Hungary to tax offshore wealth, ask for Swiss help

Wed Jan 16, 2013 4:39pm GMT

* Hungary govt wants to tax money held in foreign accounts

* Government will ask Switzerland for full disclosure

* Total offshore assets could be worth up to $9 billion

By Marton Dunai

BUDAPEST, Jan 16 (Reuters) - Hungary's government plans to identify and tax all wealth held by Hungarians in foreign - mostly Swiss - banks, the Hungarian prime minister's chief of staff Janos Lazar said on Wednesday.

Hungary now wants to tax all holdings in foreign deposits at an average 35 percent rate, Lazar told reporters.

He said the central European country will ask Switzerland first to disclose all data pertaining to bank accounts of Hungarian citizens in Swiss banks.

Hungary's government, which has struggled to improve tax collection as it works to keep its budget deficit under the European Union limit of 3 percent of gross domestic product, has been hostile to offshore holdings since it took power in 2010.

Citing international comparisons and intelligence sources, Lazar said the total holding of Hungarians in foreign, mostly Swiss banks is at least 1 trillion forints ($4.53 billion) and perhaps as much as 2 trillion.

"It's safe to say there are billions of euros worth of funds abroad," Lazar said. "We ask that Switzerland disclose all data that could help identify all deposits so that we can tax those deposits under the Hungarian system."

"Hungary is a front-runner in Central Europe in terms of Swiss deposits," he said. "We have secret intelligence about the existence of these accounts, and not insignificant ones. We are not after a couple of million euros here."

Switzerland handles requests for administrative assistance confidentially so the Federal Tax Administration, which deals with such requests, said it could not confirm whether it has received a request, or comment in any way.

"The treaty between Switzerland and Hungary that enables the exchange of information in tax matters has not entered into force yet," an FTA spokesman told Reuters.

The Hungarian government in 2010 allowed two years for Hungarians to repatriate their offshore assets and pay a modest 10 percent tax on them. The deadline on that expired on Dec. 31.

Lazar said holders of illegally amassed funds will be prosecuted, although criminal investigation was not the main goal of the operation.

"We ask Switzerland to give us all data and information," he said. "Knowing the status quo of Swiss financial confidentiality we will have to see how far we can take this."

He said Hungary will start similar talks with other European countries like Austria and notably off-shore haven Cyprus.

A spokesman of the Austrian financial and markets regulator FMA told Reuters the option to deposit anonymously in Austria ended years ago and access to funds deposited before is now tied to identification.

However, he added that bank confidentiality rules would prevent any Austrian banks or authorities from disclosing the identity of the account holders. ($1 = 220.9132 Hungarian forints) (Additional reporting by Martin De Sa'Pinto in Zurich and Georgina Prodhan in Vienna; editing by Stephen Nisbet)