Two developments in Swiss banking secrecy are in the news. See BNA Daily Tax Report 220 DTR GG-1 and GG-3 (Nov. 17, 2010)
First, the US has withdrawn its John Doe summons in the UBS case after the Swiss bank satisfied the conditions of the agreement regarding review of secret client accounts that resulted in the bank's turning over more than 4000 client account holder names to the US (with additional accountholder names potentially to be revealed as pending litigation is decided). The bank withheld information on several hundred, however, because the accounts did not meet the Swiss criteria for release or because the account holders had already declared the accounts to the IRS. Of course, that means that those account holders should be glad that they self-identified their secret accounts--they would otherwise have been disclosed and not able to take advantage of the rather generous conditions provided for voluntary disclosers.
Second, UBS announced on Nov. 16 that changes to the European tax treaties with Switzerland would require new withholding on accounts that might lead up to $40 billion dollars of client money to be taken out of the bank. (That's about 40% of the total offshore assets held by European clients at UBS last year.) The existing agreement with the EU requires withholding on interest earnings in Swiss bank accounts held by EU nationals. But deals underway with the UK and Germany would possibly tax dividends, capital gains and other earnings, resulting in considerable additional withholding by the bank and loss of the "tax evasion" potential of Swiss banking secrecy, even though Swiss banks expect to be permitted to maintain the secrecy of account holders under the new treaties with the withholding requirements.
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