Swiss parliament rejected a bill designed to resolve a dispute over undeclared bank accounts held by U.S. citizens, potentially setting the stage for American prosecution of the country’s banks. Members of parliament’s lower house voted 123 to 63 against the bill, which would have allowed Swiss banks to cooperate with the U.S. and to settle a long-running dispute over wealthy American tax evaders. The government has said it has no plan B, in the event of the bill failing to pass. [Bloomberg]
Switzerland
Credit Suisse, UBS Care About (Not Being Known For Helping People Engage In) Tax Evasion Now
By Bess LevinTime was, you could count on Swiss banks to assist their clients in the business of not paying taxes, having practically written the book on how to go about keeping one’s assets a secret from prying eyes (Chapter 1: Discarded toothpaste containers make a great place to stash diamonds). Now? Not only are they no longer providing the service, they’re suddenly too good to associate with people whose hands aren’t clean. Read more »
This weekend Switzerland voted to … do something about executive pay? Maybe? I was a little frustrated reading the news reports because they didn’t really say what the Swiss actually did, so I went and found the actual resolution, and turns out it doesn’t either. Something something vote on executive pay:1
The shareholder meeting will vote each year the total amount of remuneration (money and value of benefits in kind) of the board of directors, of management, and of the the advisory committee. Each year it will elect the chairman of the board of directors and, one by one, members of the board of directors and the Compensation Committee as well as the independent representative. Pension funds will vote in the interest of beneficiaries and will communicate how they have voted. Shareholders may vote by absentee ballot electronically, but they can not be represented by a an affiliate of the company or a depositary;
So immediate fun simple questions like
- are you voting on last year’s pay, or next year’s pay?
- what happens if you vote no? do they get nothing? do you do another vote in a month? and
- since you apparently just vote on total amount of comp, can management/the board divvy it up however they feel like it?
remain totally unanswered. Read more »
The bank isn’t hiring anyone at the moment and current CEO Oswald Gruebel has said he’s not leaving anytime soon but, naturally, they’d like to be prepared when the moment comes. Would you or someone you know be the right person for the job? Prerequisites for the gig include “the charisma to run a place like UBS” and being any nationality but German. Read more »
The piano bar in Davos that is, where the Big Guy is headed this week for the first time ever. Once in Switzerland he’ll do whatever it is people do during the day (talk about Ideas?) and then presumably meet up with the gang (World Economic Forum mascots Nouriel Roubini, George Soros, et al) for some late night drunk karaoke at PB in the Tonic Hotel. If you’ve a request, get it in now. [Dealbook]
In the growing battle over stolen information, who can muster the most misplaced outrage? The French, for whom the ends (prosecuting tax evaders) justify the means (using a list stolen from HSBC)? Or the Swiss, defenders of the Eighth Commandment and erstwhile protectors of tax cheats from around the world?
Or bets are on the French.
“France is committing no fraud, the tax evaders are,” said Eric Woerth, budget minister, in an interview on Canal Plus. “What counts is that we obtained [the information] legally.”
Not covered by the amnestyThey’ve got another week, but as yet, UBS’ tax cheats private-banking clients aren’t putting up much of a fight to keep their information out of the hands of U.S. authorities.
Just two Americans–out of the 500 notified last month that they were to be outed–have filed an appeal, so far. Switzerland warned them that the jig was up on Nov. 24 and gave them a month to appeal. Another 4,000 people are to have their account data handed over to the Justice Dept. under an August deal between Switzerland and the U.S. government; nothing has yet been divulged.
Liechtenstein, and its citizens, have long been more than a little strange. All microstates are a little strange, being, like Liechtenstein the, polar political opposite of failed states.
Failed states are plagued by institutions too weak to prop up the flaccid rule of law, and thereby permitting “shadow institutions” (the black market, organized crime, official corruption, non-governmental bases of power) to garner such a mass of power and influence so as to tear apart the thin threads of justice and stability merely by the centrifugal force of their motion.
Microstates enjoy an artificially stable state by virtue of their globally envied institutions. Usually, these were created during formative times in global history. Often they were augmented by the highly centralized, even imperial rule in place when the borders were drawn. In Liechtenstein, Vaduz was lorded over by no feudal subject and therefore beholden only to the Emperor (making it the early 18th century, European equivalent of North Carolina for carpet bagging). When Napoleon dismantled the Holy Roman Empire, of which Liechtenstein had officially been member, the tiny Principality, unlike her peers, dissolved into a state with no fealty at all save to its local princes.
Come World War I and World War II, the entire country is basically a big safe deposit box for Europe.
