Source and Link from www.Tax-news.com: IRS To Drop UBS Lawsuit.

IRS To Drop UBS Lawsuit

The US Internal Revenue Service (IRS) has said that it may drop a lawsuit against Swiss bank UBS after the Swiss government announced on August 26 that its examination of approximately 4,450 UBS clients accused of evading US taxes.

The IRS announced in a statement that based on information received from the Swiss federal government, it anticipates being able to “withdraw the John Doe summons this fall.”

Concluded in August last year, an administrative assistance agreement between the US and Switzerland provides that UBS is to disclose to US authorities the names and bank details of 4,450 of its American clients, suspected of evading taxes over a number of years with the help of the Swiss banking giant. In return, civil charges against the bank would be dropped. The US authorities had originally sought the names and details of 52,000 clients of the bank. UBS also agreed to a fine of USD780m.

“The Federal Tax Administration has concluded its administrative assistance examination relating to approximately 4,450 UBS client dossiers. It has done so by the deadline set in the administrative assistance treaty with the United States,” the Swiss federal government announced.

Despite a delay caused by the Swiss Federal Administrative Court’s examination of the agreement, the Swiss government explained that the data delivery “will be largely concluded by autumn 2010.”

“Talks are being held between the contracting parties regarding the final stage of the agreement’s implementation. Both parties are optimistic that the US authorities will receive most of the agreed account information within a reasonable period of time and that the US authorities will definitively withdraw the civil action (John Doe Summons) brought against UBS,” the Swiss government stated.

Aug. 5 (Bloomberg) — Italy’s finance minister Giulio Tremonti has a new weapon to pursue tax cheats in a country starving for revenue: a former HSBC Holdings Plc employee now in police protection in France.

Two years ago, Herve Falciani, then a software technician at HSBC’s Geneva offices, made off with computer files containing data on at least 24,000 current and former account holders from several countries. Claiming he wanted to curb the illegal flow of money across borders, Falciani helped French authorities access names he kept on his laptop for their probe of tax evaders. And in May, the French shared their windfall with Italy’s prosecutors, including the identities of 5,728 Italian citizens and companies holding Swiss accounts valued at $6.9 billion, Bloomberg Markets magazine reports in its September issue.

“Something was going wrong, and it was a danger not only to the bank, but to clients and states,” Falciani says from his lawyer’s office in Nice on the French Riviera.

Now, Tremonti is using Falciani’s list to spearhead a new crackdown on tax evasion, a scourge that’s bedeviled Rome’s collectors since the founding of modern Italy 149 years ago. Cheating is so pervasive in Italy that even Tremonti’s boss, Prime Minister Silvio Berlusconi, is on trial for tax fraud related to his broadcast company’s offshore purchases of film rights.

Full article here: http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a.o2Sy0aIfjc

PRAETORIAN COMMENT:

We find this whole thieving of bank employees despicable, and what is even more despicable is that France will harbor a know thief and criminal to line its own pockets, because they have failed in their economic policies over and over again.

Many of the reasons that entrepreneurs and free thinkers looked to Switzerland and other havens was for ways to tax optimize and build up a nest egg against market crashes, extreme taxation, and mostly the mis-management of the tax revenue Big Government is collecting.

Death of the Free market, and the birth of a new European Union = the Old Soviet Union.

Switzerland, EU Hold Tax Talks

The Head of Switzerland’s State Secretariat for International Financial Matters, Michael Ambühl, has recently received the European Union (EU) Director General for Taxation, Walter Deeffaa, with the talks focusing on the current status of tax and financial policy.

During the course of the meeting, discussions also centred on further developments in the EU taxation of savings income directive, on the state of implementation of Switzerland’s new administrative assistance policy, on the EU code of conduct on company taxation (for which the EU has made a request for a dialogue to be opened), and on cooperation within multilateral financial bodies (including the Organization for Economic Cooperation and Development, the Financial Stability Board and the International Monetary Fund).

In addition, the financial and currency situation in Europe was also discussed, where Ambühl expressed Switzerland’s concerns regarding currency developments within the euro area.

Source: Switzerland, EU Hold Tax Talks.

