Bloomberg News

Swiss Banks May Have to Ensure Foreign Clients’ Tax Compliance

February 22, 2012

Feb. 22 (Bloomberg) -- Swiss banks must ensure foreign clients are tax-compliant in their home countries, according to proposals by Switzerland’s government that pave the way for approval of an accord with the U.S.

Banks will face stricter due-diligence requirements to prevent them from accepting untaxed assets, the Swiss government said today in an e-mailed statement. Foreign clients must also declare that funds managed in Swiss accounts are tax compliant, the government said.

“We can on the one hand preserve clients’ interest in safeguarding their privacy and on the other hand meet countries’ legitimate claims on taxing their citizens,” Finance Minister Eveline Widmer-Schlumpf said in the Swiss capital Bern.

The proposals are intended to garner support from the Swiss Social Democrats when Parliament next week votes on an amendment to a tax agreement with the U.S. Switzerland and the U.S. are holding separate talks to resolve an offshore tax evasion probe involving 11 Swiss financial firms after the Department of Justice indicted Wegelin & Co. on Feb. 2 for allegedly helping customers hide money from the Internal Revenue Service.

The Social Democrats said on Feb. 1 that they will only back the amendment if Switzerland breaks with its past role as a haven for untaxed assets. The amendment clarifies a 2009 accord with the U.S. and allows the handover of files in cases where the U.S. authorities don’t know the identities of American account holders.

Other Accords

Switzerland will seek agreements with other countries on untaxed funds from the past, known as legacy assets, according to today’s proposals. Measures could include self-declarations, one-time payments on untaxed assets and tax amnesties, the government said.

Going forward, Switzerland proposes self-declarations by clients and withholding tax agreements similar to those agreed with Germany and the U.K. last year.

Standards of administrative assistance should be improved, said the government, which will submit more detailed proposals by September.

--Editors: Dylan Griffiths, Keith Campbell.

To contact the reporter on this story: Klaus Wille in Zurich at kwille@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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