Set the way forward machine to 2008-2009. Banking is getting clobbered. In other words, the institutions (primarily Swiss) of banking secrecy and investment acumen, which permitted a country which otherwise lacked the critical mass to be even remotely interesting, much less worth using as a safe haven, to hold it together, are under siege.
The only real question is: Will Liechtenstein be annexed by Switzerland, or Austria?
UK Seals Deal To End Liechtenstein Tax Havens [Times Online]
Believe it or not the United States and UBSSwitzerland are not anxious to release the details of their 20-Questions: Tax Evaders settlement just this minute (or Friday, when the settlement is due to be concluded). You would think the settlement some sort of public relations embarrassment for Switzerland by this metric.
The settlement is likely to include the handing over of some UBS client data to the U.S. but UBS will be spared paying a fine, U.S. government sources have said.
A second source also confirmed the details were unlikely to be made public on Friday.
There had been speculation the U.S. and Switzerland would wait until the end of September to finalize the settlement to wait until the end of a U.S. voluntary tax disclosure programme.
So, really, the voluntary disclosure program (don’t say amnesty) only applies if you weren’t totally screwed by UBS before you had a chance to dial IRS customer service and fess up. (Or hit the “disclose foreign black account” button in TurboTax, if you work for the Treasury.)
UBS Tax Deal Details Unlikely On Friday [Reuters]
Face it. There is no escape and you banks are so unpopular now that any hope you had at generating sympathy is gone gone gone. We want to know your customers. We want to know when you knew them. We want to know how you met them. We want to know who they know that you know. Brace yourself. This might be a bit uncomfortable.
The U.S. Internal Revenue Service (IRS) is preparing to pursue other foreign banks for allegedly facilitating tax evasion by wealthy Americans following its high-profile case against Switzerland’s UBS, an IRS official said on Monday.
UBS, Switzerland’s largest bank, in February acknowledged that it helped U.S. clients conceal assets from the U.S. government. It agreed to pay a $780 million fine and identify some of its American clients.
Meanwhile, don’t think we don’t see you, UBS, over there in the corner trying to get the United States to just drop the whole thing and let you gently set your clients adrift before Switzerland signs a new tax treaty with the United States to address the problem going forward (i.e. after you’ve moved the biggest clients to offshore subsidiary asset managers).
IRS says set to pursue “other banks” on tax evasion [Reuters]
While it may not be the place for tax avoiders (evaders) it’s still a Mecca for legitimate tax arbitrage. Convinced, with good reason, that they are about to be tagged with windfall profits taxes, green taxes, anti-petrol taxes, and “you are too profitable” taxes, a number of energy companies are moving to Swiss cantons, like Zug, to take advantage of promotions like 5 and 10 year tax holidays, pre-negotiated corporate tax rates and, occasionally, the personal tax rates for executives that remain valid for up to 20 years and a fistful of “C Permits” for your closest relatives and essential colleagues.
Over the past six months companies including offshore drilling contractors Noble Corp and Transocean, energy-focused engineering group Foster Wheeler and oilfield services company Weatherfield International have all announced plans to shift domicile to Switzerland.
“Switzerland has a stable and developed tax regime and a network of tax treaties with most countries where we operate,” Transocean Chief Executive Bob Long said in a statement in October, when it announced its move.
“Stable” being the key word here. Regulatory predictability is still, in some countries, an asset.
…in Zug, corporate tax is about 16 percent but can fall as low as 9.5 percent for companies that do most of their business outside Switzerland. That compares with an average global corporate tax rate of 25.9 percent, according to consultancy KPMG.
[...]
“One trend that we see is that particularly Bermuda-based companies are now moving to Switzerland,” said Martin Frey, a partner at law company Baker & McKenzie. “That may only partly be obviously for tax reasons, but also for security reasons and the fact that the Obama administration may go after them.”
I wouldn’t be surprised if the executive office building suddenly mutates a copy of the “expatriation is a death event” tax statutes and creates the “corporate expatiation is death event” tax, treating the corporate departure from the United States as a sale of all assets and leveling a tax on the hypothetical gains. Laws extending United States taxation to non-citizens in a similar way have been on the books since 1996. Effectively, the intent is to make sure that the departing ex-pat continued paying “their dues” long after they had left the country with no intention to return.
Is anyone really surprised that as expat tax terms stiffened in 2006 the United States saw an increasing number of citizens turning in their passports? We think that a little extreme, but wouldn’t blink twice at moving our little corporate headquarters out of the United States for friendlier lands if someone decided to level a punitive tax on snarky blogs.
Corporate oil booms in low-tax Switzerland [Reuters]
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