swiss capital Bern on Friday, Widmer-Schlumpf said such global rules by the Organisation for Economic Co-operation and Development (OECD) would have to be sustainable, guarantee reciprocity and be in line with data protection.

She said the cabinet had made a first evaluation of a report on the future of Switzerland’s financial market. A formal response will be issued in September.

“We have not had enough time to examine the report in detail,” Widmer-Schlumpf told reporters.

She strongly rejected allegations that the government has taken a first step towards abolishing Switzerland’s cherished banking secrecy.

Such fundamental decisions would have to be taken by parliament and voters, she argued.

Friday’s statements came ahead of a special debate in parliament next week to discuss a strategy for Switzerland financial market policy.

Swiss tax woes

Switzerland has been under extreme pressure from both Europe and the US over its role as a shelter for tax cheats since the financial crisis of 2008.

In a bid to avoid being blacklisted, the Swiss government in 2009 agreed to adopt OECD rules to fight tax evasion.

In 2012 Switzerland approved revised tax accords with Britain and Austria.

A similar deal with neighbouring Germany failed amid opposition in the German parliament.

Discussions are underway in the Swiss  parliament to solve a tax spat with the US.

US and EU

Widmer-Schlumpf said the government stance was not directly related to another hot issue to be discussed in parliament next week: a proposed deal between the United States and Swiss banks suspected of helping tax cheats hide their money.

However, she acknowledged that the different issues were easily mixed up.

Widmer-Schlumpf added she was waiting to see the detailed proposals from the European Union on adapting a bilateral tax accord before saying if cabinet was willing to enter discussions on an automatic exchange of information with the 27-nation EU.

Continuing the Swiss system offering a withholding tax on foreign assets in Swiss banks without revealing the names of beneficiaries is still an option, she explained.

EU tax commissioner Algirdas Semeta is due in Bern on Monday for talks about the introduction of an automatic exchange of banking data with Switzerland.

Strategy report

The report by group of experts led by Aymo Brunetti, recommends Switzerland abandons the withholding tax system for foreign asset management clients and seeks a global solution based on an automatic exchange of information.

“The aim is to achieve a sustainable international acceptance and long-term legal security for Switzerland,” he told journalists.

Countries which do not apply international OECD standards could still be offered a withholding tax system and additional client information if specifically requested, Brunetti said.

Political parties gave the report, which was published on Friday, mixed marks.

Praise and criticism

The Radical Party, which is traditionally close to the business community, said the cabinet had blocked plans by the political left for a fundamental strategy change. It called on the government to stick to the system of withholding taxes.

The Christian Democrats rejected an automatic banking data exchange, unless it is introduced and applied at a global level.

The rightwing Swiss People’s Party accused the government of paving the way for the abolition of banking secrecy. It said the cabinet was weakening Switzerland’s position in international negotiations. 

The centre-left Social Democrats welcomed the findings of the report but criticised the cabinet stance as half-hearted.

The Swiss Bankers Association (SBA) welcomed the findings of the expert study.

It came out in favour of extending a bilateral accord on savings income with the EU, including an automatic exchange of information.

SBA made its agreement conditional on non-discriminatory access to EU for Swiss banks, a fair regularisation of the past and a transitional period beyond 2015 for the new rules to be applied.

The non-governmental Berne Declaration said the cabinet had taken a historic step and accepted the automatic exchange of information in principle, finally giving in to unavoidable.