The U.S. government’s efforts to limit, punish and deter offshore tax evasion have been a frequent subject on this blog. The fruits of those efforts have been so appealing to other nations, however, that some countries want to reach similar terms with the Swiss government to prevent their own citizens from sheltering assets from taxation in the Alpine nation.
In particular, Switzerland’s northern neighbor wants to achieve an agreement that would require Swiss financial institutions to provide information on individual clients’ accounts. But there is one problem: Germany and Switzerland had already come to terms on a deal that would require German citizens to pay back taxes on their Swiss accounts and would provide for future taxation of interest earned on the accounts. Importantly, however, the account holders would not be named.
Wishing to preserve the anonymity of account holders, Swiss authorities are loath to go back on that agreement. The deal is not yet final, however, and some of Germany’s Social Democrats have vowed to defeat it before it can gain the required approval of the German legislature. Members of that party have decried the current concord as unfair and have likened the sturdiness of the system in place to catch tax evasion to a piece of Swiss cheese.
As we have seen in posts regarding offshore reporting requirements, the Internal Revenue Service and the Department of Justice are becoming increasingly vigilant about taxpayers who hide assets overseas. Spurred on by their success, other countries are pushing for greater transparency in the Swiss banking industry, which, if achieved, would place further emphasis on the need to be compliant with all IRS rules for assets placed in foreign countries.
Source: Reuters, “Germany’s Social Democrats want to renegotiate Swiss tax deal,” Annika Breidthardt and Matthias Baehr, Aug. 21, 2012
• Some taxpayers accused of violating offshore account rules could potentially face time in jail. If you would like more information on my firm, please visit my Irvine offshore bank account page.