Netherlands Targets ‘Black’ Credit Card Payments, by Ulrika Lomas, Tax-News.com, Brussels
Tuesday, June 15, 2010

Dutch Finance Minister De Jager has instructed the country’s tax department to trace payments made using anonymous ‘black’ credit cards (special credit and pin debit cards), linked to bank accounts in former tax havens.

According to the finance ministry, these accounts are not reported to the tax department and probably account for hundreds of millions of euros of undeclared funds. The tax department is currently in discussion with organisations processing such credit card payments in the Netherlands in a bid to track down the individuals concerned.

In a statement, De Jager explained: “It is inconceivable that people buy expensive things anonymously through foreign bank accounts and at the same time try to dodge tax. The tax department ruthlessly tackles this type of fraud. When caught the fine can be as much as at most 300%.”

The Dutch tax department and the Fiscal Intelligence and Investigation Service and Economic Investigation Service (FIOD) believe that these credit and pin debit cards are regularly used to buy expensive goods, and that they are used regularly in attempts to commit investment and value-added tax carousel fraud.

The finance ministry states that: “The tax department now has the possibility to filter payments by Dutch citizens by for instance analysing the frequency and location of the payments. On the basis of the account number the tax department can subsequently request information about the owner of the account. To this purpose De Jager concluded in the past year dozens of information exchange treaties with former tax havens.”

It is estimated that in the region of EUR30bn of undeclared funds is located in foreign accounts.

Netherlands Targets ‘Black’ Credit Card Payments.

Swiss lawmakers on Tuesday (June 8th, 2010) rejected a deal to hand over to United States authorities data on more than 4,000 wealthy Americans suspected of evading taxes with the help of the Swiss bank UBS, a move that could bring the bank a step closer to indictment, according to people briefed on the matter.

<…>

Swiss lawmakers in the lower house, the National Council, rejected the deal by a vote of 104 to 76, with 16 abstentions. They also voted to send the measure to a national referendum, if necessary. The upper house, the Council of States, approved the deal last week. Both sides will begin on Wednesday to try to reach a compromise.

<…>

If the entire Swiss Parliament does not approve the deal by June 18, the Justice Department, on behalf of the Internal Revenue Service, will revive a legal case against UBS in a Florida court that seeks to force the bank to turn over 52,000 names of American clients, a person briefed on the matter said. The Justice Department dropped the civil lawsuit, known as a John Doe summons, when Switzerland agreed last August to turn over 4,450 names.

<…>

The showdown over UBS, which once centered on wealthy client gatherings in Miami and Geneva, has highlighted a cultural difference between the two countries: unlike the United States, Switzerland does not view tax evasion as a crime.

The case gained ground in recent years when Bradley C. Birkenfeld, a former UBS private banker, spilled secrets to prosecutors and described tax-evasion planning that included some of the highest executives of the bank. Mr. Birkenfeld, an American who is serving a 40-month prison sentence in the United States, is the only UBS banker or executive to go to jail, a fact that has infuriated his lawyers.

Full text of this NY Times article.

Swiss Government Rebuked Over UBS Affair.

Swiss Government Rebuked Over UBS Affair, by Ulrika Lomas, Tax-News.com, Brussels

A Swiss parliamentary committee has sharply criticized the government’s role in the UBS tax evasion scandal, which now threatens to punch a hole in Switzerland’s banking secrecy laws.

Following a 15-month long enquiry into the UBS affair, the Swiss parliament’s two control committees published a report on May 31 which concluded that the federal government failed to recognize the ramifications of the US probe into tax evasion by UBS clients, which has led to the drawing up of an agreement to hand over confidential data to the US authorities.

“The significance of the transfer of the bank data of some US clients of UBS was not recognised until too late,” the joint committees said.

The joint committees’ report also accused the government of being slow to react when the bank encountered financial difficulties as a result of its investment in illiquid mortgage-backed securities.

In August 2009 UBS agreed to a fine of USD780m and agreed to discuss the transfer of data on 4,450 accounts to the US Internal Revenue Service, although this was far short of the 52,000 names originally sought. On March 31, 2010, in discussions with the US, the Swiss government agreed to amend its double tax agreement with the US to allow for the exchange of tax information in cases of extreme tax evasion. This amendment will facilitate the exchange of tax data on account holders with the largest outstanding tax liabilities to US authorities.

