UBS has demanded proof of tax compliance from its foreign-based customers. Now, the Swiss bank is setting its sights on Swiss clients.

The fallout from the tax disputes with the U.S., Germany and other countries has meant that Swiss banks have demanded proof from customers domiciled abroad that monies received have been properly taxed.

At the same time cross-border tax evasion is being tackled using the global automatic exchange of information, or AEoI, standards, which around 100 countries to date have agreed to comply with.

UBS Requires Proof

At present the AEoI standards haven’t affected Swiss domestic bank secrecy – Swiss clients banking in Switzerland. Now however, UBS is seeking proof of tax compliance from some of its Swiss clients, Swiss paper «Finanz und Wirtschaft» (in German, behind paywall) reported on Thursday.

UBS is apparently now also targeting persons domiciled in Switzerland, who either have a numbered account with the bank who wish to have their statements retained there, not mailed home, or whose business entitles them to an offshore structure. UBS confirmed the information to the paper without giving further details.

Thus far hundreds of customers have already been contacted. They are required to provide proof in the form of an extract from their tax return confirmed by a tax consultant. This conditions applies across the country and is effective from this week, it reports.

Tax Matters Private?

Other banks haven’t yet gone this far. Zuercher Kantonalbank, or ZKB,  expects its clients to have cleared any tax liabilities, and will provide them with help if needed, according to its ZKB model. There is no requirement for written proof. A request to Credit Suisse for its stance on tax compliance for Swiss customers is still pending.

The UBS move represents a challenge to a taboo in Switzerland – even if numbered accounts when not even the bank knew the client identity behind the funds are a thing of the past. By contrast, the question of whether taxes have been paid has always been a private matter between the person and the tax office.

The whole tax issue has resulted in a fierce political squabble over the future of the Swiss bank secrecy laws. The left-leaning parties would like to see the secrecy laws abolished, without any success to date.