The chairman of the Swiss Bankers Association, Patrick Odier, urged the Swiss people and the government to “put up a united front” and work out a solution that applies to all countries. He said US and Swiss politicians must work with existing accords.
“The solution must be globally applicable, be definitive and correspond to existing Swiss law,” Odier told the association at a meeting in Basel, Switzerland, according to his prepared remarks.
“A second bilateral treaty has to be avoided and the US needs to respect this.”
A double taxation agreement was approved by Switzerland in 2009, but is still awaiting ratification by the US Senate.
The United States last year forced Switzerland to agree to a separate bilateral tax treaty – and to break its own banking secrecy laws – in order to prevent the country’s biggest bank, UBS AG, from facing damaging civil litigation in US courts for helping thousands of Americans hide money in offshore accounts.
UBS was forced to hand over the names of thousands of American account holders and pay a US$780-million fine in a landmark case that pierced Switzerland’s storied tradition of banking secrecy. Swiss lawmakers are due to approve a revised tax agreement with the US this fall.
But Switzerland now fears that US officials may try to bring charges against one or more Swiss banks, including Credit Suisse Group, if the country does not divulge more details on how many Americans may have used Swiss banks to avoid paying US taxes.
“The United States is trying to build up pressure. It’s looking for someone to pay its debts and finance its wars,” Christophe Darbellay, head of the centrist Christian Democratic People’s Party, was quoted as saying by the Zurich daily Blick on Monday.
The Swiss government has also faced similar pressure outside the United States, and has recently signed revised agreements with several countries, including Germany and Britain, to provide greater help to foreign tax authorities seeking information on their citizens’ accounts in the Alpine nation.
Taken together, the moves have been widely seen as the beginning of the end of Switzerland’s strict policy of non-cooperation with foreign tax authorities.
“The US should take the tax agreements with Germany and the United Kingdom as an example. Bilateral problems between friendly nations should be solved by mutual agreement,” Odier said.
The agreements with Germany and Britain were both reached in August. Swiss banks will pay an up-front guarantee of two billion francs (nearly US$2.7 billion) to Germany and 500 million Swiss francs (US$630 million; £385 million) to Britain.
German residents who haven’t previously declared existing assets in Switzerland will have the chance to make a one-time tax payment between 19 per cent and 34 per cent of those assets, or to declare them to German authorities.
Similarly, British clients will have the option of making an anonymous one-time payment for past taxes owed, or declaring their assets to British authorities.
The Swiss Bankers Association also said there could be rough times ahead because of the strong franc and new banking requirements to boost capital holdings.
The value of the franc has risen sharply as a safe haven for investors, but that has made Swiss exports and tourism more expensive, driving down profits.
Banks must also meet new rules to gradually increase their capital cushions, eating into the amount they can invest.
But the trade group reported that Swiss banks’ combined assets rose slightly to 2.7 trillion francs, and generated earnings of 61.5 billion francs in 2010 — an increase of 13.4 per cent in earnings on the year.
The Swiss currency almost reached parity with the euro before the Swiss National Bank stepped in last month by pumping francs into the markets.
Switzerland’s government says the country’s currency is still too strong, despite measures taken to make it less attractive to foreign investors.
On Monday, the exchange rate was 1.10 francs to the euro.