November 13, 2008 / 3:38 PM / 9 years ago

FACTBOX: Status of bank secrecy protection in Europe

5 Min Read

(Reuters) - Barack Obama's election as U.S. president will open up a new front in a growing campaign against Swiss banking secrecy, already under fire from Germany which wants the country put on a tax haven blacklist, officials said.

The list includes Monaco, Andorra and Liechtenstein.

French President Nicolas Sarkozy has also called for tax havens to be banned.

Here are details on some European countries with strict laws protecting bank privacy:

* Liechtenstein:

-- Liechtenstein allows foreigners to open trusts anonymously by registering them through a local attorney or trustee. The government says this is in line with international law. German officials say these trusts can be used to evade tax.

-- Until recently, the Alpine principality's banking laws permitted banks to issue numbered accounts, but new regulations require them to know who all account holders are.

-- Liechtenstein reacted with fury last February when Germany launched a probe into thousands of its citizens suspected of parking savings in the country's banks to evade tax.

* Luxembourg:

-- Luxembourg's banking secrecy law says that those who work in financial institutions cannot reveal information to the outside world except in money-laundering cases.

-- Under the 2005 EU Savings Directive, Luxembourg allows some account holders to keep their identities secret from their countries of residence by paying withholding tax instead.

* Switzerland:

-- Switzerland's protection of banking secrecy goes back to 1934 when it passed a law imposing heavy penalties, even prison sentences, for breach of banking secrecy.

-- The Swiss waive secrecy in criminal investigations. Banks supply information requested by foreign governments pursuing criminal investigations of individuals, but this does not automatically extend to tax matters.

-- Switzerland allows EU account holders to keep bank secrecy by paying withholding tax instead. But Switzerland has signed bilateral agreements with dozens of states over the past decade under which it will give them access to Swiss bank accounts in specific instances where it has found clear evidence of tax fraud.

-- Obama has singled out Switzerland's UBS as one of the banks who helped American "tax cheats."

-- Switzerland is the world's biggest offshore center with about $2 trillion or about 27 percent of estimated global offshore assets, according to the Boston Consulting Group.

* Austria:

-- Austria's 1947 law, written into the constitution, allows strict banking secrecy though Austrian banks require the identification of anyone depositing over $50,000. Access to information on accounts is provided on request to a government producing evidence that the account holder is involved in a criminal investigation.

- In July 2006, the Supreme Court upheld a bank's decision to withhold information requested by Germany under a bilateral treaty on the grounds that the subject, a German taxpayer, had not been formally notified of the initiation of criminal tax proceedings.

- Austria allows account holders to keep bank secrecy by paying withholding tax.

* Belgium:

-- Bank secrets may be revealed as evidence when an account holder is under investigation. Belgium has amended its criminal code to make receiving, concealing and managing criminal funds a crime.

-- Belgium has opted to keep bank secrecy and to charge foreign account holders withholding tax under the 2005 EU Savings Directive.

* San Marino:

-- Landlocked inside Italy, San Marino is a stronghold of bank secrecy and allows anyone to open an anonymous account with few questions asked.

-- The OECD removed it from its blacklist of tax havens in 2003 after San Marino took action to toughen its anti-money laundering rules, crack down on bearer accounts and make it harder for foreigners, mostly Italians from nearby provinces, to evade value added tax.

-- San Marino has agreed to allow account holders to keep bank secrecy by paying withholding tax.

* the Eu Directive:

-- The European Union's savings directive, introduced in 2005, dealt a first blow to tax havens by forcing European wealth management centers to apply a withholding tax on savings from undeclared EU income.

Sources: Reuters; OECD (www.oecd.org)

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