Tax deal with US pressures Swiss banks
AFP · 4 Dec 2012, 23:55
Published: 04 Dec 2012 23:55 GMT+01:00
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Bern said the agreement, signed on Monday in Washington, will bring Switzerland in line with the US Foreign Account Tax Compliance Act (FATCA), a source of dispute between both countries since it was announced in March 2010.
It "requires that foreign financial institutions reach an agreement with US tax authorities in which they are obliged to transfer information about identified US accounts," Switzerland's Federal Department of Finance said in a statement.
Under FATCA legislation, banks that fail to share information with Washington if they do not have the authorization of the account holder must charge a 30-percent withholding tax on US clients' assets, the statement continued.
Before the pact passes into law — most likely on January 1st, 2014 — it must be approved by Switzerland's federal cabinet on January 9th, and then by the country's parliament later in the year.
The Swiss announcement follows a joint declaration in July by Washington and five other European countries — Britain, France, Germany, Italy and Spain — that they had agreed to fight offshore tax evasion through automatic information exchanges.
The FATCA law is controversial in many countries because it requires banks to reveal information about their clients.
Until now, tax agreements have only provided for the exchange of information "on demand," meaning a country would already suspect possible tax evasion before requesting the information.
Two senior US Democratic senators, Dick Durbin and Carl Levin, say tax-haven abuse costs US taxpayers an estimated $100 billion a year in lost revenue.