Offshore savers can kiss confidentiality goodbye

An employee of the one of the major Lichtenstein banks recently sold details of all their account holders to the German and UK tax authorities. Employees of various Swiss banks have done something similar. I can imagine it’s very lucrative work. On top of that, the US and the UK have persuaded the Swiss authorities to roll back their banking secrecy and allow details of account holders to be passed to them, while many Offshore Financial Centres (OFCs) have signed Tax Information Exchange Agreements (TIEAs) with onshore countries. Those OFCs controlled by any European Union country now automatically exchange details of accounts earning income with the home country of the account holder.

What this means, essentially, is that onshore countries now have a legal means to obtain information about any offshore account or offshore trust or company structure. If they do not have a legal means, then it seems they are quite prepared to purchase the information from a thief. What has happened to reach this situation? What has happened to the right to privacy and banking secrecy?

Some might say that it kicked off in 1996, when the OECD commissioned a report which was delivered in 1998 and listed all “tax havens” which engaged in “harmful tax competition”. The OECD threatened these tax havens with all sorts of unpleasant stuff because their low tax rates attracted investment away from the OECD member states. The implication was that anybody who had a tax rate lower than the OECD norm were being unfair. Another source of irritation was that the OFCs wouldn’t reveal who was doing what in their jurisdiction.

more…