Swiss Plan to Lift Banks’ Veil of Secrecy: An Article Authored by Paul Oliveira, CPA from KLR - Accounting Firm Boston, Massachusetts, Providence, Rhode Island

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Swiss Plan to Lift Banks’ Veil of Secrecy

posted Apr 16, 2015 by Paul Oliveira, CPA

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Switzerland unveiled draft legislation that would lift the country’s decades-long veil of bank secrecy.

Switzerland’s tradition of bank secrecy has been taking increasing hits as cash-strapped nations around the globe try to crack down on tax evasion. Over the past two years, Bern has signed on to an international convention setting the framework for countries to help each other with tax information requests and an international agreement on the automatic exchange of information. The country has already entered a number of bilateral agreements with the U.K. and Australia, and is currently negotiating a deal with the U.S.

Consultations begin

The Swiss government has launched a three-month consultation on the two proposed bills that would let the country fulfill those agreements. Currently, Switzerland shares information about foreigners holding offshore accounts in the nation only if it receives a request from a foreign tax authority.

If the proposed legislation becomes law, Switzerland will “spontaneously” inform foreign tax authorities if it comes across information that could be of interest to them — such as property ownership. If passed, European countries will automatically receive names, addresses, tax identification numbers, and dates of birth of Swiss bank account holders living in their country.

It also will automatically exchange with some foreign tax officials such information as foreign account holders’ bank balances, as well as interest and dividend income data.

A lengthy path ahead

In February, Hong Kong and Shanghai Banking Corporation (HSBC) helped clients hide $100 billion in secret Swiss accounts, and reports have shown that Swiss banks carry $2 trillion of foreign money, which is more than any other country.

The consultations will run until April 21. The final proposals will go to the Swiss parliament, where they may face some opposition. If necessary, the proposals may face a popular referendum.

The government has said it hopes parliament will be able to discuss the proposals this fall, which would indicate the laws could come into effect at the start of 2017, even with a referendum. The first automatic exchange of information would then take place in 2018.