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Swiss Motion Seeks Sanctions For Tax Disc Theft

by Ulrika Lomas,, Brussels

31 October 2012

The legal committee of the Swiss Council of States (upper house of parliament) has recently adopted a motion calling for the use or transfer of stolen client banking information to be punished.

Adopted unanimously, the motion urges the Swiss Federal Council to draft a corresponding bill providing for action to be taken against those who obtain or use such confidential information, in the form of an appropriate punishment.

The Federal Council is also asked to examine whether or not prosecution should extend to publication of client data.

The Council of States is expected to debate the highly emotive issue during its winter session. The proposals replace a similar motion submitted by National Council member Pirmin Bischof, providing for a tougher course of action to be taken in the case of data theft and use.

Although the Federal Council rejected Bischof’s motion, it nevertheless conceded that loopholes exist in this area.

Switzerland has been at the centre of cases involving stolen banking data for years now.

Determined to track down German tax evaders and to recover lost revenues, the German state of North Rhine-Westphalia has purchased several bank information discs over the past few years, containing information on German residents with untaxed assets held in Swiss banks. This decision has proven highly worthwhile and indeed lucrative for the German state, unleashing a tidal wave of voluntary declarations from individuals seeking to regularize their fiscal situation.

Germany’s Federal Constitutional Court permitted the use of such tax information at the end of 2010. At the time, the court ruled that information regarding alleged tax evaders, contained on discs provided by informants, may be used during criminal investigations, irrespective of whether or not the original means by which the data was obtained was deemed to be lawful.

While insisting that no one should be able to reduce or evade their tax obligations by either manipulating income or concealing assets in another state, German Finance Minister Wolfgang Schäuble warned that the purchase of tax data discs is no alternative to a reasonable statutory provision, pointing out that the purchase of illegally obtained information is merely a “second best solution”.

The state must ensure that its laws are implemented without recourse to collaboration with criminals, the minister argued, noting that this is only possible via the bilateral tax agreement brokered with Switzerland.

The tax accord negotiated with Switzerland provides for a lump sum tax to be imposed anonymously on hitherto undeclared German assets located in Swiss banks at tax rates of between 21% and 41%. Future capital gains are to be taxed as in Germany under the treaty.

Germany’s Social Democrats (SPD) and Green Party have opposed the treaty from the outset and have threatened to veto the accord in the Bundesrat or upper house of parliament, arguing that the provisions are too lenient. SPD-led states are determined to maintain pressure on tax evaders and intend to purchase tax data discs in future.

The tax agreement between Germany and Switzerland, aimed at resolving the longstanding issue of past tax avoidance, is due to enter into force on January 1, 2013. However, the fate of the accord still hangs in the balance.

TAGS: compliance | tax | offshore confidentiality | tax compliance | tax avoidance | law | banking | offshore | agreements | banking secrecy | withholding tax | Germany | Switzerland

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