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Country Rankings - Switzerland

  • Sep 26, 2017   Switzerland: transparent

    Switzerland is also attempting to come to terms with this new culture of transparency, which is another irony given that it is the fifth-most transparent country in the world, according to Transparency International's most recent Corruption Perceptions Index. Incidentally, this makes it more transparent than France, Germany, and the United Kingdom, countries which have been leading proponents of measures to increase transparency in the area of taxation and company ownership. Of course, the Corruptions Perception Index is designed to measure how transparent or corrupt a country's public sector is, rather than its banking sector. But it does indicate at least that the Swiss Government is one of the more trustworthy governments around. And it is quite encouraging, when much of the world is about to flick the switch on automatic information of bulk financial account data, which is something of a journey into the unknown, that Switzerland is taking the issue of protecting personal data seriously. Will other jurisdictions be as judicious as Switzerland is expected to be with the personal financial information of thousands – possibly millions – of people. Many undoubtedly will, or at least try to (recently, digital records have a nasty habit of going missing or being misappropriated). But there are some jurisdictions due to exchange information under the CRS this month or next September that lurk in the depths of the Corruptions Perceptions Index. Russia, which has committed to automatic EoI from 2018, is 131st on the list of 176 jurisdictions. Mexico, which is making its first exchanges this month, isn't much further up the league in 123rd place. Not that this guarantees that information transmitted to these countries will be used for nefarious purposes. But no system is flawless, least of all one involving scores of tax authorities, hundreds of financial institutions, and millions of taxpayers.
    Source: https://www.tax-news.com/news/Swiss_Bankers_Urge_Care_In_Information_Exchange____75267.html

  • Sep 19, 2017   Switzerland: pariah

    Ironically, for a nation synonymous with neutrality, Switzerland now finds itself in the unwelcome position of international pariah. And this is largely as a result of other things it is synonymous with low taxes for the wealthy and multinationals, cast-iron banking secrecy, and a culture of individual privacy enshrined in law. Such an economic model is now simply incompatible with a world rushing headlong towards transparency, for better or for worse. Otherwise the Swiss authorities wouldn't have to host delegations from the likes of the European Parliament's "PANA" Committee. Nevertheless, it is a model that has served Switzerland very well. The CIA's World Factbook states that low corporate tax, combined with economic and political stability, exceptional infrastructure, and efficient capital markets "make Switzerland one of the most competitive economies in the world." GDP per head was an estimated USD59,400 in 2016, higher than in the United States, and in the world's top-20. However, there are signs that the strain is beginning to tell. In the United States, Swiss banks have been on the naughty step ever since the 2008 tax evasion affair involving Swiss banking giant UBS, and the frequency with which Swiss banks are linked to tax avoidance scandals elsewhere in the world, particularly in Europe, must have inflicted some reputational damage on the Swiss banking sector. We cannot draw a certain link between this and declining assets held by the Swiss banking sector, although it's surely more than a mere coincidence. While it's far from a crisis, it remains to be seen how far things will have to change for Switzerland to win international acceptance, and, indeed, how far Switzerland itself is prepared to go.
    Source: https://www.tax-news.com/news/EUs_PANA_Committee_Visits_Switzerland____75249.html

  • Jul 06, 2017   Switzerland: helpful

    One thing that definitely hasn't had its day, however, is tax code complexity – especially in jurisdictions with progressive tax regimes. Who could have imagined, when the first modern income taxes were introduced, largely in the 19th and early 20th centuries, how things would end up! Appropriately enough, since we have just explored an environmental theme, it's just as well that the business of taxation has for the most part gone digital, otherwise we'd be experiencing paper shortages. In the United Kingdom for example, Tolley's guide has expanded to almost 1,000 pages, and over in the US, former House of Representatives tax committee chairman Dave Camp (R – Michigan) was often heard to quip that the tax code is "ten times the size of the Bible with none of the good news." In an ideal world, we would be able to tear up national tax codes and start again from scratch, drafting new laws which reflected the realities of a technologically-driven, globalized economy and which recognized new ways of working. Perhaps then there'd be no need for BEPS. Back in the real world however, most countries merely patch and mend taxes. This tends to exacerbate the problem of complexity, perpetuates tax avoidance, and leaves taxpayers vulnerable to various anomalies, pitfalls, and legal trapdoors. It's a state of affairs that nobody likes, but which nobody can seem to get a grip of. If only governments would at least help taxpayers by publishing nice concise guides to their tax systems, instead of making them trawl through reams of impenetrable regulations and guidance. Like Switzerland just has, in fact!
    Source: http://www.tax-news.com/news/Switzerland_Publishes_Tax_System_Guidance____74555.html

