LDF and Swiss-UK Tax Agreement
the banking secrecy of Switzerland and waive any information about the identity of tax evaders. Fur-
thermore, it undermines the intention of the EU Commission to focus on an automatic exchange of
information and complicate negotiated amendments of the Savings Directive with Switzerland and as
well with Luxembourg and Austria.
The problem with Perdelwitz' assessment is that, equal win-win situations never exist in complex
cases like this. Furthermore, his evaluation of the benefits and disadvantages is subjective. Perdelwitz
ignores the fact that the UK and Austria receive a considerable amount of money without doing any-
thing. All future tax collection will also be made by the Swiss paying agent. Crucially, this agreement
must not ultimately undermine the aims of EU Commission. One difficulty faced by Swiss banks and
intermediaries is that punishment of clients with untaxed assets, employees and the corporation which
helped the client to evade tax is indeterminate. Regularising the past enables agreement on an automat-
ic exchange of information with foreseeable consequences.
3.7.14 Loopholes
Several authors®’ mention loopholes in the agreement. While some certainly do exist, it must be re-
membered that every agreement has loopholes, since it is impossible to regulate everything in just a
few pages. There are several thousands of advisors and lawyers searching for loopholes pitted against
just a few dozen people who develop, negotiate and decide on the law.
One of the most frequently cited loopholes is the exclusion of discretionary structures like many of the
Liechtenstein Foundations. However, while most Liechtenstein foundations are discretionary from a
legal point of view, many are not discretionary from a tax point of view, due to an existing contract of
mandate, the influence of the beneficiary as a member of the board or by some kind of instructional
right. In the case of the foundation being a standalone entity unconnected to a settlor or beneficiary, a
look-through would be unfair since the foundation is the legal owner of the assets. If a “fake” discre-
458
tionary structure was found to be treated as a "real" discretionary structure, the anti-abuse*? article
would be applied.
In addition, there is the criticism about the possibility of relevant persons moving their assets to anoth-
er jurisdiction before January 2013. Article 18 of the agreement states that Switzerland has to provide
HMRC with data about the ten jurisdictions most frequently chosen by clients who closed their ac-
counts or transferred their assets out of Switzerland. Of course, this will not generate surprising in-
5$ Perdelwitz, 2011, 500 & 503.
5! Perdelwitz, 2011, 496 - 503.
#8 CH-UK Tax Agreement, 2011, art. 33.
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