Swiss banks to ask for ‘tax honesty’ from foreign clients

Last Updated: Sunday, November 15, 2009 - 18:11

Geneva: Switzerland`s secretive banks are considering landmark plans to require that their foreign clients conform to personal taxation requirements abroad, a leading banker said in an interview on Sunday.

Patrick Odier, head of the Swiss bankers` association and a senior partner at private bank Lombard Odier, told the newspaper NZZ am Sonntag that the industry was studying such a step alongside more extensive taxation on foreign savers in Switzerland.

"I also want to go a step further," Odier was quoted as
saying. "We, the banks, must introduce a new business model where
tax honesty is the goal when new money is taken in," he said,
adding that such an approach must "clearly" be the focus of
future business activities.

"We`re still working on the details. It could, for
example, take the form of a personal declaration: the client
would confirm with his signature that his money is properly
taxed."

"We want to work out a really credible solution," he
added.

However, Odier said such a step could only apply to
countries that enter into a bilateral agreement with the
Swiss.

Swiss banks have been at the heart of a renewed
international pressure in recent years over tax evasion,
including bruising multi-billion dollar litigation against the
country`s biggest bank UBS in the United States.

Neighbouring European countries and the G20 group of
leading economies have claimed that Switzerland`s banking
secrecy law encourages foreign clients to hide their revenue
from domestic tax authorities in Swiss bank accounts.

The NZZ am Sonntag said that Odier`s comments marked a
"new tone" and signalled a "radical change in course" in the
Swiss banking industry`s approach to foreign clients.

Traditionally, some Swiss banks have been prone to turn a
blind eye on a foreign client`s tax affairs, while local legal
firms were more likely to offer "tax optimisation" services
for wealthy clients.

In recent years Switzerland has levied a withholding tax
on interest earned by EU residents with Swiss savings
accounts, under an agreement to pay part of the revenues back
to the European Union.

However, loopholes in the agreement have been criticised,
while the deal only applies to savings accounts, not other
investments.

Bureau Report



First Published: Sunday, November 15, 2009 - 18:11

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