  • Jun 13, 2017   Switzerland: unique

    Speaking of which, another major milestone on the worldwide implementation of BEPS measures was reached last week, when almost 70 countries signed the BEPS multilateral instrument (MLI), potentially adding substantially to the page count of thousands of bilateral double tax avoidance treaties. Generally, this development has been welcomed by tax professionals because the adoption of a single multilateral instrument by countries would avoid the painful and prolonged process of renegotiating approximately 3,000 tax treaties in order to make them BEPS-proof. However, as we've almost come to expect with the BEPS project as a whole, delve beneath the surface and things start getting complicated. Indeed, the MLI could be another example where one set of problems – tax treaty abuse – is replaced by another: complexity and uncertainty. Problematically, the MLI effectively gives jurisdictions flexibility to pick and choose which elements of the text to incorporate into all or parts of their tax treaty networks. And, inevitably, this has led jurisdictions to take a variety of different approaches to the MLI. For example, in the days since the Paris-held signing ceremony, Canada, Ireland, New Zealand, Switzerland, and the UK have indicated how they intend to amend their tax treaties, and it seems that no one policy is the same – uniquely, Switzerland will implement necessary changes through a combination of the MLI and bilateral renegotiations. Indeed, as jurisdictions seek to reconcile their approaches, it looks like a substantial amount of renegotiation is going to be unavoidable. And while these renegotiations shouldn't be on the same scale required if there weren't the MLI, this outcome isn't ideal. With countries choosing different options, life is going to be made yet more difficult for taxpayers with cross-border tax affairs, since they will need to somehow keep track of all these changes. Multinational companies with subsidiaries across many territories could be deeply affected by these measures. Will taxpayers be given new maps to help them navigate this ever-changing maze, or will they be left to find their own way out? That remains to be seen, but this is further evidence that tackling tax avoidance often leads to unintended consequences.
    Source: http://www.tax-news.com/news/Switzerland_Explains_BEPS_Changes_To_Treaty_Network____74436.html

  • Feb 21, 2017   Switzerland: uncertain

    However, arguably the most interesting development on the interest tax front in the past week or so was the rejection by Swiss voters of the country's corporate tax reforms. And I must confess that I didn't see this coming. Late polling seemed to suggest that just under half of voters were in favor of the reforms, but considerably fewer were intending to vote against them, with a substantial number of "don't knows" in between. There must have been some very effective lobbying from the "no" campaign in the days ahead of the vote. Or perhaps, as they approached the voting booth, most of the undecided thought, as a friend of mine originating from the north of England would say, "if in doubt, do nought." I am somewhat torn by this development. I'm a firm admirer of Switzerland's long-standing tradition of "direct democracy." And it could be argued that these tax reforms were foisted on Switzerland by the European Union from the start. But perhaps this system can be too obstructive. Did most of the people really know what they were voting for (or against)? Not that I'm being patronizing, or suggesting that Nanny knows best. But if people everywhere voted on such things, we probably wouldn't have seen any major changes to corporate tax laws since about 1970. Perhaps fears over falling investment and redundancies played a significant part in the outcome of the referendum, and if it did this is entirely understandable – the Government, which backs the reforms, has itself said that around 40,000 people are employed by companies befitting from special cantonal tax statuses. The flip side is that this casts a long shadow over the Swiss tax regime. The Government will have to go back and tinker with the legislation, but Switzerland's legislative process can be drawn out, and there's no guarantee the tinkerings will be accepted by lawmakers. It's a recipe for prolonged uncertainty, which can often turn out to be worse than the changes.
    Source: http://www.tax-news.com/news/Switzerland_Rejects_Corporate_Tax_Reform____73446.html