The agreement must be approved by the Swiss parliament before it can be ratified, and the upper house of the Swiss parliament is due to discuss the issue on June 3, followed by the lower house next week. A majority of lawmakers are expected to back the deal, however, after the conservative People’s Party removed their opposition to the agreement in an attempt to prevent a tax on bankers’ bonuses.

FINMA, the Swiss financial regulator, was also criticized in the report for its part in the regulatory failures, although the authority said that it “welcomes the Control Committees’ thorough analysis of the events and of how they were handled by the federal authorities.”

“The Control Committees have drawn up a well-supported and detailed overview of the facts in regard of the highly complex events for all parties involved. FINMA supported the Control Committees with its work by disclosing all the records and documents they requested. In addition, FINMA assisted further by conducting numerous formal hearings, providing written statements and organising meetings to assess the findings,” a FINMA statement said.

FINMA intends to respond to the report’s conclusions and recommendations by the end of 2010.

BNP Paribas Divests Offshore Ops.

BNP Paribas Divests Offshore Ops, by Ulrika Lomas, Tax-News.com, Brussels
Thursday, April 08, 2010

BNP Paribas is finalizing its plan to terminate its wealth management activities in Panama, Grand Cayman and the Bahamas. The bank announced on April 2 that it had signed an agreement to transfer its operations to Scotiabank.

The announcement is as a result of the French government’s tough stance on territories that it considers are not compliant with international standards on tax transparency.

Last year, French banks undertook that they would close all of their branches and subsidiaries in countries on the Organization for Economic Cooperation and Development’s (OECD’s) ‘grey list’ after March 2010. This decision was announced following a meeting between President Nicolas Sarkozy, members of the government and financial leaders.

At the time of this announcement last October, all three territories were on the OECD’s ‘grey list.’ However, the Cayman Islands and the Bahamas have since been promoted to the OECD’s ‘white list’ of territories which have “substantially implemented” the Organization’s tax transparency standard. Panama remains on the ‘grey list,’ but has made a commitment to come into compliance with the transparency standard.

BNP Paribas said that the transaction is subject to regulatory approval and is expected to be completed in the third quarter of 2010. The terms of the transaction were not disclosed.

BNP Paribas said: “The transaction will optimally preserve employment locally and ensure that clients will continue to be provided with high-quality service. Scotiabank is Canada’s most international bank and a premier multinational financial institution. Scotiabank has offered personal and commercial financial services in Panama since 1974, the Cayman Islands since 1968 and The Bahamas since 1956. This transaction will make Scotiabank one of the largest wealth management providers in Panama.”

Dan Wright, Senior Vice-President & Head, Scotiabank International Wealth Management, added: “This agreement is a great fit with Scotiabank’s international wealth management growth strategy in the Caribbean and Latin American regions. Upon closing, the transfer will enhance Scotiabank’s existing operations in these jurisdictions, strengthening our ability to serve the needs of clients.”

Australia And Monaco Sign TIEA.

Australia And Monaco Sign TIEA, by Mary Swire, Tax-News.com, Hong Kong
Friday, April 09, 2010

The governments of Australia and Monaco signed a tax information exchange agreement (TIEA) in Paris on April 1, bringing to 23 Australia’s global network of such agreements.

Australia’s Assistant Treasurer, Nick Sherry, announced the signing of the TIEA, which allows the bilateral exchange of tax and financial information between Australia and Monaco. The existing taxes which are the subject of the agreement are all federal (not state) taxes in Australia and profit tax in Monaco.

The agreement also provides that neither tax authority can refuse to provide information solely because it does not require the information for its own domestic purposes. Each party shall also provide, upon request, information held by banks or other financial institutions, and information regarding the ownership of companies, partnerships, trusts and foundations, among other entities.

“This agreement further boosts the government’s drive to improve transparency in both the domestic and global financial systems,” the Assistant Treasurer said. “By signing this agreement Monaco has committed to implementing international tax standards of information exchange.”

The TIEA will enter into force after both countries have advised that they have completed their relevant domestic legislative procedures, and is expected to have effect from July 1, 2010.

April 7 (Bloomberg) — Swiss regulators are probing whether investors are buying life insurance to hide undeclared assets from tax authorities as the dispute over banking secrecy widens.

