For centuries, Switzerland has been a peaceful haven; its mountains wrapped in majestic mystery and its banking in centuries of secrecy. But for the world's tax cheats, Switzerland is now a paradise lost. Foreign governments are prying open the $2 trillion offshore banking business in the country with tax treaties.
It all started with a former UBS banker who spent two-and-a-half years in prison for helping wealthy Americans avoid paying their taxes. It is a story that would have gone unnoticed had it not been for the fact that the Inland Revenue Service awarded that man $104m for revealing the secrets of the Swiss banking industry. It is believed to be the biggest whistle-blower award ever. And it heralded in a new era - no longer could the Swiss banking industry keep its secrets.
UBS, the Swiss bank at the centre of the whistle-blowing, agreed to pay a $780m fine. But the US is still investigating more Swiss banks. And other nations are now also pursuing the Swiss banks, including the UK, Austria and Germany - all keen on clawing back tax on some of the $2 trillion of wealth that foreign clients have stashed away there.
UBS, the Swiss bank at the centre of the whistle-blowing, agreed to pay a $780m fine. But the US is still investigating more Swiss banks. And other nations are now also pursuing the Swiss banks, including the UK, Austria and Germany - all keen on clawing back tax on some of the $2 trillion of wealth that foreign clients have stashed away there.
The deals with the UK, Austria and Germany will allow foreign clients to remain anonymous, but the Swiss banks and government will collect one-off tax on their accounts, averaging 25 per cent, for the foreign governments. In the future, the Swiss will tax foreign accounts' interest and dividends at British, Austrian and German tax rates.
The Austrian and British treaties have already been ratified and will come into effect on January 1. In Germany, however, there is a problem - Socialists do not like the Swiss-German tax treaty and are calling it a gift to rich people.
But how are the Swiss responding to all this? Is their famous neutrality still intact?
The Austrian and British treaties have already been ratified and will come into effect on January 1. In Germany, however, there is a problem - Socialists do not like the Swiss-German tax treaty and are calling it a gift to rich people.
But how are the Swiss responding to all this? Is their famous neutrality still intact?
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