  • Dec 07, 2015   Switzerland: judicial

    From judiciousness to matters judicial, we now come to the case of Hervé Falciani, who was jailed, in absentia, by the Swiss Federal Court last week. He's the one who gathered (some say stole) information on 130,000 clients of HSBC bank in Switzerland while he was a systems engineer for the firm, before passing it on to the French Government, claiming the individuals he exposed were dodging taxes. France then forwarded the information, pass-the-parcel fashion, to other governments. Some, including HSBC, allege that he did this for personal profit. Others, including the man himself, say that it was a selfless act designed to bring wealthy tax evaders to account. So is he a hero or a villain? I suppose that depends on what the man's true motives were, and I suspect we'll probably never quite get to the truth on this matter. Either way, in my view, he deserves to get punished, even if he's unlikely to ever to receive it. Because, surely, a crime has taken place here, right? I find it very unlikely that HSBC gave Falciani permission to copy those files and pass them to a third party. As I've said before, tax evasion is wrong and deserves to be punished. Equally, receiving stolen goods is also a crime, especially if one has knowledge of their criminal provenance, and no matter how much governments attempt to dress up their dealings with the Falcianis of this world as being for the greater good (let's not forget that money has exchanged hands between those accused of data theft and tax authorities in previous similar cases), two wrongs don't make a right. What's more, how does Falciani know that all 130,000 are guilty of something? How many innocent people have had their private financial information proffered around Europe — and who knows how many other countries too? So well done Switzerland for keeping your head when all those about you seem to be losing theirs. And another thing, the EU will bend over backwards in an attempt to force its will on sovereign states when it suits it, especially in the area of tax – but there's currently no legal arrangements in place to extradite criminals from France to Switzerland? I find that strange.
    Source: http://www.tax-news.com/news/swiss_court_announces_sentence_for_hsbc_data_leak____69840.html

  • Sep 01, 2015   Switzerland: people power

    Sadly, it's the case in many countries that, save for putting an X next to someone's name on Election Day, people have very little say on government policy or the day-to-day running of the country. Switzerland, however, is something of an exception, with its system of "direct democracy," which allows citizens – who can manage to arm themselves with a sufficient number of signatures from their fellow countrymen – to challenge the Government's decisions and put their own ideas onto the legislative agenda. One of the latest people's initiatives goes to the very heart of what Switzerland stands for: individual privacy. Of course, for many people, including those driving the international tax agenda (the OECD, the European Commission, et al), "privacy" and "confidentiality" when included in the same sentence as "Switzerland" are merely euphemisms for "banking secrecy," which is a phrase normally used pejoratively these days: if you want to hide behind confidentiality laws, you must be up to something, is the political consensus. But it is tragic – and frankly a bit scary – that the desire to maintain a private life has become almost a crime in itself. I'm under no illusions that in most of the developed world, privacy is a thing of the past. Most people would be shocked to find out just how many agencies and private organizations hold their sensitive information on various databases, data protection laws or no data protection laws. Whether it would spark them into action in defence of their privacy, like it has in Switzerland, is moot; the genie is out of the bottle now. After all, we live in the age of social media, when millions – billions if Facebook's Mark Zuckerberg's recent claims are to be believed – seem compelled to share intimate details of their lives with the world. The Swiss Government is, quite predictably, recommending that parliament reject the people's initiative on the basis that it will hinder their fight against crime. However, I'd rather praise the Swiss system for allowing its people (over 100,000 of them signed the petition) to fight privacy's corner, rather than execrate the Government for opposing it. They can't all be criminals and crackpots.
    Source: http://www.tax-news.com/news/Swiss_Federal_Council_Opposes_Protection_Of_Privacy_Initiative_____68982.html

  • Mar 19, 2015   Switzerland: people power

    In an age of increasing voter apathy, of general disenchantment with mealy-mouthed style-over-substance politicians desperately trying to stay on-message, it was refreshing to see another example of Switzerland's "direct democracy" in action when a proposal to replace VAT with an environmental levy was rejected by the people. But can the people be given too much say on issues ranging from the mundane to the fundamental? I suppose it could be argued that democracy Swiss-style is potentially a hindrance to the political process. With Swiss voters able to demand a say at every level, from the federal right down to the communes, of which there are almost 3,000, it sounds like a recipe for legislative paralysis, a system in which proposed laws are endlessly debated and amended and never approved – isn't this what we elect politicians for in the first place? Well, it's true that it does take a long time to pass laws in Switzerland, referendum or no referendum. This is probably because lawmakers know that their actions could be scrutinized by the public, and they are therefore less inclined to take the easy way out and pass bad laws for the sake of political expedience, which often seems the case in some other countries. And this is no bad thing. In actual fact, the people's right to hold a referendum on a particular law is exercised quite sparingly (about 5 percent of the time) and a vote can only take place if 50,000 signatures in support of it are collected within 100 days of the publication of a bill. So it appears that these powers are being used quite sensibly. Direct democracy might subject the legislative framework to some degree of uncertainty, dictated as it is to a large extent by swings in public opinion. Yet, even if this is the case, it certainly hasn't harmed the Swiss economy. Switzerland is successful, prosperous and modern, and sits among the top ten wealthiest economies in terms of per capita income. In fact, you could say Switzerland works because of direct democracy; unlike those in other countries, Swiss politicians aren't given so much license to screw things up.
    Source: www.tax-news.com/news/Swiss_Voters_Reject_Proposal_To_Replace_VAT____67515.html

