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By Their Enemies Ye Shall Know Them
In the second deal of its kind signed within a month, those canny Swiss bankers have agreed to pay a mere £5billion (US$8.1 billion) in tax revenue to British tax authorities based on the unreported funds held by U.K. residents in their Swiss accounts.
The deal with the U.K. has wider implications because it applies in varying degrees to the “tax havens” in the British Crown colonies Jersey, Guernsey, and the Isle of Man, and the U.K. Overseas Territories including the Cayman Islands, Bermuda and others.
Earlier on August 10th the Swiss signed a similar deal with German tax authorities requiring Swiss banks to make an advance payment of US$2.5 billion in back taxes to Berlin based on undeclared German accounts at Swiss banks. The details of the U.K. deal can be found on the Swiss finance department website. They’re similar to those in the deal struck between the German and Swiss governments.
Under the terms of both deals the Swiss will turn over no names of Brits or Germans, thus preserving the historic principle of Swiss bank secrecy – or whatever remains of that once Swiss sacred ideal of financial privacy.
EU Savings Tax Example
The U.K. and German agreements mirror the system that the Swiss have used since 2005 in fulfilling the terms of so-called EU “savings tax directive.” The Swiss withhold tax on certain types of income paid to non-Swiss EU citizens’ accounts in Switzerland and pay the tax to the person’s home country tax collectors while allowing those customers to retain their anonymity.
Austria, Belgium and Luxembourg since 2005 have used the same withholding plan in order to preserve their bank secrecy laws. But even now the EU member state tax collectors are lobbying frantically for the goal they have always sought – a complete end to all bank secrecy, abolition of financial privacy and automatic exchange of tax information among governments upon demand.
This issue is expected to be addressed at an EU meeting in Cannes but observers think the Swiss deals make any expansion of EU taxing power unlikely, thank goodness.
Reactionary Left Loonies
Now about those enemies; it took no longer than the time required to bang out an email press release and press “send” for the loonies on the Left to go berserk.
That professional tax scold, Richard Murphy of the so-called “Tax Justice Network” (my prior comment about TJN here), in his usual restrained style, called the U.K.-Swiss deal “diabolical and stupid” and a deliberate act by the British coalition government “to encourage criminal tax evasion.”
The orchestrated anti-privacy, anti-tax competition chorus was swelled by Christian Aid‘s oddly similar conclusion that the UK-Swiss agreement “amounts to collusion with criminality and will seriously damage poor countries’ attempts to collect the billions they lose to tax dodgers.”
Satisfied Swiss
The Swiss news media judged that Switzerland has done reasonably well with the core of banking secrecy still intact. The newspaper, NZZ, said the biggest advantage for Switzerland “is that it succeeded in protecting the interests of the clients to an unexpectedly high degree. The fact that old problems could be solved without giving up privacy is of paramount importance to the Swiss finance industry,” it added.
So does this mean that Switzerland is no longer an offshore financial haven that foreigners can trust with their money?
Not hardly. In the wake of the horrendous UBS tax evasion scandal and with Credit Suisse under in the gun sights of the U.S. Internal Revenue Service, the Swiss, always supreme realists, have bent with the times – but not so far as to end Swiss bank secrecy. The days of foreign tax evasion are over. But they have demonstrated that enforcement of tax laws can and should be consistent with reasonable financial privacy.
Realistic Resistance
Switzerland has resisted to the greatest degree possible, pressures that other, less resolute nations could never withstand. That resistance can be traced to the nature and independence of the modern day descendants of the original Helvetian tribes — and their inherited as well as acquired financial DNA.
But another and most important reason is that Switzerland manages and controls trillions of dollars, euros, and muscular Swiss francs — more than one third of all the world’s offshore assets — and money does more than talk. Quietly and successfully that kind of wealth can and does resist the likes of EU bureaucrats and their radical Left supporters.
Current Swiss financial strength allowed the Bern government to achieve advantageous deals at a time when the U.K. and Germany, if not all the EU, are financially highly vulnerable. Switzerland has joined the global campaign against illegal tax avoidance, but on its own terms.
