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Swiss hold $1.7trillion in foreign private money – paper

Posted on: March 18, 2009


Reuters – Monday, March 16

GENEVA, March 15 – Foreign private investors hold up to 2 trillion Swiss francs in Swiss banks, twice as much as previously thought, Swiss weekly NZZ am Sonntag said on Sunday.

The higher figure increases the potential amount that could flow out of Swiss banks and the country following Switzerland’s decision on Friday to relax banking secrecy. [ID:nLD122324]

NZZ cited a new study by the Swiss Bankers Association estimating that 2.9 trillion francs were managed “offshore” in Switzerland by Swiss banks, out of a total 5.2 trillion francs including money from Switzerland that they manage.

Of that, 36 to 42 percent, or between 1.85 trillion francs and 2.15 trillion, belongs to private investors, with the remaining 750 billion to 1.05 trillion francs in offshore funds belonging to institutional investors.

No one was immediately available for comment at the Swiss Bankers Association.

NZZ said the Swiss National Bank had previously assumed that the share of institutional investors was bigger than that of private investors.

“In fact private persons are behind many institutional investors,” NZZ quoted Swiss Bankers Association spokesman Thomas Sutter as saying.

Switzerland agreed on Friday to adopt international standards on the treatment of foreigners’ taxes, signalling it was ready to help foreign tax authorities investigating cases of suspected tax evasion.

Since many other tax havens, including Luxembourg, Austria, Liechtenstein and Singapore, have made similar moves, foreign investors may have few alternatives for their money if they want to hide it from the taxman.

The moves followed efforts to crack down on tax havens by the United States and major European countries who are scrambling for tax revenues to fund their stimulus packages and bailouts, and are eager to show voters that the rich are not unfairly escaping their share of the burden.

Pressure on Switzerland to ease its banking secrecy further could continue as France and Germany want it to share information about all foreign bank accounts, even when no specific tax offences are suspected.

The international standards to be adopted by Switzerland and drawn up by the Organisation for Economic Cooperation and Development require countries to help each other’s authorities when a specific offence by a named individual is suspected, and do not call for a general information exchange.

Foreign Minister Micheline Calmy-Rey said forthcoming negotiations with around 70 countries with which Switzerland has double-taxation agreements to implement the new rules would focus on restricting assistance to specific cases and seeking a fair transition period to the new system.

“Now Switzerland is no longer on the defensive in tax matters and no longer needs to hide. On the contrary, we can confidently demand other tax and financial centres to meet these international standards too,” she told NZZ in an interview.

To remain off a blacklist of uncooperative financial centres — the reason Switzerland agreed to modify its banking secrecy — it must renegotiate tax agreements with at least a dozen countries.

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