GENEVA – Switzerland’s tax disputes with the United States and some European nations are “an economic war” putting 20,000 jobs at risk, the CEO of Swiss banking giant UBS AG has been quoted as saying.
Switzerland has recently tried to shed its image as a tax haven, signing deals with the United States, Germany and Britain to provide greater assistance to foreign tax authorities seeking information on their citizens’ accounts in the Alpine nation.
But the tax agreements have drawn fire from Switzerland’s nationalist People’s Party, which won more than a quarter of the vote in last year’s general election, with some lawmakers saying they will try to block the treaties through referendums.
Sergio Ermotti, who was appointed CEO of Switzerland’s largest bank in November in the wake of a trading scandal, says Switzerland now is “stuck in the middle of economic warfare” and its opponents’ goal is to weaken UBS and the next biggest bank, Credit Suisse, according to Zurich Sunday newspaper SonntagsZeitung.
U.S. authorities in particular have dealt Switzerland and its banks several serious blows over the past few years, resulting in several significant concessions to Swiss banking secrecy. Investigations against at least 11 banks, including Credit Suisse, are still pending, on suspicion they too helped Americans hide money abroad, following the successful case against UBS AG, which had to pay a $780 million fine and hand over 4,450 clients’ files to Washington in 2010.
Since then, an amnesty program and the arrest of several Swiss bankers have given U.S. authorities ample ammunition to pursue some of the country’s other banks.
But Switzerland has insisted throughout its negotiations with other governments that it won’t accept any automatic transfer of information on foreign account holders — ensuring that a semblance of its banking secrecy remains in place.
“For us this is an economic war,” Ermotti was quoted as saying. “Since 2008, Switzerland has been attacked.”
The banks’ rivals seek a share of their combined foreign assets of 2.2 trillion Swiss francs ($2.42 trillion), forcing UBS to cut costs and imperiling 20,000 jobs, Ermotti also was quoted in the Sunday paper as saying.
Last month, Switzerland’s oldest bank, Wegelin & Co, announced it was selling most of its business after it was indicted in the U.S. for conspiring to help American clients hide more than $1.2 billion from the Internal Revenue Service.
Talks to resolve the long-running U.S.-Swiss tax spat over how to pursue suspected tax evaders recently suffered a blow when a Swiss court blocked the handover of one unnamed bank client’s data to U.S. authorities.
The Federal Administrative Court ruled that a 1996 treaty between Switzerland and the United States doesn’t allow the U.S. Internal Revenue Service to request the account details of potential tax cheats without clear evidence of fraudulent intent.
Germany has said its state coffers could increase by some €10 billion ($13 billion) next year after Switzerland agreed to a new tough bilateral tax evasion treaty. The agreement signed by officials from both countries in Switzerland earlier this month seeks to end a long-running dispute over German tax evaders who keep their money in Swiss bank accounts.
Switzerland also has agreed to increase the charge it levies on British taxpayers’ Swiss bank accounts after London demanded the same treatment as Germany. Switzerland had offered Germany a higher rate in an attempt to win over the country’s opposition Social Democrats.