The Swiss bank suffered a blow when a British court rejected its attempt for reimbursement of several hundred million Swiss francs in taxes on bonuses paid to U.K.-based bankers in the wake of the financial crisis.
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.
Nine years on, a British court ruled that Zurich-based Credit Suisse is not entitled to £239 million ($298 million) it paid at the time, according to legal outlet «Law 360» (behind paywall). The Swiss bank had argued that the measure was somewhat arbitrary. Some foreign banks had escaped the tax simply because of the time frames chosen by Britain, it countered in court.
«Credit Suisse proceeded with this case as we believed there was an important principle of law at stake; however, we accept the judgement of the court,» a spokesman said.
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. Credit Suisse is believed to be the only bank to attempt to recoup its money in court. Last month, Britain's shadow chancellor branded the effort «outrageous».
