The government says it will push ahead with efforts to regularise untaxed assets in Swiss banks and keep new black money away.This content was published on February 25, 2010 - 18:58
Finance Minister Hans-Rudolf Merz said integrity and stability of the financial centre were crucial. The cabinet aims to find solutions in bilateral talks with other countries rather than seeking an agreement with the European Union - its main trading partner.
The cabinet did not specify a preference for extending an existing withholding tax on income of assets, tax amnesties or self-declarations of tax payers as a means of helping its key trading partners seeking to boost tax revenues.
“There is no simple solution which will allow to keep banking secrecy,” said Merz at a news conference on Thursday.
Among the options considered – in particular by the banking industry - is a flat-rate withholding tax. As part of a set of bilateral accords with the EU in 2005 Switzerland also agreed on the gradual introduction of a withholding tax on income of assets of individuals.
Merz said Switzerland would continue or resume bilateral negotiations with other countries, notably Germany, Italy and France, to find a solution.
He added that the EU did not have a consolidated position and had so far not presented any demands.
However, he ruled out Switzerland adopting an automatic exchange of information relevant for tax purposes in force in most EU countries.
“Automatic exchange of information would be the end of banking secrecy, and it would greatly damage the Swiss financial industry,” he said.
Stability and integrity
In line with the financial strategy approved by the cabinet in December, Merz listed a number of principles to keep the stability and integrity of the financial centre.
“We are not interested in untaxed money,” he said.
He reiterated Switzerland’s commitment to adhere to the standards of the Organization for Economic Co-operation and Development (OECD) to improve assistance to foreign tax authorities.
So far the government has initialed 18 new double-taxation agreements. Five of them are scheduled for discussions in parliament next month amid threats by opponents to challenge them to a nationwide vote.
Switzerland is the world’s largest off-shore financial centre and estimated to have up to SFr760 trillion ($700 trillion) of undeclared assets hidden in the country.
Merz also announced that the government dismissed the possibility of seeking a comprehensive service agreement with Brussels on improved market access.
Exchange of information
The EU welcomed the efforts announced by the Swiss government but pointed out that it would continue to promote the automatic exchange of information.
“The [European] Commission remains convinced that this is the best way to ensure effective taxation in line with rules in taxpayers’ states of residence,” a statement said.
The Commission added it was keen to learn more about the detailed measures the Swiss government intends to take. It added that it is in the EU’s interest to ensure a level playing field for all 27 member states for cooperation with non-EU member Switzerland.
Political parties in Switzerland gave a mixed response to the government’s financial market strategy.
The centre-right Radical Party, known for its ties to the business community, said the double-taxation agreements were a first step to ensure stability for the financial centre.
It pointed out that the introduction of a flat-rate withholding tax was a necessary next step.
However, the centre-left Social Democrats criticised the government for failing to present more concrete measures for the future of the financial centre.
It said Merz had merely repeated very general statements and the government risked losing valuable time to develop a strategy without black money.
Urs Geiser, swissinfo.ch (With input by Tanguy Verhoosel in Brussels)
The government in March 2009 adopted the OECD standards, lifting the distinction between tax fraud and tax evasion for foreign clients of Swiss banks.
The group of most industrialised nations put Switzerland of grey list of tax havens.
As a result Switzerland negotiated at least 18 double taxation agreements to be submitted to parliament.
Switzerland also came under pressure from neighbouring Germany, France and Italy over its tax policy, while the Swiss government agreed to hand over data of 4,450 clients to the US suspected of tax dodging.
Banking secrecy was enshrined in Swiss law in 1934 thus becoming a tenet of the government’s financial strategy and the country’s financial industry.
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