Exchange of Information for Tax Purposes

1. S. 243Introduction

Switzerland has been known as a safe haven for the deposit of financial assets due to its bank secrecy for a long time. In literature and movies a Swiss bank account has been a symbol of hidden wealth, yet often reality surpasses fiction. Banking secrecy is codified in Switzerland by the 1934 Banking Act and has been heavily debated recently. Some claim it facilitates tax evasion and the money laundering of income from illegal activities, and others say it gives protection to refugees who face persecution by oppressive regimes by allowing them to escape without losing all their assets, with the Jews fleeing from the Nazi regime as the prime example.

Despite the many reasons in favor of Swiss bank secrecy, for tax authorities of various other states, Swiss bank secrecy is mostly seen as a way to facilitate tax evasion. But where in the past these states have tacitly undergone loss of revenue, they have recently adopted a more active approach to combat Swiss bank secrecy. Frontrunner has been the United States, which has even arrested Swiss bankers in order to obtain information about their clients. European countries, however, have not gone as far as to incarcerate ban...