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Greek deposits in Switzerland without a retroactive tax

05 February 2014 / 15:02:24  GRReporter
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Yesterday's meeting of Ministers of Finance, of Greece Yiannis Stournaras, and Switzerland Eveline Widmer-Schlumpf, dedicated to the issue of retroactive taxation of deposits of Greek citizens in Switzerland, did not work. The negotiations between the two parties have continued for nearly four years, since March 2010, reaching no agreement. The Minister of Finance of Switzerland has just indicated the direction in which the negotiations could continue, "Models for non-taxable accounts in Swiss banks established in the past are now considered outdated. We need to look for other ways."

The "outdated models" from "the past", mentioned by Evelyn Widmer-Schlumpf, are the agreements signed between Switzerland and the UK, and Germany, which provide for a single tax of 22% to 35% on deposits whose holders wish to remain anonymous and for paying in advance part of the amount that would be collected. In the case of the UK, which first signed the agreement with Switzerland, the amount is 500 million Swiss francs or slightly less than 400 million euro.

An advance payment was planned for Germany but it had not been made since the upper house of the country had rejected the agreement (the Social Democrats voted against it).

Contrary to the agreement with the UK, the one signed between Switzerland and Austria and enforced on 01. 01. 2013 does not provide for an advance payment. However, during the first year of implementation of the agreement, the treasury of Austria received 700 million Swiss francs or more than 550 million euro. Based on these agreements, those depositors who want to remain anonymous in the future will pay a "source tax".

The Greek side insists on enforcing the advance payment, as it wants to show some "trophy" of the negotiations with Switzerland.

Ministers of Finance, of Switzerland Eveline Widmer-Schlumpf, and Greece Yiannis Stournaras

According to sources, this "trophy" cannot exceed the amount received by the UK and certainly, it would not meet the public expectations in Greece.

Either way, the Swiss side has made it clear that there will be no advance payment in Greece, as it would be very difficult to achieve it, both technically and politically.

The bilateral agreements are not approved by all Swiss and everything shows that the regime negotiated with the UK and Austria is not applicable to Greece. This situation is reinforced by the fact that Switzerland was forced by the U.S. to sign, on 14 February 2013, the so-called Fatca (Foreign Account Tax Compliance Act), which requires Swiss banks to inform, after 1 July 2014, the U.S. authorities about U.S. citizens holding deposits abroad.

Contrary to common assessments, however, sources claim that the Swiss government does not believe that yesterday's meeting in Athens has "buried" the bilateral agreement on the taxation of the Greek accounts of the past in Swiss banks. "We have talked for three years already and we have made progress regarding the past; however, the issue relates to the future", a source close to the negotiations states for "Kathimerini" newspaper.

The two sides could reach an agreement on the "source tax" regarding the deposits of the past and then on data exchange within the Organisation for Economic Cooperation and Development. It seems that Switzerland is ready for such a step. "For those incomes that are taxed in Greece...," specifies another Swiss source familiar with the negotiations in detail. This specification refers to the income from shipping activities, which comprises a large part of Greek deposits in Swiss banks and which will continue to be non-taxable, even if it the "source tax" is enforced.

Eveline Widmer-Schlumpf has expressed the will of Switzerland for data exchange in respect of deposits from now on, quoting the relevant agreements signed between the Organisation for Economic Cooperation and Development and the G20. The Minister of Finance of Switzerland has however firmly rejected the possibility of repeating the UK taxation model in Greece. On 15 October 2013, Switzerland signed, as the 58th country, the agreement for administrative data exchange under the agreement of the Organisation for Economic Cooperation and Development. Preserving, in the future, the anonymity of depositors who have evaded taxes in their home country is now outdated and unacceptable due to the very course of events.

In any case, such a regulation would bring the Greek government only negatives in political terms. Firstly, it would return insignificant capital to Greece and secondly, it would impede the implementation of the future tax amnesty planned by the government. Furthermore, the data exchange that is already taking place would expel additional capital to other tax havens.

Tags: switzerlandGreek depositsAgreementAnonymous depositors
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