Wednesday, April 20, 2011

Taxes Coming for Europeans Hiding Money in Switzerland (All for the Ultimate Benefit of Jamie Dimon)

Swiss banks aren't what they used to be.

The latest move by the Swiss government will likely result in it being impossible for most Europeans to hide money in Switzerland, away from the prying eyes of various European tax collectors.

Switzerland aims to sign new treaties by the summer with Germany and Britain under which their citizens would pay tax on more of their undeclared assets in Swiss banks. France and Italy are expected to follow suit, NYT reports.

Estimates in Switzerland, according to NYT< suggest Berlin might reap about €50 billion, or $72 billion, in the first year. For London, the figure would be lower.

Why are the Swiss doing this? Because their big banks have too many vulnerable assets across the globe. Thus,small Swiss banks that specialize in privacy get sold down the river, and will be squeezed for the benefit of global Swiss banks and global elitist banks such as Jamie Dimon's JPMorgan Chase. NYT again:
The Swiss are seeking to avoid repetitions of the kind of legal action that resulted in a $780 million fine for UBS, the country’s biggest bank, in 2009 for helping wealthy Americans evade taxes. They also hope to end the practice, more common in recent years, of Swiss bank employees’ selling stolen client lists to foreign governments, as well as the threat of more Swiss bank employees being arrested while abroad.
Private Swiss banks, who stay at home in Switzerland don't have these problems, it's only the monster global elitist banks that do, like UBS, where former U.S. Senator Phil Gramm is employed by UBS AG as a Vice Chairman of the Investment Bank division.

For U.S. citizens even tighter regulation will come into effect with new legislation at the end of 2012, the Foreign Account Tax Compliance Act. It aims, reports NYT, at further dissuading Americans from stashing undeclared money abroad. It includes a new withholding tax of 30 percent on certain foreign entities that refuse to disclose data on U.S. account holders.

NYT explains how all this will squeeze the small private Swiss banks:
The shift will bring further change to the smaller private banks that have traditionally served as niche fund managers to global elites, who often want to keep their financial affairs secret. As the size of the undeclared funds that they manage ebbs, these banks will have to fight in the increasingly tough wealth management market on the basis of fiscally transparent services.

Among the smaller, private banks are Lombard Odier, Pictet & Cie., Bank Sarasin, EFG International, Julius Bär and Vontobel, as well as lenders owned by local governments including Zürcher Kantonalbank and St. Galler Kantonalbank.

Some are likely to merge, some might be bought by larger groups and others will have to reduce their services, according to Martin Naville, head of the American Chamber of Commerce in Zurich.

Most realize that they can no longer base their models on receiving undeclared funds, and that has brought some sniping in the Swiss media. “Everybody’s pointing fingers at the other guys,” Mr. Naville said. “But it’s all rumors, no one really knows who holds what.”

There might even be a rare window for acquisitions by foreign banks. JPMorgan Chase recently made inquiries about taking over a smaller Swiss bank, according to two people with knowledge of the talks, who were not permitted to speak publicly


  1. Are there any countries left where it's safe to put your money? Switzerland, Panama, Andorra, Monaco, Liechtenstein... they all caved to the demands of the big bullies.

  2. "Foreign Account Tax Compliance Act"

    Add a T and we have the perfect acronym.