  • Mar 12, 2015   Switzerland: under siege

    Is there such a thing as banking secrecy anymore? It's certainly debatable. In Switzerland, still the epicenter of the private banking world, confidentiality laws remain on the statute books. But this fundamental pillar of the Swiss legal system is undoubtedly being weakened as Berne acquiesces to the transparency demands of foreign nations and plurilateral organizations, the latest of which was the joint declaration by Switzerland and Australia on the implementation of automatic information exchange in tax matters. Not that Switzerland can really be condemned for giving ground. It has been surrounded by the massed ranks of the world's tax inspectors for a number of years, and generally it hasn't given in without putting up a good fight. These days the phrase "banking secrecy" is used in a pejorative way, alongside other uncomplimentary descriptors of wealth management and offshore finance, like "tax haven,", and many people would probably denounce me for defending it. But in the hysteria that accompanies each new tax avoidance scandal in Europe, North America, and elsewhere, people tend to overlook the inexorable erosion of individual privacy brought about by each new international transparency initiative. I'd be interested to know how many of the government ministers who routinely praise the work of the OECD in this area have grasped what automatic exchange of information actually entails. Briefly, let me explain: "automatic" exchange of information means the periodic and bulk transmission of personal data between tax and other authorities, as opposed to information sent by one jurisdiction to another on request when there is sufficient grounds to suspect somebody of tax evasion. So it doesn't really matter whether you're guilty of anything or not anymore. Your precious personal and financial information could soon be beamed around the world without your consent, or, indeed, your knowledge. Not only this, we know how easy it is these days for data to leak, by accident, by design or by the sheer incompetence of the authority entrusted to secure the information. Is this a price worth paying to catch what is surely a relatively small number of people determined to evade tax? You probably know where I stand.
    Source: www.tax-news.com/news/Switzerland_Australia_To_Automatically_Share_Tax_Data____67461.html

  • Oct 23, 2014   Switzerland: browbeaten

    October 14, 2014, was a black day for national self-determination. For this is when Switzerland and the European Union signed a joint statement affirming the Swiss Government's commitment to abolish certain company laws in order to appease Brussels. A bit like the Double Irish, in the era of BEPS, corporate forms like Switzerland's domiciliary, holding and mixed companies, which effectively allow a company to split its profit from its substance, thereby avoiding some of Europe's high taxes, are never going to withstand international scrutiny. But the EU, or more precisely its taxation henchman the European Commission, was chipping away at Switzerland, a neutral and fiercely independent nation, way before anybody had heard of the term "base erosion and profit shifting." To the EU, low-tax Switzerland represents some kind of fiscal sink, down which disappear corporate tax revenues due to the treasuries of Germany, France, the UK and any number of other high-tax states. To make matters worse, Switzerland's strict privacy rules have meant that until recently, the EU and its member states have been able to do very little about the large sums of untaxed cash parked in Swiss banks. In other words, this largely low-tax, privacy-loving country is complete anathema to most of those leading the EU. Although Switzerland has signed a number of agreements with the EU in areas such as trade and immigration, it isn't actually a member of the EU. Although you wouldn't know it given the way that Brussels routinely expects Switzerland to jump on demand, in particular on matters to do with tax. In the past, tenuous arguments made by the Commission that the 1972 free trade agreement meant Swiss tax laws more or less had to fall in line with the EU's were, figuratively-speaking, met with a type of "talk to the hand" gesture from the Swiss, and Brussels knew that there really wasn't anything it could do unless the Swiss consented. But EU persistence has paid off. The world is different now, and most of it appears to be ganging up on Switzerland. Ah, you might say, aren't the Swiss the bad guys, because they allow evil dictators to stash their ill-gotten gains in numbered accounts, no questions asked? Shouldn't they be forced to change? My answer to that is, regardless of one's view of the Swiss, shouldn't they be allowed to govern themselves as they see fit? The fact that the country has been so successful for so long, in contrast to many of its European neighbors, is testament to its way of doing things. It's just another example of the alarming trend among the rich Western countries to meddle piously in the affairs of other nations.
    Source: www.tax-news.com/news/Switzerland_EU_Finalize_Agreement_On_Corporate_Tax_Reform____66139.html

