Swiss say will no longer accept untaxed money

25. Feb. 2010

BERNE - Switzerland will no longer accept untaxed money into its banks as it tries to ease pressure on its $2 trillion offshore banking industry from key trading partners seeking to boost tax revenues, it said on Thursday.

Crisis in Credit

As it unveiled measures on how to foster the financial services industry on Thursday, the Swiss government also said it wanted to find a solution for the estimated $600-700 billion of undeclared assets still hidden in the country.

"We are not interested in untaxed money," finance minister Hans-Rudolf Merz told reporters.

The government has dropped the idea of seeking a pan-European deal as a way to improve EU market access for its firms and would instead seek to resolve the issue of untaxed money bilaterally with each country, he said.

He did not specify how Switzerland could do this in practice and reiterated a general commitment to embracing international standards for cooperation in tax matters that have been drafted by the Organization for Economic Cooperation and Development.

Switzerland also fell short of offering full transparency to its European Union partners as it said it would not accept the practice of automatic exchange of information relevant for tax purposes in use in all EU states but Luxembourg and Austri.

"Automatic exchange of information would be the end of bank secrecy, and I believe it would greatly damage the Swiss financial market," Merz said.

Switzerland, the world's largest offshore financial center and home to UBS (UBS.N)(UBSN.VX), Credit Suisse (CSGN.VX) and Julius Baer (BAER.VX), fears opening up too much would force money out of the Alpine nation to the benefit of rising financial centers in Asia.

Even though Switzerland offered on March 13 to help foreign authorities fight tax evasion, cash-strapped European Union countries cannot directly access bank data on assets hidden in secret Swiss accounts, known as "Schwarzgeld" or black money.

A damning U.S. tax probe into help UBS gave to Americans seeking to hide money abroad has also weakened Switzerland's international status.

Large neighbors France, Germany and Italy are also keeping the world's largest wealth manager under pressure through a combination of tax amnesties and threats to acquire Swiss bank data from informants.
[Reuters]