Withholding-tax agreements are the right choice to thwart tax dodgers and maintain banking privacy at the same time, Swiss Finance Minister Eveline Widmer-Schlumpf said.
“This model of taxation can ensure that the assets deposited in Switzerland are tax compliant,” Widmer-Schlumpf wrote in an editorial in France’s Le Monde newspaper. It makes sure “taxpayers pay their taxes, while protecting the privacy of customers of financial institutions,” she said.
Switzerland favors withholding tax arrangements for non- resident bank-account holders, rather than the European Union’s preferred automatic exchange of information model. Austria and Luxembourg this week announced plans that bring them more in line with the EU’s position, leaving Switzerland increasingly isolated and clinging to its bilateral accords with the U.K. and Austria, which still shield client identities.
“This solution is much more effective than an automatic exchange of information, which produces an amount of data not always workable and doesn’t flush out all fraudsters,” Widmer- Schlumpf said. “With the model of taxing at the source, nobody escapes the taxman.”
As part of the agreements with the U.K. and Austria, Swiss banks take a levy on capital gains earned by citizens of those countries. The revenue generated goes to the British Treasury and the Austrian Finance Ministry, while clients’ names remain secret. While Swiss authorities are in talks with Italy and Greece on similar deals, a proposed accord with Germany collapsed in December after lawmakers in Germany’s upper house of parliament rejected the deal.
Luxembourg’s Prime Minister Jean-Claude Juncker said yesterday that his country will begin the automatic exchange of tax data in 2015, while Austria’s government said on April 9 that it may revise its laws shielding information about foreign account holders.
Switzerland is “determined to fight abuse, prove that it’s a reliable partner and make every effort to optimize the conditions for its financial sector,” Widmer-Schlumpf said. “We do expect the international community to recognize the efforts made and not to attack Switzerland by threating countermeasures.”
Jerome Cahuzac, who resigned as French budget minister last month, said April 2 that he’d been lying for months about an undeclared Swiss bank account.
To contact the editor responsible for this story: Craig Stirling at email@example.com