Swiss Banks Welcome Rejection of Germany Tax Accord, Study ShowsGiles Broom
Swiss banks welcome the collapse of an accord with Germany that would have imposed new taxes on German clients in a bid to end a dispute over tax evasion, Ernst & Young said.
About 72 percent of 120 Swiss banks surveyed see the demise of the agreement as positive, Ernst & Young said in a report today.
It’s “a remarkable finding,” Patrick Schwaller, a partner at Ernst & Young in Zurich, said in an e-mailed statement. Banks will be able “to avoid the costs of implementation and the resulting immediate outflow of client assets,” he said.
The accord was blocked by opposition lawmakers in Germany’s upper house of the Parliament in November, who said it contained too many loopholes for tax evaders. The collapse of the deal, following the ratification of similar agreements with the U.K. and Austria, was a setback as it would have kept client identities secret, the Swiss Bankers Association, which represents more than 300 banks, said at the time.
Swiss banks are trying to stem withdrawals by European customers concerned about a widening hunt for tax dodgers after banking secrecy started to crumble when the U.S. sued UBS AG four years ago.
Only 26 percent of banks surveyed expect net client outflows while new withholding tax deals are introduced, with new money helping to compensate for withdrawals.
In the absence of the accord, most banks aren’t introducing new due diligence measures regarding the tax status of German customers, Ernst & Young said.
Still, compliance and tax transparency are among the three most important topics for bank management in the next six to 12 months, the survey found. Implementing new capital requirements linked to international standards known as Basel III is also near the top of agenda for Swiss banks, Ernst & Young said.