Swiss Banks Hurt by Italian Tax Amnesty

Tax Analysts, January 19, 2010
Swiss banks have suffered a large outflow of assets as a result of the ongoing Italian tax amnesty.
Switzerland's three largest wealth management banks, UBS AG, Credit Suisse Group AG, and Julius Baer Group, may have lost as much as CHF 18 billion (about $17.7 billion) to the ongoing Italian tax amnesty, according to media reports.
The Italian amnesty, which allows taxpayers to declare offshore assets and pay a one-time fine, was originally scheduled to end on December 15, 2009, but has been extended to April 30, 2010. (For prior coverage, see Doc 2009-27696  or 2009 WTD 241-5 .)
The fine for those who came clean by December 15, 2009, was 5 percent of the total assets. The fine increases to 6 percent for those who report by February 28, 2010, and will rise to 7 percent for those who report by April 30.
Also, Italian taxpayers had to remove their assets from Swiss banks and return them to Italy to qualify for the amnesty as long as Switzerland remained on the OECD's gray list. However, Switzerland was removed from the gray list on September 25, 2009; therefore, taxpayers have, since that date, been able to leave the assets in Swiss banks once declared. (For prior coverage of Switzerland's removal from the gray list, see Doc 2009-21372  or 2009 WTD 185-1 .)
Clients withdrew between CHF 3 billion and CHF 7 billion from UBS and Credit Suisse, while Julius Baer saw between CHF 1 billion and CHF 4 billion head south, according to Huw van Steenis, a Morgan Stanley analyst quoted in a January 15 Bloomberg.com report.
"The Italian tax amnesty has been slightly more successful than the market first thought," Steenis said.
The banks are now scrambling to maintain deposits, with UBS reportedly losing a total of CHF 182.9 billion (about $180 billion) over the last 18 months. "Although one-off effects such as tax amnesties are unavoidable, we ourselves must not give clients any reason to leave the bank," said UBS CEO Oswald Gruebel, according to the Bloomberg.com report.
Morgan Stanley estimates that Swiss banks in total retained about 65 percent of the declared Italian assets, reflecting a bump up in reporting as the end of the amnesty loomed and after Switzerland migrated from the OECD gray list.
Julius Baer retained about 60 percent of its Italian clients who participated in the amnesty and hopes to win back at least half of the 40 percent it lost, according to CEO Boris Collardi, as reported in December in the Swiss newspaper Sonntag.

Comments

Post a Comment

Popular posts from this blog

Madhu Kodas of India

Madhu Kodas of India, An Appeal to Fellow Citizens I have been closely following recent happenings relating to Shri Madhu Koda, Member of Parliament and former Chief Minister of Jharkhand and some of his cabinet colleagues that have been appearing in the Press. Without going into the murky details which vividly reveal the tale of greed, avarice, and ambition of relatively young, elected representatives for whom politics is the stepping stone to a life full of riches, unbridled power and the license to loot, let it be understood that it reflects the tragic case of an opportunity lost for crores of tribal and non-tribal residents of Jharkhand! It is the culmination of a story of betrayal by their own leaders in whom people had reposed their trust. However, this is not the story of Jharkhand alone. We believe that the same story is being unfolded in other States of India whether they are in the North, South, East, West or the North East. Lust for power, hunger for wealth, intolerance of d...
Read more

I-T raid at IAS couple home yields Rs 3 crore in cash

CNN-IBN BIG CATCH: House of senior IAS officer Arvind Joshi was raided on Thursday night. Bhopal: Over Rs 3 crore in cash have been recovered from an IAS couple in Bhopal following raids by the Income Tax Department officials at their residence on Thursday night. Officials also seized details of bank deposits worth Rs 2.25 crore from the house of Arvind Joshi, a senior IAS officer and his wife Tinu Joshi, who is the secretary of Woman and Child Welfare Development in the Madhya Pradesh government. "Stacks of banknotes were recovered in a suitcase. The action comes on the basis of documents found during a similar exercise in 2009 of heavy investments made in an insurance company by these officials," said Director General of Investigations (I-T) for Madhya Pradesh and Chhattisgarh, Brajesh Gupta. Sources say Joshi confessed all the money is from unaccounted sources . There were also simultaneous raids at the houses of retired Bhopal Municipal Corporation commissioner MA Kha...
Read more

Delhi court reserves order on CBI plea to acquit Quattrocchi

NEW DELHI: A city court on Friday reserved its order on the Central Bureau of Investigation (CBI) plea to withdraw Italian businessman Ottavio Quattrocchi's name from the Bofors gun deal pay-off case. Chief Metropolitan Magistrate Kaveri Baweja reserved the order for Oct 24 on whether the CBI's application under Section 321 of Criminal Procedure Code (CrPC) should be accepted. The CBI had Oct 3 moved an application before a court here to quash all charges against Quattrocchi in the two-decade-old Bofors pay-off case, saying the case cannot be kept pending forever as attempts to extradite him have failed in the past. "The continued prosecution of Quattrocchi is unjustified in the light of various factors, including the failed attempts to extradite him," Additional Solicitor General P.P. Malhotra appearing for the CBI had said before the court of Chief Metropolitan Magistrate Baweja. Citing that the court has limited power under section 321 of CrPC, Malhotra said: ...
Read more