Home News Swiss banks plan tax requirement for foreign clients

Swiss banks plan tax requirement for foreign clients

Published on 16/11/2009

Geneva--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.

AFP/ Expatica