Cash & Liquidity ManagementInvestment & FundingSwiss-US Deal Over Tax Evasion

Swiss-US Deal Over Tax Evasion

The Swiss government has done a deal with the US that allows its banks to disclose information on American clients with hidden accounts, a move that could resolve a long-running dispute between the countries over tax evasion.  

Scrutiny of tax havens in Europe and elsewhere is a hot topic at the moment and the US, in common with other countries using the so-called ‘Lagarde list’ to target nationals using Switzerland to avoid tax, is keen to improve oversight and reporting between the two nations.  

According to Eveline Widmer-Schlumpf, Switzerland’s finance minister, the deal enables Swiss banks to accept an offer by the US government to hand over broad client details and pay fines in exchange for a promise not to indict any banks. How ‘broad’ the client details shared are, covering individuals and perhaps some corporations, remains to be seen as the Swiss are notoriously secretive about their banking system and customers.  

It is understood though that client names and account data will be shared and non-prosecution agreements could be struck with co-operating Swiss banks. The move comes as part of a wider US move to crack down on tax evasion as indicated by its Foreign Account Tax Compliance Act (FATCA).  

“This is an important step for the banks; it will apparently allow them to disclose statistical information, such as the number of accounts with US beneficial owners, the number of accounts with foreign corporations or foundations, and the amount of assets under management,” said Scott Michel, a tax lawyer in Washington DC who was speaking to the ‘New York Times’. “The IRS and DoJ can use this information as the basis for financial penalties under settlement agreements, which might be deferred-prosecution agreements or non-prosecution agreements.”

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