Friday, December 09, 2011

Switzerland's useless tax deals face more hurdles

We note this, from the tax haven cheerleaders Geneva Lunch:
Italy’s new prime minister, Mario Monti, has told the country’s parliament, through his minister for relations with that body, that Italy should not seek a double taxation agreement with Switzerland along the lines of those with Germany and the UK.
That is excellent news. The Italians have recognised that the agreements are not only wrong, but useless. As we have demonstrated beyond doubt, and as the FT and others are starting to recognise, they won't raise a fraction of what has been claimed they will.

Now there is this, from Money Marketing:
The UK Government will have to rework a tax deal struck with Switzerland because it falls foul of EU law.
. . .
Speaking to Money Marketing, EU taxation and customs spokeswoman Emer Traynor says the UK’s agreement is out of line with EU agreements with Switzerland and, due to the primacy of EU law, the UK’s contract will have to be reworked.
. . .
An HM Treasury spokeswoman says: “We are working closely with the European Commission to address the concerns.”
That last sentence looks very much as if the UK is already in the process of reworking the agreement. This latest move looks like a shabby political fudge, as described here.

Scrapping seems quite likely, actually. More, from the Money Marketing article:
"The EU agreement also allows people to reclaim from the relevant member state the difference between that 35 per cent and the tax which should be paid. Traynor says the UK’s agreement is a softer approach. She says: “It is implicitly considered as final and a slightly softer stance on tax evasion. It says the Swiss will tax you, we will take the money, no questions asked, and your due is paid. We say if there is no transparency, you will have to pay the 35 per cent tax and we can still come after you.”
Traynor was clearly being highly diplomatic here. "Slightly" is an understatement. And 'implicit' is not quite right either - it is explicit - after all, it's called a Final Withholding Tax. But the most important point about what she is saying is that the EU is not likely to accept the fact that this is a 'final' tax, and that all your dues are then paid off. In other words, you might pay the tax - but still your obligations might not be fulfilled. In which case, it's hard to see what the point of the deals would be at all.

These deals, designed by the Swiss Bankers' Association and presented to the UK, should be buried in a shallow grave somewhere in one of the wooded parts of the Alps near Zürich.

They are a source of deep shame for the countries that have signed them, not only for moral reasons, but for technical reasons too.


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