The government agreed last year with Britain and Germany to collect punitive back taxes to legalise accounts held by their citizens in Switzerland and to introduce a withholding tax on future assets. Final details are still being hammered out.
Finance minister Eveline Widmer-Schlumpf said in a weekend interview she had reached agreement at the political level on advance payments Swiss banks must make that should be reimbursed later when they collect back taxes due on legacy wealth.
"Now the question is whether the banks are ready for such a payment. Some of the banks are signalling agreement, others are saying 'no way'," she told the NZZ am Sonntag newspaper.
"We have largely done our job. Before we sign the agreements with Germany and Britain we must know whether the banks agree with the solution."
Swiss Bankers Association spokesman Thomas Sutter said discussions were under way about what banks must pay. "We are in talks about the financing of this lump sum that the banks should pay in advance. To my knowledge this is not the only open question. We are confident that we can find a solution."
Swiss banking secrecy, which has helped the country build up a multi-trillion dollar offshore banking industry, has come under heavy fire in recent years. Regularising untaxed assets is seen as key to the sector making a fresh start.
Mario Tuor, a spokesman for the State Secretariat for International Financial Matters (SIF) which is leading the talks, said the negotiations due to be concluded this summer were very advanced.
A Swiss banking source said the payment issue was controversial as it could encourage banks to dissuade clients from moving money out of Switzerland so banks could recoup backtaxes they have paid in advance.
"The upfront payment is certainly a topic where we need more clarity on how it will be structured," the source said. "The payment could bring us into an awkward situation of a conflict of interest."
Pierin Vincenz, head of Swiss retail bank Raiffeisen, said his bank was not prepared to contribute to the advance payment as it did very little business with foreign clients.
"The banks that have a focus on wealth management with foreigners are the ones that have an interest in regularising their funds and their employees," Vincenz told the Tages-Anzeiger newspaper on Tuesday.
"Regional banks and the majority of cantonal banks will hardly pay for a legacy that they did not cause."
Switzerland's two biggest banks Credit Suisse and UBS which both have a big offshore presence would not comment on the negotiations.
Julius Baer, Switzerland's largest dedicated wealth manager, reached a deal in April to pay the German tax authorities 50 million euros ($71 million) to avoid potential legal action over untaxed accounts.
Copyright Reuters, 2011