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.

GENOA – “A bombshell” is how Fabio Pesto, president of Federagenti-yacht, the super-yacht section of the shipping agents’ federation, describes the article that appeared in the Financial Times following the seizure by financial police of Flavio Briatore’s Force Blue at La Spezia. The FT says that “some legal advisers are telling their worldwide clients, 90 per cent of whom have their yachts under a Cayman Islands flag, to take care before venturing into Italian waters”.

“A bombshell” is how Fabio Pesto, president of Federagenti-yacht, the super-yacht section of the shipping agents’ federation, describes the article that appeared in the Financial Times following the seizure by financial police of Flavio Briatore’s Force Blue at La Spezia. The FT says that “some legal advisers are telling their worldwide clients, 90 per cent of whom have their yachts under a Cayman Islands flag, to take care before venturing into Italian waters”.

WILDFIRE – The Financial Times reports that word is spreading like wildfire among sector professionals across the globe: Italy is risky. “We’ve already had the season’s first cancellations and they’ve come from very big yachts. Owners have ruled out Italian ports and will be heading for Greece and Croatia”, says Mr Pesto. But this is just the beginning. Mr Pesto goes on: “The whole summer season is at stake here, and more besides. This will snowball. If super-yachts don’t come to Italy for summer, they won’t stay on in winter for dry-dock work. The upshot is that they won’t be back next year”. Near the Pesto Sea Group offices in Genoa’s old harbour, a 45-metre yacht with the interesting name of “Alibi” has just cast off. American billionaire Paul Allen left just a few days ago on his 126-metre monster. Coincidences, perhaps. “We’re not defending people who commit offences”, notes Mr Pesto. “Those who break the rules should pay. But there’s a lot of confusion and this is a world with a very direct, Anglo-Saxon outlook: if the rules aren’t clear, go somewhere else. End of story. We’re looking to send out positive signals but it’s not easy”.

Full text article of “Corriere della sera” in English and Italian.

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.

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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.

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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.

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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.