Cracking down on tax evasion in Switzerland
Looking at the lake, I was wondering if my contact would come. Gallons of water were steadily flowing out of the Jet d’Eau nozzle on the left bank. No wind apparently. When I had called him to discuss the consequences of the current crackdown on the Swiss banking industry by the OECD countries, he had just said: “Come and see me. Let’s discuss here”. He meant Geneva.
The man was a tax lawyer recently established in the city to serve its clients, most of whom were French industrial families. Maybe it could be worth the trip, I had thought, maybe he would be able to tip me off on some stories. The train ride from Paris had been smooth and calm, flat and green landscapes flowing past the windowpane. Daylight was almost gone now. I was standing on the pier, in front of the Beau Rivage hotel. “6 pm in front of the Beau Rivage hotel”, he had said..
He arrived on foot, walking southbound on the pier, a stocky man with a fine hairdo and a camel overcoat. I knew his picture only. Another Paris-based lawyer, with whom I had worked as a former lawyer myself, had put me in contact with him. Yes, it was definitely him*.
“A lot of American and European money is gone, for sure. In Geneva, the word is that 2,000 to 3,000 billion of Swiss francs were withdrawn from the country since 2009”. After a 10-minute walk, we entered a café at the end of the rue de la Confédération. Seated on a red leather-bound chair, with a view on the street, I listened to the tax lawyer. 2,000 to 3,000 billion vanished? Did it mean that Swiss bankers were out of work now? “Not quite. Because the same amount flowed in, but from other countries”. From Argentina and Brazil, through Uruguay, first, he said. From Asia then, and Russia. “African despots and their family still have their money in Switzerland, too”, he added. What was all that fuss about then? Everything had to change so that everything could stay the same (I am a fan of Visconti’s Gattopardo, can not help quoting it in every situation)? “No. Switzerland will basically have forgone bank secrecy in 2018. This is a huge change,” he answered.
Bank secrecy was codified by a law dating back to 1934, the Federal Act on Banks and Savings Banks, generally known as the Banking Law. The Banking law makes it a criminal offense for a Swiss bank to reveal the name of an account holder, regardless of the holder’s nationality. It does not mean, however, that the holder’s identity is impossible to retrieve. All bank accounts, even the numbered ones, are linked to an identified individual. And a Swiss prosecutor or a judge can issue an order to grant law enforcement authorities access to the information if deemed relevant to a criminal investigation.
Anyway, this secrecy was living its final days, at least for foreigners. Under constant pressure since 2009 from the US and from European countries, the Swiss Federal Government proposed on January 15, 2015 two draft laws that would effectively get rid of bank secrecy for offshore accounts and allow the automatic exchange of an account-holder’s information with foreign tax authorities. Even with a possible referendum on the matter, which could be held in September 2016, the laws could come into force at the beginning of 2017, with the first automatic exchange of information taking place in 2018. Switzerland added that it would decide at a later stage this year which countries to exchange data with.
“All EU countries will be concerned. For the French account holders, the impact of the coming set of rules is already real”, said the tax lawyer, swallowing part of a sugar-topped cake, a scone maybe. His hairdo, slicked back brown hair, was untouched. He looked nice, a fine pick for Geneva I thought (I was born around here, on the French side of the border). Without warning, he then took out a document from his inside pocket and handed it to me. It was a letter sent by UBS to a French client, with the name of the latter redacted. “ Nous vous prions de bien vouloir signer le formulaire de déclaration ci-joint : Imposition des revenus de l’épargne par l’UE – Autorisation de divulgation volontaire”, it read. And then: “En signant ce formulaire de déclaration, vous autorisez UBS à révéler à l’Administration fédérale des contributions (AFC) en Suisse votre nom, adresse et numéro de compte bancaire (…). Pour sa part, l’AFC transmettera les informations contenues dans la déclaration aux autorités fiscales françaises compétentes”.
Please, sign this document releasing us from our bank secrecy duty and allowing us to send your account information to your tax authorities in France – through the Swiss tax authorities though. That was basically what the document said. “Every french holder of an UBS account received it, commented the tax lawyer, whose cake was by now history. Should they refuse to sign the document, UBS will close their account and give them a check that they won’t be able to cash *in* without Bercy noticing it.” Wasn’t there a sparkle in his eyes, when he said this? Maybe he was thinking about all these new clients to advise. Or maybe I was too imaginative a reporter.
He was standing now, he had to go. It has been nice meeting you, yes, yes, nice meeting you too. Say hello to R, (he meant the lawyer in Paris), he added. Sure will, and he was gone. Finishing my hot chocolate, I was thinking that I definitely had to meet someone at Bercy.
* The identities of the tax lawyer in Geneva and the tax lawyer in Paris are not disclosed, as both of them accepted to talk on condition of anonymity.