UBS faces charges of facilitating tax evasion in France

4th April 2017

Major global bank, UBS is facing hefty charges and a criminal trial after being accused of helping individuals commit tax evasion in France. But what does this mean for the firm and the global fight against evasion?

The charges

Last month the group’s French unit reported that investigative judges from PNF, the national financial prosecutor’s office, have decided to take the case to court. “We will now have the possibility to respond in detail in a court of law,” it was reported as saying. “UBS has made clear that the bank disagrees with the allegations, assumptions and legal interpretations being made. We will continue to strongly defend ourselves and look forward to a fair proceeding.”

Major fine

The bank has been accused of facilitating tax evasion and has been ordered to pay at least €1.1bn, an amount that corresponds to a figure that has already been paid as part of the dispute. However, it has been pushing for a fine closer to the €300m it had to pay in 2014 to German authorities over a similar investigation.

The PNF has suggested that more than €9.76bn worth of fraudulent money was held by UBS on behalf of French tax evaders, however the bank’s general counsel, Markus Diethelm, indicated that UBS believed the current fine was too high. “Such a large amount is unthinkable vis-à-vis our shareholders as well as vis-à-vis other jurisdictions with which we have negotiated.”

The net is closing

While the size of the fine isn’t for us to discuss, the severity of the punishment highlights the crackdown taking place across Europe, and indeed the world, against tax evasion.  And if a bank as colossal as UBS has been tackled by authorities, then it’s highly unlikely that smaller organisations will have a chance of getting away with facilitating transgressive behaviour or being guilty of tax evasion themselves. In addition, with the growth of the Common Reporting Standard, breaking the law in one country can land you or your agency in hot water in another, meaning it’s definitely not worth the risk.

If you’re at all unsure about your status, or that of the contractors you’re placing in foreign locations, then ensure you partner with a specialist before it’s too late. With the law changing at a rapid rate in countries around the world, you could be putting yourself at a greater risk than you were aware.

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