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Greece Targeting Tax Dodgers Seeks U.K. Model From Swiss

Swiss Government Panel Recommends Automatic Bank Data Exchange
Switzerland, which is trying to shake off its reputation as a tax haven after amassing $2.2 trillion of offshore assets, faces pressure from the European Union to join a system of automatic exchange of bank-account data. Photographer: Valentin Flauraud/Bloomberg

Greece’s chronic difficulties with tax evasion was a topic of discussion today when Finance Minister Yannis Stournaras met his Swiss counterpart Eveline Widmer-Schlumpf in Athens.

“We reiterated that we want the British model” for Greece, Stournaras said after the meeting, referring to a 2011 withholding tax agreement between Switzerland and the U.K. “We want all Greeks, including those who held money in Switzerland to participate in the fiscal adjustment burden.”

Talks on unreported Greek funds have dragged on since 2011 and progress toward an agreement would provide a boost for the Greek government, which vowed to clamp down on tax evasion as part of its 240 billion-euro ($324 billion) bailout from the euro area and the International Monetary Fund. The country was owed 63 billion euros in unpaid taxes, fines and loans at the end of November, up from 56 billion euros at the start of 2013, according to Greek Finance Ministry data.

Discussions are aimed at finding a solution on how to deal with deposits retroactively, and will hopefully be concluded “soon,” said Widmer-Schlumpf, whose visit to Athens is linked to Greece’s six-month presidency of the European Union. Any agreement would need to be consistent with Swiss law, she said. Talks will continue on a technical level, the Swiss Finance Ministry said in a statement.

Tax Haven

Switzerland is trying to shake off its reputation as a tax haven after amassing $2.2 trillion of assets from wealthy clients living outside the country. As well as its agreement with the U.K., it also reached a withholding tax agreement with Austria, while a similar treaty with Germany failed because of parliamentary opposition in Berlin.

While no official numbers exist, Greeks may have hidden some 42 billion francs ($47 billion) in Swiss accounts, according to a 2009 report from Helvea SA, a Geneva-based brokerage. Former Greek Finance Minister Filippos Sachinidis said in April 2012 that a decline in income from retention taxes on Swiss accounts since 2009 showed that Greeks may have been pulling their money out of Switzerland and toward countries not subject to the implementation of EU law.

A European Commission task force charged with helping Greece implement structural changes to its economy and public services said in a report in October that there are “signs of increased efficiency” in the country’s tax collection, with the number of completed audits of large taxpayers more than doubling in the first seven months of 2013 compared with 2012. Last year the government appointed Haris Theoharis as general secretary of an independent public revenue authority, one of the country’s bailout conditions.

Fight Evasion

The overhaul of the country’s tax system is creating a “robust and stable framework that can support the country’s fiscal adjustment effort, while fairly putting weight on fighting tax evasion,” Stournaras told a parliament committee in November.

Still, for many Greeks who have seen their tax burden increase while wages and pensions are cut, a scandal over the so-called Lagarde list of 2,062 Greeks with deposits at a branch of HSBC Holdings Plc in Geneva taps into a perception that wealthy Greeks continue to evade taxes. Former Finance Minister George Papaconstantinou, who negotiated the country’s first bailout in May 2010, is being prosecuted for allegedly removing the name of relatives from the list, which was given to the Greek government by France’s then-finance minister, Christine Lagarde. Papaconstantinou denies any wrongdoing.

In 2009, Switzerland agreed to meet international standards to avoid being blacklisted as a tax haven by the Organization for Economic Cooperation and Development. Last year, it also decided to help develop global standards for exchanging data within the framework of the OECD.

For Greek “public opinion, tax evasion continues to be a problem,” said George Tzogopoulos, a research fellow at the Athens-based Hellenic Foundation for European & Foreign Policy, before the meeting. “An agreement would show that it is determined to deal with the problem.”

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