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French secure tax deal from Swiss

Geneva, August 27, 2009

French tax authorities will be allowed to request information on suspected French tax dodgers with accounts in Switzerland without having to provide the name of the bank, Swiss television reported.

The terms of the bilateral tax deal, due to be signed later on Thursday, have not been disclosed but it would involve unprecedented cooperation from the Swiss, French-language Swiss television said in a report on Wednesday night.

"The vice is tightening on cheaters," television said. "French fiscal authorities could demand information of Switzerland on the basis of simple suspicion of fraud. In some cases, it would then be up to Berne to conduct an investigation to determine in which bank the suspect client had accounts."    

French Economy Minister Christine Lagarde is due to sign the accord in the Swiss capital Berne later on Thursday. A Swiss Finance Ministry spokesman declined to comment on the details, but said that a statement would be issued later.

French President Nicolas Sarkozy has declared that "the time of bank secrecy is over".

Under pressure from the G20, Switzerland, the world's biggest offshore banking centre, agreed in March to relax its prized bank secrecy and agreed for the first time to share certain bank client data with other jurisdictions, once bilateral tax treaties are ratified.

The Alpine country has initialled new tax treaties with 13 countries -- including the United States and Britain -- and the deal with France will be the third it has signed, the Finance Ministry spokesman said.

It must sign 12 to be removed from an OECD "grey list" of tax havens which have agreed to improve transparency but have not yet signed the necessary deals. It aims to do so by the end of the year.

Last week Switzerland agreed to reveal the names of about 4,450 wealthy American clients of UBS AG to US authorities in a tax dispute settlement that pierced its vaunted bank secrecy.

Swiss authorities -- who have always maintained they would not conduct "fishing expeditions" for foreign tax authorities -- could be forced to divulge the names of hundreds or thousands of French with Swiss-based accounts, according to the Swiss television report.

"This would be a shock," said Carlo Lombardini, a tax lawyer in Geneva, told Swiss television.

French clients represented an "important market", he added. Many wealthy French favour discreet banks in Geneva, just across the border. Many moved their funds to Swiss banks after the victory of Socialist President Francois Mitterrand in 1981, fearing a nationalisation of banks.

The tax exodus was marked by briefcases stuffed with cash, and French fiscal authorities trying to infiltrate the Swiss banks, the television said.

In Geneva banking circles, French agents are remembered at the time as noting the number plates of French vehicles parked in front of Swiss banks or photographing them as evidence. - Reuters




Tags: France | swiss | tax haven |

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