“We are checking selectively if there is a need for regulator action,” said Alain Bichsel, a spokesman for the Swiss Financial Market Supervisory Authority, known as Finma, in Bern. “We are warning of the risk.”

The concern is that so-called wrapper products, sold by insurers through units in Luxembourg, Liechtenstein and Singapore, are being used to conceal untaxed money. Finma’s review comes a year after Switzerland agreed to cooperate with international regulators to avoid being blacklisted by the Organization for Economic Cooperation and Development.

Swiss Life Holding AG doubled premiums from life policies that mask underlying bank deposits and client identities to about 5 billion Swiss francs ($4.7 billion) last year. Baloise Holding AG in Basel reported a similar increase in sales at its Liechtenstein life insurance unit.

An insurer that accepts premiums “without checking whether it comes from untaxed money makes itself guilty of assisting foreign tax evasion,” said Walter Frei, a partner at Zurich- based law firm Bill Isenegger Ackermann AG, referring to the insurance wrappers. “It is nothing but old wine in new bottles,” he said. Frei represents some UBS AG clients whose account data Switzerland agreed to turn over to the U.S. last August.

Wrapper Evaders

When a client buys a wrapper, the beneficial ownership of the assets is transferred to the insurer while the funds often remain on the balance sheet of private banks. Insurers invest the premiums through advisers and clients receive benefits tied to the performance of the underlying investment. Taxes are minimized or deferred because life insurance policies are classified as non-income producing assets.

Swiss Life Chief Executive Officer Bruno Pfister said the country’s biggest life insurer doesn’t want its wrapper business to be open to tax evaders.

“We take Finma’s warning seriously,” Pfister said in a March 30 interview from his Zurich headquarters. “We see it as positive to try and curb this misuse.”

Baloise says its Liechtenstein unit, which had life insurance premiums of 1.6 billion francs last year, asks foreign clients for a written declaration on the tax status of assets.

The examination of sales practices at Swiss insurers comes as France and Germany step up the search for tax cheats and tighten rules on life policies. Swiss insurers may open themselves to lawsuits when they provide wrappers to French and German citizens seeking to evade taxes, according to Finma.

Private banking clients are buying wrappers in the wake of the Swiss government’s agreement to hand over account data on UBS customers to the U.S. Internal Revenue Service to settle a dispute over suspected tax evasion. Zurich-based UBS is Switzerland’s largest bank by market value.

Swiss Life and Baloise say their cross-border businesses benefitted from the Italian tax amnesty, or scudo fiscale. The exemption, extended until April 30, allows Italians to apply for pardons in return for paying a fine of 5 percent to 7 percent of undeclared assets. Investors also may opt to take out life insurance and leave the assets at their private banks instead of repatriating them.

Demand for wrappers increased in the past year as clients search for low-tax investments, said Alfredo Gysi, chief executive officer of BSI Group, the Lugano, Switzerland-based private bank owned by Assicurazioni Generali SpA, Europe’s third-biggest insurer.

“The move toward tax compliant models has increased the attractiveness of those products,” Gysi said. “Lower taxes are a part of it.”

PRAETORIAN NOTE:

We have followed the Sale and Marketing of these wrappers for the last 4-5 years, and always wondered how Promoters, could sell this product as an end all product to make undeclared assets, declared! Surely pitching ‘heat’ would have something to do with it, since the fees were so high, making it very attractive to the promoters selling wrappers.

There is no Silver bullet in international tax planning, but there are some sound strategies that can be applied, if planned carefully.

Germany’s new and highly controversial law against tax evasion has virtually been overridden by events: the Finance Ministry has revealed that it is simply unable to identify any jurisdiction that fulfils the conditions required for its application.

The law, containing severe sanctions for anyone with links to so-called “tax havens,” was adopted by the previous grand coalition government, and entered into force in Germany at the end of September last year.

Since then, finance officials have been unable to apply the law, as the Organization for Economic Cooperation and Development’s (OECD) “black list” of countries deemed uncooperative in tax matters simply no longer exists. The law therefore remains merely a threat – for the time being at least.

Read the full article on www.taxnews.com German Law Against Tax Evasion Proves Futile.