Credit Suisse is making a fresh attempt to get repayment from the British treasury of several hundred million Swiss francs in taxes on bonuses paid to U.K.-based bankers.
The spat dates back to 2010 when, two years after the financial crisis, the U.K. government imposed a one-off tax of 50 percent on all banking staff bonuses exceeding 25,000 pounds. This forced Credit Suisse to cut the bonuses of its senior U.K.-based managers.
Eight years on, the Swiss bank is seeking reimbursement from the British treasury of some 239 million pounds, or about 320 million Swiss francs, U.K.-based newspaper «Daily Mail» reported on Sunday.
Illegal State Subsidy?
Credit Suisse claims the tax imposed represented an «illegal state subsidy» since it only affected those financial institutions who paid out bonuses over a specified four-month period. Banks who operated a different model escaped paying the tax.
The Labor government in power at the time argued the tax was justified since the government bailouts generated so-called «windfall profits» for the banks, which the state was entitled to tax. The Swiss bank’s protests fell on deaf ears. While the financial crisis also hit Credit Suisse hard, it never went cap in hand to the Swiss government, unlike its domestic rival UBS.
At the time, the one-off tax on bonuses generated about 3.4 billion pounds for the U.K. state coffers.
«Shameless» Credit Suisse
While the tax caused large resentment among London-based banks, Credit Suisse is thus far the only one to resort to legal action. The issue will be heard in the U.K. High Court in the coming year when it will seek compensation for the lost tax revenue, according to the report.
Recourse to the British legal system is however unlikely to improve the image of Credit Suisse. British activists are angered by the Swiss bank’s move, describing it as an institute of greed and accuse it of learning nothing from the 2008 financial crisis.
A member of the group opposed to the excessive bonuses paid to senior bankers told the «Daily Mail» that the legal steps being taken by Credit Suisse are a shameless affront to the ordinary British taxpayer. The bank would be better advised to let the matter rest and begin a fresh chapter.
Credit Suisse Statement
A spokesman for the Swiss bank told the «Daily Mail»: «Credit Suisse has sought to resolve bank payroll tax issues over a number of years with HMRC. These technical issues are now the subject of formal proceedings, which Credit Suisse has a legitimate interest in pursuing to provide certainty as to the proper scope and application of the 2010 one-off tax.»
