Swiss Banking Secrecy

The Swiss banking secrecy is subject to much discussion at the moment and Switzerland is under strong pressure to change the country’s banking secrecy laws. It is easy to say that Switzerland immediately must change their banking secrecy laws since it only protect criminals around the world. But why does Switzerland have such strong bank secrecy and why was the laws in this area once created? There is almost always a good reason (well, a reason anyway) behind laws and of course the Swiss banking secrecy laws are no exception.

Switzerland itself explains that “According to the Swiss conception of democracy, citizens are not here for the State, but rather the State is here for the citizens. Citizens are not primarily taxpayers, but rather free human beings who have a right to privacy. Banking secrecy should be seen in this context. Banking secrecy protects the financial privacy of citizens from unauthorized access by other private persons or also by the State. Banking secrecy does not protect criminals, however: banking secrecy is subject to various legally defined limits.”

One could always argue about how strong secrecy laws should be but the philosophy that the citizens are not here for the State, but rather the State is here for the citizens is something that most of us will be prepared to accept even though in the practical life you have the impression that the situation is quite the opposite.

Switzerland has published a more detailed account for its bank secrecy and the country’s obligations in an international context with exchange of tax information etc. It is definitely worthwhile reading for anyone who would like to get more knowledge in the subject and the complete text can be obtained by clicking the link down below.

Swiss Banking Secrecy according to Switzerland

…more than 800 000 Companies have been registered in the British Virgin Islands (BVI)?

As of June 2008, 823,502 companies had been registered in the British Virgin Islands as of of which 445,865 were ‘active’. In 2000 KPMG reported in its survey of offshore jurisdictions for the United Kingdom government that over 41% of the world’s offshore companies were formed in the British Virgin Islands.

…that Cyprus is regarded as having the most attractive tag regime in Europe?

In a survey KPMG interviewed more than 400 tax professionals across Europe. According to the poll Cyprus was regarded as the most attractive tax regime in Europe followed by Ireland, Switzerland and Malta. The least attractive tax regime was that of neighboring Greece.

…only French nationals pay income tax in Monaco?

Monaco has no personal income tax except for French nationals who has to pay income tax according to French law and directly to the French government. Under some circumstances even French nationals may be exempt from income tax. These situations are as follow:

1. they have had been habitually resident in Monaco for 5 years on October 13, 1962 and they hold dual French and Monegasque nationality;
2. they are attached to the Prince’s household; or
3. they are the French spouses of foreigners residing in Monaco and the marriage took place before the January 1st, 1986.

… in Cyprus you can earn up to 19.500 Euros without paying personal income tax

Most jurisdictions allow for a free amount to be earned without having to pay personal income tax. This non-taxable amount differs from jurisdiction to jurisdiction but it is clear that Cyprus is one of the jurisdictions having the most generous rules in this area. According to Cyprus tax law you are allowed to earn up to 19.500 euros per year tax-free.

More than 14,700 Americans have disclosed their secret foreign bank accounts

According to American Internal Revenue Service (IRS) more than 14,700 Americans have disclosed their secret foreign bank account under the amnesty program agreeing to repatriate the assets and pay back taxes and interest as well as reduced penalties. One major reason for this has without doubt been the between the IRS and the Swiss bank UBS where UBS has agreed to turn over the names of about 4,450 American clients suspected by the IRS of using the bank’s offshore services to evade taxes.

Those UBS clients who has not turned themselves in and are on the bank’s list of accounts face back taxes and fines that well can exceed what they own, as well as potential prosecution and jail time.

In 2003 did launch a similar amnesty with the objective to luring Americans who evaded taxes through offshore credit cards to declare their savings in a correct manner in the US. That ‘campaign’ led drew only 1,300 Americans to disclose their savings in foreign offshore savings account and therefore the last campaign must be said to be a huge success for the IRS.

According to the I.R.S. documents, UBS will disclose American clients who had unreported accounts of at least a million Swiss francs. UBS will also disclose Americans who were the owners of secret offshore sham company accounts with that total. The accounts in question cover 2001 through 2008.