Zurich Opinion
Rob Vrijhof, a leading Zurich investment manager who serves on the Sovereign Society Council of Experts, tells me that “…many of the attacks on Swiss bank secrecy in the name of ‘justice’ are, in truth, attempts to eliminate cross border competition, to impose an international tax cartel, or to undermine Switzerland’s recognized status as a world financial center easily competing with the City in London or with Wall Street. None of that is going to happen.”
The important point here is the unyielding determination of the Swiss not to be dictated to by other nations or by the EU bureaucrats. For years they have withstood a barrage of malicious, distorted attacks from the EU, the Organization for Economic Co-operation and Development (OECD) and other assorted welfare state deficit spenders, led by the U.S. That record says much about the Swiss, and about both the nation’s past and future as an asset protection and offshore financial haven.
One other thought: compare the ability of London and Berlin to reach satisfactory Swiss tax collection arrangements with the tactics of Barack Obama’s IRS. The IRS would rather bully, threaten, arrest, indict and sue one of America’s oldest allies, its banks and citizens, thus Washington has no agreement with the Swiss on future tax collections.
Here at the Sovereign Society we continue to rank Switzerland as the world’s all-around, number one financial haven.
What You Can Do
The best of Switzerland still remains; banking, annuities, life insurance, experienced independent investment managers.
At the Sovereign Society we work with Swiss and other offshore bankers who, unlike UBS or Credit Suisse, can be trusted. We have agreements with reputable Swiss banks willing to accept accounts from Sovereign Society members. These arrangements are in full compliance with IRS and SEC rules and other U.S. laws.
As it has been since our founding 14 years ago, our staff is available to assist our members in opening a Swiss or other offshore account. Take advantage of these special banking arrangements and the advice of our offshore advisers — sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com
For new subscribers to my new monthly Offshore Confidential, the July issue was a special report on offshore banking, entitled “The Cornerstone of Your Financial Strategy.” We’ll send it to you along with a complete list of offshore banks and financial managers in more than 20 countries that accept accounts from our U.S. and other members. Click here.
Other Posts from the Author
- Are You Among the 23% Entitled to a Second Passport? - May 14th, 2012
- The Real Problem With the French Elections - May 4th, 2012
- The Life of a “Sovereign Individual” - April 24th, 2012
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hey bob, just googled bauman offshore confidential and got an article by you about hong kong … it was dated 2010 and you still had jack flader as a contact … care to give the people reading this blog an update on Mr. Flader??
BOB REPLIES: Mr. Flader ended his professional activities due to health concerns, sold his Hong Kong-based business and retired last year. He also resigned from the Sovereign Society Council of Experts at that time.
Bob,
A comment: It’s always an interesting concept, the subtle crossover and graying in the understanding of bona fide, no ifs, ands or buts, the vicissitudes of the definition of the word “privacy.” … Switzerland will continue to submit to the collectives governments. This is especially true of the U.S. government employing the badge and gun, threats through its corrupt system of jurisprudence and “you can take THAT to the bank too!” I admonish anyone that soft-peddles ANY idea that the Swiss can and will put their hand in your pocket, without your permission, simply to “satisfy” governments’ collective thugs. Tout au contraire, “mission creep” is and will continue to “evade” the bona fide understanding of privacy, as well as the metamorphosis of an individual’s freedom and liberty through the relentless changing of “definitions!” The truth is: your productive capacity will be taken by force and redistributed to the collective and its power elite. The beatings will continue… Will you submit to the “yoke and lash?” No one will breach the moral turpitude of exaction, theft by the collectives’ thugs, those who use coercion, and if necessary death to anyone who dares violate the collectives’ “legalized plunder!” You can take THAT to the bank as well! How about sanctity of bona fide private banks, the private contract and the definition of the word privacy? To “gray-out” the very understanding of what the Swiss have relented to is to lack understanding of exactly what self-inflicted terminal stupidity truly means! Switzerland, even with its stellar geographical beauty—is a place to be FROM! The wealth that has already fled Switzerland for other venues is an on-going process. Get out, while you still can! To trust the Swiss is to bust,To bust is hell, No trust, no bust, no hell. C’est la guerre,Capt. A.,Principality of Monaco