By Lisa Jucca
GENEVA (Reuters) - Increasing demands from tax authorities around the world are challenging traditional private bankers while opening opportunities for niche players who can help rich clients pay less taxes in a legal way.
Managing off-shore, often undeclared funds in bank secrecy strongholds such as Switzerland and Luxembourg has been a traditional activity of many private banks.
But a global movement towards more stringent tax and transparency requirements is challenging this approach.
"It is becoming very difficult for clients of private banks and trust companies to hide their money from the tax man, which they have maybe been able to do in the past," Stephanie Jarrett, from law firm Baker & McKenzie, told the Reuters Wealth Management Summit in Geneva.
"I don't think banking secrecy is at an end but certainly the tax frontiers are being pushed and thinking you can carry on simply relying on banking secrecy is short term."
The European Union's savings directive, introduced in 2005, dealt the first blow to bank secrecy in Europe by forcing European wealth management centers such as Switzerland and Luxembourg to apply a withholding tax on savings from undeclared EU income.
U.S. tax legislation is equally stringent and experts predict new efforts in the fight against tax evasion also in relatively loosely regulated emerging countries.
Yet, this appears to be an opportunity for small players who offer ad-hoc tax solutions to allow wealthy individuals to pay as little tax as possible without breaking the law. Continued...
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