Swiss Come Clean Amid Data Swaps
Switzerland’s abandonment of banking secrecy for international tax dodgers is having an unexpected side effect at home: more domestic tax cheats with accounts around Europe are coming forward.
If 2017 was the glide path for Switzerland’s international data-swapping agreements, this year means business: Swiss banks must automatically share client data with 38 other nations – an unprecedented undertaking in the history of the alpine nation’s closely-guarded banking secrecy tradition.
Next year, the data-swapping procedure is to be expanded to another 41 countries – including some such as Saudia Arabia, Russia and China, which has proven highly controversial among private bankers.
But data on suspected tax dodgers isn’t just leaving Switzerland for foreign tax offices: Swiss officials are set to receive data from their counterparts abroad thanks to the automatic exchange of information, or AEoI. This has prompted a surge in so-called voluntary disclosures in recent months, with «tax exiles» rushing to come clean on their hidden accounts.
In greater Zurich, 6,150 such tax dodgers came forward last year, according to cantonal data (in German). This represents a three-fold rise from 2016, leading local officials to beef up staff to handle the glut of voluntary disclosures. «The extraordinary rise is due to the imminent start of the cross-border automatic exchange of information,» the canton of Zurich said in a statement.
Tax officials said tax cheats came clean on their real estate and accounts in Italy, Portugal, and Spain, as well as assets held in neighboring Germany, Austria, and Liechtenstein. Swiss taxes are largely based on an honors system: taxpayers declare their assets, and audits or any form of spot checks are rare. In 2010, Zurich introduced a one-time disclosure for taxpayers to come clean, with any punishment.
Switzerland has fallen into line internationally with pursuing tax evasion, but for its own citizens, the alpine nation still doesn’t consider evasion, unlike outright fraud, to be criminal. Last year’s disclosures rained 1.33 billion Swiss francs into Zurich’s coffers, while Lucerne took in 15.5 million francs, according to «Reuters».