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Switzerland considering solution to U.S. tax dispute

By Emma Thomasson and Katharina Bart

ZURICH (Reuters) - The Swiss government is considering a possible solution to a long-running dispute with U.S. authorities over Swiss banks accused of helping wealthy Americans evade billions of dollars of tax.

A source familiar with the talks has told Reuters the two sides have agreed an outline for a deal that would divide over 300 Swiss banks according to the extent they had helped U.S. clients hide money, to determine how they are dealt with.

A Swiss government spokesman said in a statement on Wednesday the cabinet had been informed about a solution to the dispute. He declined to give further details as the negotiations are ongoing.

Bank secrecy, which has helped Switzerland become the world's largest offshore center with $2 trillion in assets, has come under heavy fire since the financial crisis as cash-strapped governments have sought to clamp down on tax evasion.

The Swiss government has been in protracted talks to end U.S. investigations into Swiss banks, including Credit Suisse and Julius Baer , in return for expected heavy fines and a transfer of client names.

Under the outline deal, banks already under investigation would settle with individual deferred prosecution agreements, the source said.

Credit Suisse, which has already made a 295 million Swiss franc ($318.35 million) provision towards settling the investigation, declined to comment. The Swiss Bankers Association also declined to comment.

A second group of banks which had U.S. clients but have not yet been targeted by investigators would have to agree to pay fines and hand over data on their customers, the source said.

The country's biggest bank UBS was forced in 2009 to pay a fine of $780 million and hand over the names of more than 4,000 clients, delivering the U.S. authorities information that allowed them to then pursue other Swiss banks.

Switzerland's oldest private bank, Wegelin & Co, said in January it was closing down after pleading guilty to helping Americans evade taxes, paying a fine of nearly $58 million.


Negotiations have stalled in the past because Washington had demanded client data going back as far as 2002 - which Berne said it could not deliver due to strict Swiss bank secrecy laws - and because U.S. authorities want to keep up pressure on tax evaders to come clean under an amnesty launched last year.

The deal now under consideration would involve banks only handing over data reaching back to 2009, when Switzerland and the United States signed a new double-taxation pact which allows the transfer of information on more clients, the source said.

In return, Swiss negotiators are working on a plan to deliver codified data detailing the money trail for those who pulled money before 2009 and placed it in other tax havens instead, the source said.

Tax evasion has dominated headlines in recent weeks following the admission by a disgraced former French minister that he held a Swiss account and the recent leak of thousands of holders of secret bank accounts worldwide.

In response, major European Union economies have agreed to deepen cooperation in the area and Luxembourg has dropped its opposition to sharing bank data with its partners.

On Tuesday, the German state of Rhineland-Palatinate said it had bought a CD containing data on secret bank accounts which could yield half a billion euros in tax revenues, triggering police raids across the country.

(Additional reporting by Oliver Hirt. Editing by Erica Billingham)