The scrutiny of financial secrets and the change in international tax practices

The global financial world is undergoing constant change, with the transparency of capital flows increasing steadily over the past decades. Fortresses of financial secrecy that used to be impregnable must increasingly bow to international legal standards. This process reflects the conflict between the traditional protection of privacy ofwealthy and the state claim to fair taxation. The following explanations shed light on the mechanisms of this development and show how national legislation and international agreements gradually undermine the possibilities of secrecy of wealth.

The limits of financial secrecy in national law

German credit institutions have no way of invoking traditional banking secrecy as soon as criminal acts are in place. Even if there is a mere suspicion of a tax offense, it is becoming increasingly difficult for the financial institutions to build up the tax authorities with reference to a right to refuse information. In this context, several essentialaspects of outstanding importance. First of all, the question arises as to which obligations are imposed on the financial institutions to really get to know their customers. After that, it is important to clarify how quickly and how uncomplicated third parties can receive information about an account connection. In both questions, the provisions of the tax code and the Money Laundering Act play a role in Germanycrucial role.

The legal obligations to identify customers

The tax code strictly forbids the establishment of accounts on a false or fictional name for one’s own person or third parties or to put valuables in custody. Anyone who keeps accounts or leaves lockers must first be certain about the person and address of the person entitled to dispose of them. This information must be recorded in a suitable form so that the institutecan provide information about all accounts and subjects at any time. In addition, the financial institutions have to determine the beneficial owners as obliged bodies of the Money Laundering Act when opening an account. This prevents dark funds from being deposited into the constructed straw company.

The quick information and the fairy tale from the anonymous account

The corresponding paragraph of the tax code provides detailed information about the speed and simplicity of the information being provided. Credit institutions must provide information about all accounts, lockers and powers of attorney at all times with regard to natural or legal persons. This obligation is still valid for several years after the end of the business relationship. Now what is thatspecial about the concept of the number account? After all, every account has a number. When it comes to the term number account, most people immediately think of Switzerland. In the meantime, the legal situation in this banking Alpine Fortress has changed. The account holder must also be identified there.

Protection of customer data in the Alpine republic

With an account in Switzerland, only the bank is aware of the personal data of the customers. The financial institutions usually do not dream of passing on this data to third parties. Only in blatant cases of criminal offenses or tax fraud will the institute move away from this practice. Or it happens under pressure from foreign nations, as in the tax dispute between theUnited States and a large Swiss bank. In order to obtain shares in the income from the estimated black money credits of German investors in the Alpine republic, the finance ministers of both countries signed an agreement a few years ago.

The failure of diplomatic efforts

This agreement provided for withholding tax on capital gains, regardless of whether they were earned in Switzerland or Germany. However, the contract was in the Federal Council and the Mediation Committee. Large parts of the population and many politicians were of the opinion that the black money artists had come off too cheaply with a mere and beyond moderate deductionwould be. The tax evaders would have remained anonymous and the Federal Republic would have committed to no longer actively actively procure data on Swiss account details. The Swiss attach particular importance to anonymity.

The conflict over the purchase of stolen data carriers

The representatives of the Alpine Republic are reacting extremely sensitively to the purchase of data carriers, whose financial success is impressive. At the end of March, the two-thousand twelve were even on the offensive. The Confederates issued arrest warrants for several North Rhine-Westphalian tax officials for purchasing such data carriers. From the point of view of the waving tax paradisethe German civil servants pursued news and violated banking secrecy. The trio is not advised to go on a holiday in Switzerland for the time being, because when you enter the country you risk an arrest. In any case, the agreement with Switzerland fit seamlessly into the federal government’s capital gains tax benefit strategy.

The political strategy and the fear of tax evaders

Apparently, the negotiations were based on the motto that they would rather get a moderate share than nothing at all. This approach was related to the introduction of the withholding tax, another milestone in connection with the kneeling strategy before large investors. The failure of the agreement was not only a blow to the office for Switzerland. also many successful to dateSteer evaders were suddenly forced to make self-disclosures out of sheer fear of further data purchases. The most spectacular case was the affair surrounding the self-confessed gambler Uli Hoeneß, who admitted two thousand thirteen million tax evasion in January of the year through a Swiss account.

The emigration of capital to new tax havens

In Switzerland, in view of the whole discussion, dark clouds are already appearing on the horizon and fear a capital decree is feared by the emigration of a number of wealthy and clever black money investors in the direction of the next tax paradise. This fear is by no means unreasonable. Many well-known people think that Germany is completely unattractive anyway and that Switzerland is not eithermore that is what she used to be. So come up with something new. There are plenty of offers. If you want to enjoy your capital and its fruits without any state influence and have high investment amounts, you really go abroad. The historical and current development clearly shows that the age of absolute financial anonymity in traditionaltax havens irrevocably coming to an end. States are increasingly willing and able to enforce their fiscal claims across their own borders through international pressure and the targeted purchase of data. At the same time, however, a constant game of cat and mouse is created in which the wealthy are always looking for new, even more opaque jurisdictions toto withdraw from government access. Ultimately, this conflict reveals the fundamental tension between the global mobility of capital and the territorial limitations of state sovereignty, with transparency at the expense of traditional privacy steadily increasing.