  • Aug 21, 2014   Switzerland: protecting the innocent

    Switzerland doesn't get many plaudits in an era when the numbered bank account is Enemy Number One for tax authorities in many parts of the world, despite the fact that it has made many concessions to the global tax transparency cause. So the Swiss Federal Council's decision to make the dissemination of information about owners of Swiss banks accounts punishable is hardly likely to win it any new fans in the global community; the treasuries of Europe, Australia and North America have all benefited in the past from bank client data passed to them from disgruntled employees and ex-employees of banks in Switzerland and Liechtenstein. Yes, those silly enough to evade the tax laws in their country of residence deserve to be penalized. But surely two wrongs don't make a right? In any other walk of life, buying stolen goods is a criminal offence, often punishable by jail time. But apparently these codes do not extend to tax officials, as several governments have in the past sanctioned the use of public money – tens of millions of dollars of it – to acquire such data. In my view it is stretching it somewhat to suggest that these individuals are whistle blowers, exposing tax-dodging millionaires and billionaires. A whistle blower usually acts on conscience and principle, and while they may sometimes be compensated or rewarded for the risks they take, financial gain isn't their primary motive. With revenue authorities so willing to throw money at those brandishing a CD or memory stick containing the private financial information of thousands of individuals – not of all of who will be guilty of anything – one suspects that financial gain is the primary motive, with conscience and principle coming a distant second. The fact that in at least one case a few years ago, a regional tax authority in Germany helped to protect the anonymity of the person who sold them information almost makes the whole affair laughable. Perhaps they gave her a new identity, a second passport and a secret bank account too. It just shows how the headlong rush to global tax transparency has warped the minds of those in power. No doubt they will be queuing up in the days ahead to condemn the Swiss for making an offence out of theft and data protection breaches.
    Source: www.tax-news.com/news/Swiss_To_Take_Tough_Stance_On_Client_Data_Leaks____65557.html

  • Jul 10, 2014   Switzerland: more cheese than holes

    Switzerland is probably fairly happy that international attention this week was being devoted to a French bank, for a change, and newly-announced figures for the money the country generated from applying the EU's Savings Tax Directive may also have created a small frisson of satisfaction among the country's financial leaders. For others, who don't understand why, at first blush USD570m doesn't seem to be a derisory amount of money to have extracted through a tax of 30 percent on interest payments, even if it was down 20 percent on last year, but hold hard: while there are no robust figures for total Swiss assets under management, a semi-official figure published last year suggests that they amount to about USD6 trillion, representing more than a quarter of global AUM. USD570m is 30 percent of USD1.9bn, which is an astronomically small proportion of USD6 trillion. Try it on your calculator: it's far less than a tenth of a percentage point. In other words, the Savings Tax Directive has been a total failure, and as will no doubt be the case with FATCA, the costs associated with implementing it are certainly greater than the returns it has generated. Tax authorities don't care about that: if it costs UBS 10 Swiss Francs to provide 1 Franc in extra tax, then they are still happy, not noticing the appalling waste of productive resources that has been inflicted on the private sector. Now of course, the EU's Taxation Commissioner Algirdas Šemeta, himself one of the biggest single economic disasters to have been visited on the reeling European Union since its foundation, is ready with answers: 1. The revised Savings Tax Directive, which all member states have agreed to, will plug many of the holes in the first version of the Directive. Except that it has not been agreed until all third-party states agree to it, and many of them, including Switzerland, probably won't do so. Even if they do, savers (and banks) will quickly find ways around the new Directive just as effectively as they did with the last Directive. 2. Withholding taxes were only ever intended as a stop-gap measure while exchange of information regimes were installed worldwide, ensuring that the returns from all revenue-yielding assets are reported to home-country tax authorities. This is a true statement, as far as it goes, but that is not very far, because there is no world-wide understanding that beneficial ownership should be recorded, and it is a simple matter for the ultimate owners of assets to obscure true ownership. FATCA is an attempt to remedy that situation, as was the attempt by the Loch Erne G8 to establish acceptance of the need for beneficial ownership registers. But after initial agreement on such a goal, it has quickly become apparent that no country is prepared to hobble its investors in such a way, and least of all the United States, which doesn't even have a national register of companies. Now, before this begins to sound like a panegyric in favour of tax cheating, let us be clear: the problem here is that no system short of 100 percent state control will be successful in imposing high taxes on individuals, and even that eventually fails comprehensively, as we saw with the USSR. People will not accept high taxes, not least because they are inevitably associated with high levels of state corruption or incompetence, and usually both at once. Human nature simply does not tolerate such an equation, and apparent exceptions, such as the Scandinavian democracies, operate only at the level of wage-slaves, who have no more choice than the residents of Omsk in 1960. All Norwegian ship-owners are based in Greece, Cyprus, the Isle of Man, or Vanuatu. I am as bored with saying it as you are probably with hearing it: there is only one solution, which is to reduce government expenditure and taxes, hand in hand. No country in Europe is doing this, despite all their bleating to the contrary; and until they (or rather, their benighted citizens, who keep re-electing the same ineffectual leaders) understand this, there will be no salvation for Europe.
    Source: www.tax-news.com/news/Swiss_EU_Savings_Tax_Collections_Fell_In_2013____65160.html

