After Tax Evasion Crackdowns, Geneva Banks Hope for a Better 2018
Posted in Offshore Account Update on October 27, 2017
Following the global financial crisis, countries throughout the world began to crack down heavily on tax evaders, passing new laws and going after both offshore investors and financial institutions.
Swiss banks were hit very hard by the crackdown, with Reuters reporting that numerous respected Swiss financial institutions were accused of being complicit in tax evasion. The country’s reputation and the reputation of its financial industry was at risk, its renowned banking sector tarnished by the crackdowns, and there were fears the country would turn into an “international pariah.”
The crackdown also hit individual taxpayers very hard, with many investors who had American connections facing serious financial consequences for tax evasion. Investors had options, and continue to have options, for reducing some of these risks by talking with a Washington DC international tax attorney about amnesty programs. However, even programs like the Offshore Voluntary Disclosure Program can leave taxpayers facing penalties — albeit much smaller ones than if offshore accounts are found by the IRS.
Looking back on the crackdown now, the toll on Swiss banks is clear. There are 25 percent fewer Swiss banks today than there were in 2011 and the total number of banks in Geneva is down to just 104. Geneva-based financial institutions and other Swiss banks have also pushed heavily for reform to make sure they can compete on a global landscape after the aggressive crackdown.
Now, however, Reuters reports that things are looking up for the troubled Swiss banking industry and banks have a rosier projection of the future.
Swiss Banks are Feeling Positive About 2018
According to Reuters, when asked about their outlook for 2018, a total of 45 percent of Swiss financial institutions indicated that the upcoming year would be a good one. The remainder of the banks were split between anticipating a stable year and expecting a difficult one. This is a significant increase in the number of banks projecting a good year in 2017, when just eight percent of Swiss financial institutions were positive about the upcoming year compared to 42 percent who expected to have a difficult time.
The fears of the Swiss financial institutions were largely unrealized last year, which has prompted the big shift in the number of banks expecting a good year coming up. Around half of all big banks in Geneva (defined as banks with more than 200 employees) also have rosy projections for earnings, with the banks indicating that their profits are likely to rise in 2018.
There are a number of factors prompting banks to think more positively about what is to come, including the possibility of a new corporate tax law being passed as well as expectations of new financial regulations coming into effect in 2019 and ending the chaos that has been associated with the regulatory process.
It remains to be seen if the banks are right to be optimistic, if they’ll earn the expected profits, or if upcoming financial regulations or tax reform help or harm their business. One thing is clear, through. Laws aiming to stop tax evasion will remain in effect and Swiss banks will need to continue to comply with reporting requirements. For offshore investors, the continued intense scrutiny on offshore accounts will mean that talking to Kevin Thorn, a Washington DC international tax attorney, to ensure you're in full compliance with regulations is an advisable course of action.