France and Germany Get Tough with Credit Suisse (7/11/12)

The internet news reports that France and Germany are taking action.  The following is from Kim Willsher, France, Germany tax evasion inquiries target Swiss bank clients (Los Angeles Times 7/11/12), here.

PARIS — France and Germany have launched a series of raids on the offices and homes of bank officials and their wealthy customers in an ongoing inquiry aimed at cracking down on those who evade taxes by using Swiss banks. 

On Tuesday, German police searched the homes of an unspecified number of Credit Suisse bank customers suspected of tax evasion. In France, detectives raided the offices of Swiss banking and finance house UBS in three major cities: Lyon, Bordeaux and Strasbourg. 

* * * *  

The homes of several high-ranking UBS employees in Strasbourg were also searched Tuesday, according to a French police source. The French prosecutor's office refused comment, saying the investigation was ongoing. The bank said it would cooperate. 

* * * * 

In Germany, tax officials are investigating about 5,000 clients of Credit Suisse over Bermuda-based life insurance products used by some wealthy clients to avoid taxes. The bank insisted it stopped selling the products in 2009. 

Credit Suisse struck a deal with the German authorities in September, agreeing to pay more than $180 million to end an investigation of tax dodging allegations. 

Norbert Walter-Borjans, finance minister of the German state of North Rhine-Westphalia, said that despite a recently signed tax treaty between Germany and Switzerland, the tax evasion inquiry would continue. 

Investors from France, Germany and Britain represent the largest market in Europe for Swiss private banks. Britain and Germany have signed deals with Switzerland aimed at legalizing undeclared assets in Swiss banks by introducing a withholding tax. France has refused to sign such agreements, preferring instead to pursue criminal investigations.

This Wall Street Journal article has more on the German initiative.  David Crawford and Laura Saunders, Clients of Swiss Bank Raided in Tax Probe (WSJ 7/11/12), here.

BERLIN—German tax inspectors in recent weeks have been raiding the homes of Credit Suisse Group AG clients suspected of evading taxes, according to bank and German government officials. 

The investigation is centering on about 5,000 clients who between 2005 and 2009 allegedly bought insurance policies at a Bermuda-based subsidiary of the Swiss bank. 

The policies were sold to clients as a way of earning tax-free interest on savings, people familiar with the investigation said. A Credit Suisse spokesman said in a statement the bank has told clients who bought the policies to talk to their tax advisers. He added that Credit Suisse told its clients they were responsible for determining their tax obligations when they bought the products, which the spokesman said were legal in Switzerland. 

* * * * 

The products, known as "wrappers," exploit a Swiss tax loophole exempting insurance payouts from income tax, a person familiar with the matter said. A very small insurance policy is wrapped around an initial down payment, which is returned with interest in a payout at the end of 12 years. Swiss tax regulations accept the product as a tax-free insurance policy.