  • Mar 13, 2014   Switzerland: puts the gloves on

    Common sense you surely needn't look for in the European inheritance tax labyrinth, demonstrated this week by the latest twist in the French/Swiss farrago. I'm not even going to try to opine on the combatants' positions. It's obvious to everyone (me, that is) that inheritance tax ought to be abolished. It's immoral to tax money that has already been taxed; and it's doubly immoral to get in the way of inter-generational transfers. The relationship between parents and children is fraught enough already without government stepping between them. Of course it cuts in all sorts of unexpected directions: Joe hopes that his Dad's first wife, Isobel, dies before his Dad does (bad); but he hopes that his Dad outlives her (good); but his step-sister Madeleine is conflicted because she stands to get more through her mother's will than directly from her Dad if he doesn't die first. It can make for quite funny meetings if people are laid back (better than being laid out); but often they aren't. And there is an awful lot of pretending. "How are you Joe?" That's to say, are you going to peg out any time soon? Then there's the question of where to die. It shouldn't matter, but it does, because it has to do with where you're domiciled. Joe has a house in Greece, where Isobel lives, so it's best for him not to die in the UK, because he never got round to transferring the deeds into her name, and anyway the Land Registry is so incompetent that they still haven't been issued twenty years after the purchase. Madeleine is married to a German nobleman, but they are separated and she lives in Cyprus and has cancer. There is a real danger that she might die before Joe in which case her marriage settlement (a large slice of Silesia) will accrue to him and it will be more important than ever that no-one tries to get probate in the UK. That's one good thing about foreign languages anyway: the tax authorities can't understand each other. The OECD hasn't thought of that yet. Better try to keep Google away from them, then.
    Source: www.tax-news.com/news/Switzerland_Pressured_To_Approve_French_Tax_Pact____63968.html

  • Dec 19, 2013   Switzerland: being sensible

    Switzerland has come in for more than its fair share of criticism and punishment in recent years, most of it traceable to the fact that it has more money than other countries, proportionately speaking, and it can't be ruled out that there is a trace of envy in the behaviour of the aggressor countries and regions, notably the European Union. And the Swiss themselves are not united on all the dossiers that are involved: some left-wing political movements inside the country have been doing their bit to make things worse for the Confederation. But the majority of sensible burghers are having none of it: most recently the Swiss Council of States (a mostly advisory body, but powerful) has rejected a "people's initiative" to abolish the scheme that allows wealthy foreign residents to pay a flat tax rather than the normal graduated tax; the measure had been put forward by the Alternative Left party. The proposal still has to be considered by the Government, which will also reject it, given that the scheme brings in CHF700m a year, and will be put to a referendum. This week, the Government has also turned down a proposed revision to the country's double tax treaty with France, which would allow the latter to tax the heirs of Swiss decedents if they are resident in France, at rates up to 45 percent. Although the finance ministry reached the deal with its French counterparts, it seems odious. The French have long believed, mostly rightly, that Switzerland is a haven for French flight capital, but that does not justify an extra-territorial inheritance tax. European inheritance taxes are an unholy mess, and I won't even try to explain just how complicated it is to die there if you have a spread-out family or assets. It's an obnoxious tax in the first place, since it taxes money that has already been taxed over and over – or at least, should have been – and is highly anti-business. That's why the issue of the "death tax" has been a political football in the US, with pro-business politicians wanting to get rid of it, and the redistributory faction wanting to get its hands on people's accumulated wealth.
    Source: www.tax-news.com/news/Swiss_SMEs_Support_Flat_Tax____62960.html

