A confrontation with Germany could represent the biggest challenge Switzerland has faced thus far. Though the Swiss clash with the U.S. drew much attention, Americans with offshore accounts in Switzerland represented no more than 5% of Switzerland's $1.8 trillion offshore-banking business, according to KPMG.I suppose that, in yielding -- or appearing to yield -- to the U.S., the Swiss were simply trying to mitigate the damage. But with other countries standing in line with equal or larger stakes, the threat to the Swiss way of doing banking business may be irreparable. I hope so.
German officials say the country's taxpayers have about €175 billion in Swiss bank accounts, or more than 10% of the total. According to KPMG, as much as 80% of European Union account holders' money in Switzerland is undeclared, and experts say Germans are among the biggest groups of tax evaders in Switzerland.
Not surprisingly, the article reports that Swiss officials are crying foul that another sovereign would pay for and use data stolen in violation of Swiss law. I must admit that I previously thought that business of using and even paying for stolen Swiss bank data would be unseemly and inappropriate. No more. And, in any event, just the thought that it could happen should give further incentive to U.S. and other country taxpayers to seek amnesty in whatever form it may come (in the U.S. via voluntary disclosure). The old attitude of catch me if you can seems foolhardy.
If this is happening to the Swiss banks, other countries' banks are also at play.
Of course, these countries and the banks they enable could behave, probably a startling concept to them. More likely than behaving, though, they will try to mitigate the damage while keeping as much as they can of their franchise to enable raids on the fiscs of other countries.
Update on 2/2/10: The Tax Prof Blog has a blog on this here with helpful links to a number of news sources. I note that the source for the German Government is an IT specialist. Think of all those people working in the bowels of the banking industry who are now trying to figure out what they can do to become as rich as some of the people they turn in. My experience is that persons playing the game of using Swiss banks to cheat on taxes thought that they had controlled the flow of information, but we now find that there are lots and lots of on the books and off the books potential breaches in that dam.