Bank Secrecy Bites the Dust in Europeby
Switzerland, Austria and Luxembourg announced a relaxation of their banking secrecy laws on Friday (13 March) following mounting pressures on both sides of the Atlantic to crack down non-cooperating tax zones.
The news comes only one day after Liechtenstein and Andorra made similar declarations, as a number of financial centres around the world attempt to pre-empt any decision coming out of the G20 leaders summit on 2 April.
As western governments feel the pinch due to expensive stimulus spending projects coupled with reduced tax receipts, the spotlight has been turned on a handful of geographic locations that profit by harbouring capital owned by companies and wealthy individuals from abroad.
The Swiss government said on Friday that it intends to adopt OECD standards on the sharing of banking information between different countries, citing its desire to avoid being placed on the organization's 'black list' of tax havens.
"If Switzerland were to wind up on a black list it wouldn't only hurt the banking sector," Finance Minister, Hans-Rudolf Merz, said at a press conference in Bern implying that the economy as a whole would suffer.
In the past, Switzerland has said that signing up to OECD standards would compromise the banking secrecy of its clients.
Switzerland's largest bank, UBS (UBS), last month handed over the names of 300 customers to the US government after it produced strong evidence they were avoiding paying tax.
It is estimated that Switzerland holds around $2 trillion worth of capital from abroad reports the BBC.
In a separate announcement on Friday, Luxembourg also said it would cooperate with tax authorities from other countries but will only provide client details once 'concrete proof' of tax evasion is provided.
For its part, Austria said will renegotiate current agreements on banking secrecy in the fight against tax fraud and evasion its finance minister, Josef Proell, said on Friday.
It too has only agreed to hand over information once supplied with evidence of tax evasion by individuals with accounts in the country.
"There won't be an automatic exchange of information, but we will renegotiate a number of the 80 tax agreements that we have with other countries," Mr Proell said in Vienna.
"We have been fighting tax evasion and fraud in the past, and we will continue to do so," he added.
France, which has lead calls in recent weeks for a comprehensive review of the ‘uncooperative jurisdictions', was initially guarded in its response to the news.
"The devil is in the details," said French Finance Minister, Christine Lagarde, in Paris. "We must go all the way and see if banking secrecy is sufficiently lifted."
UK Prime Minister Gordon Brown said the changes were "the beginning of the end of tax havens." "Tax evasion, which costs the global economy billions of pounds each year, will become more difficult in future."