  • Oct 17, 2013   Switzerland: plugs on

    Let's suppose that one (you, that is, or me) was offered to be Prime Minister of a European country (and for this purpose we won't count Russia as being European in the light of President Putin's recent behaviour) – which one would you choose? Obviously it won't be Ukraine, because you'll end up in prison, or Italy, because you'll hardly be in the job long enough to get to know your chauffeur. I would probably choose somewhere civilized like Denmark, although the climate is not very nice, or perhaps Malta, where the climate is indeed very nice. But third on the list of countries I wouldn't choose must surely be Switzerland, where the thankless job of leading the country involves a battle on at least three fronts, your external enemies being the USA and the European Union, and your internal enemy being the opposition Swiss People's Party (SVP). Switzerland gets a garland this week for keeping its cool in the face of provocations from all three of these enemies. The most dangerous of them is of course the USA, since there clearly was a considerable amount of doubtful behaviour on the part of Swiss banks in regard to the overseas assets of US citizens, and they are highly vulnerable to judicial action of various types. Actually the USA has been rather measured in its behaviour, while Switzerland has been quite responsive in return. Both countries have been rather grown-up, in fact, and it needn't have been that way.
    Source: www.lowtax.net/asp/story/front/Switzerland_Makes_Further_Advances_On_Tax_Cooperation____62337.html

  • Aug 22, 2013   Switzerland: v France

    Switzerland has had some bad press lately, partly due to the readiness of its banks to help Americans escape the IRS, and partly due to the doings of a lunatic fringe of "populist" (read "socialist" or worse) activists who have been pursuing a xenophobic, "little Switzerland" agenda via referendums which require only 100,000 signatures to take place, and then generate large quantities of heat and light, usually to no effect at all. Some cantons, it's true, have abandoned the "flat" tax which allows wealthy foreigners to pay a set amount of tax (much more than their Swiss tormentors earn, to be sure) regardless of their actual income. In most cases, however, the said wealthy foreigners merely skip across to another canton, so there is no net loss to Switzerland, and it must be good business for the lawyers and the removal companies. Perhaps that's what's going on: maybe they're not Little Swiss at all, but covert lawyers? Anyway, one way or another, Switzerland continues to profit from its low taxation: this week, the Franco-Swiss Chamber of Commerce and Industry released figures showing that there is a steady drip-feed of French businesses and businesspeople across the border into Switzerland. Nothing new: when I was being "finished" in Geneva, a long time ago (don't ask) I had a French girl-friend whose rather rich textile manufacturer father used to come from Lyons to see her every weekend. The customs officials got so used to seeing him they just waved him through (there were still capital controls in those days), but in the apartment he had bought for her he would take off his shoes and extract the one-thousand dollar bills from the false in-soles. His daughter would pay them in the next morning as a Swiss resident, no questions asked. At 5,000 dollars a week it builds up quite quickly – do the math!
    Source: www.lowtax.net/asp/story/front/Switzerland_Lures_French_Businesses_With_Low_Taxes____61758.html

  • Aug 15, 2013   Switzerland: adds a currency

    Competition is the number one operating principle between countries as between species, individuals and companies, so Switzerland and Luxembourg are demonstrating their evolutionary fitness by seizing leadership of the continental European Renminbi market. Of course, the very assets that have allowed them to become two of the most successful "offshore" jurisdictions are the ones that are making it easy for them to make the running in renminbis: low tax rates, flexible corporate forms, openness to international business flows and a high level of financial expertise. It might have been expected that London would emerge as the preeminent European location for renminbi activity, especially given its historical links with Hong Kong, but this doesn't appear to be the case: renminbi deposits in London in June, 2013 appear to have been largely static at about RMB14bn, compared to Luxembourg's RMB40bn and Switzerland's RMB10bn. Trade-related renminbi transactions in London were running at RMB20bn annually in mid-2013, however. Luxembourg's success probably owes something to the fact that the three top Chinese banks have all chosen to locate their European headquarters there.
    Source: www.lowtax.net/asp/story/front/Luxembourg_Switzerland_Vie_For_RMB_Crown____61685.html

