Swiss Private Bankers' Association Rebuffs EU Tax Evasion Attacks

by Ulrika Lomas, Tax-News.com, Brussels

22 January 2009

During a recent press conference, President of the Genevan Private Bankers’ Association Grégoire Bordier announced that Switzerland is prepared to renegotiate terms of existing agreements with the European Union (EU), in an endeavour to close existing loopholes and combat tax evasion, whilst warning against attacks from negotiating partners.

Bordier confirmed that, while in favour of information exchange generally, the Swiss Private Bankers’ Association remains opposed to various information exchange systems, which, it considers, are incompatible with its internal judicial order.

Defending Switzerland’s reputation as a world leader in international wealth management, Bordier emphasised that Switzerland should not be held accountable for the existence of certain loopholes within the European system.

Emphasising the need for Switzerland to remain firm in its position, Bordier defended the country’s use of withholding taxes, and its traditional banking secrecy policy, as efficient methods of guaranteeing financial confidentiality and combating tax evasion. Indeed, he challenged opponents who continue to fiercely criticize Switzerland and relentlessly demand its inclusion on the OECD “blacklist” of countries that do not co-operate against tax evasion.

Pressure has mounted on Switzerland in recent months to amend its banking secrecy policy, following a massive tax evasion investigation launched by German authorities into accounts held by its citizens in neighbouring Liechtenstein, and following proposals by the European Commission in November 2008 to introduce tougher measures designed to clamp down on tax evaders through the savings tax directive.

Under the savings directive, rather than exchange account information, except in criminal cases, Swiss banks are required to levy a withholding tax on interest earned on Swiss and EU residents' accounts. Under the terms of an agreement reached with the EU in 2004, part of the tax revenue derived from withholding tax is returned to the account holder's country of residence.

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