  • Jul 04, 2013   Switzerland: Government against the people

    Global Tax Weekly has been portraying Switzerland as a country under siege, or at least a banking industry under siege (they still make watches and cheese with holes in it quite successfully, as far as I know). But the enemies are not just without (everyone's enemy the European Union, the USA, sadly, and paper tiger the OECD) but also within, where the Government has been coming under sustained attack from what is presumably a socialist-inspired popular national suicide movement called the people's this or the people's that, which is only a whisker away from names like National People's Party. I won't go further with that for obvious reasons, but it's allowed to wonder about the word 'people,' which is OK on the face of it, but has been acquiring noticeable political overtones, usually with a socialist or communist tinge. It's still respectable in "The People versus John Doe," but "Enemy of the People" as during the French and Russian Revolutions is not so nice. Anyway, back to Switzerland, where a "people's initiative" (a legitimate constitutional mechanism) has rounded up the 100,000 signatures necessary to bring about a referendum against the "flat tax" mechanism which attracts wealthy foreigners to many Swiss cantons. It won't be for another two years, and you would hope that the sensible Swiss majority would outvote the "fair tax" brigades. Certainly the Government knows which side its bread is buttered, to the tune of more than a billion dollars last year.
    Source: http://www.lowtax.net/asp/story/front/Switzerland_Adopts_Flat_Tax_Resolution____61237.html

  • Mar 14, 2013   Switzerland: scores own goal

    Surprisingly, the Swiss voted in favor of limits on executive pay, something that the business federation lamented, not surprisingly. Presumably we are still reaping the consequences of the banker bashing that began in 2008. Opponents of the resolution that was voted through say that debate had been very one-sided. In fact, the outcome is not really clear yet, because there will be a long process of drafting before any law as such actually hits the statute book, and it's not inconceivable that sentiment could reverse in the meantime. Even if the law comes into force, you would think it would be a paper tiger, given that it would be easy for Swiss bosses to live and be paid somewhere else. And it won't effect all the wealthy foreign bosses who take advantage of Switzerland's flat tax regime, because it applies to companies rather than individuals. Still, it won't help Switzerland's economy, will it?
    Source: www.lowtax.net/asp/story/front/Swiss_Business_Federation_Comments_on_Executive_Pay_Vote____60019.html

  • Nov 22, 2012   Switzerland: EFTA but no comparatives left

    When playing the alphabet soup game (Harrods or Macy's, GBP12 or USD14 - things are always cheaper across the pond - and as an anglo-saxon sport you can't buy it on the Continent) EFTA is a trick question which people hardly ever get right. They think the 'A' stands for agreement, as in Free Trade Agreement. Of course it stands for Area. There was a time when there was also 'ex-EFTA' which was indecipherable even to aficionados, but the game hadn't been invented back then. Anyway, enough history: what remains of EFTA can be compared to a regulation-lite European Union, and focuses on the single market and trade agreements, as at this week's meeting, which wins it, or rather them, a star. 'Them' is Iceland, Liechtenstein, Norway and Switzerland, so it's a cheap and cheerful way of bringing three new countries into the table.
    Source: http://www.lowtax.net/asp/story/front/EFTA_Focusses_On_Sealing_Trade_Deals____58257.html

  • Jul 26, 2012   Switzerland: undermines personal privacy

    Shame on Switzerland for falling over and playing dead on the issue of OECD group information exchange. I suppose it's because it wants to solidify its deals on withholding taxes with the source-countries of its richest clients, which enshrine privacy, or so it hopes, and doesn't want any aggravation with the OECD in the meantime. But it wouldn't have been the first time that Switzerland was prepared to refuse an OECD ruling. Just to be clear, under the OECD's new and unacceptable rule, a country can ask for information about a group of people identified only by their characteristics and not individually names. 'Fishing expeditions' are still not allowed, but who needs a fishing expedition when you can just explode a mortar bomb in the river and kill everything living in a 100m radius? How about: every Russian national? every client with a bank account in the BVI? Let's hope that the Swiss people demand a referendum (as they can) and put up two fingers to the OECD, which has become one of the nastiest organizations on the planet.
    Source: http://www.lowtax.net/asp/story/front/Switzerland_Approves_OECD_Group_Requests____56447.html

  • Jun 07, 2012   Switzerland: sticks to its crossbows

    Old-fashioned is the name of a cocktail. Or is it a high-ball? As an adjective, it sounds a bit dowdy. But the Swiss would probably be happy to be remembered for William Tell, who helped save the country from Austrian warlords 500 years ago or thereabouts, rather than their resistance to the diktats of Brussels in 2012. And Widmer-Schlumpf just doesn't have quite the same ring as Tell. But this week she was hard at work adding the once-hated Austrians to the charmed circle of EU nations who have agreed to turn a blind eye to Swiss banking deposits as long as they get a good share of the proceeds. Between the UK, Germany and Austria, with Italy coming up on the outside, it's getting close to a wrecking majority from the EU's perspective. How they must hate it in Brussels!
    Source: http://www.lowtax.net/asp/story/front/Switzerland_Sees_No_Barriers_To_Austrian_Tax_Deal____55659.html


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