THE government is trying to strike a deal with Switzerland that would enable it to tax deposits by Cypriots in Swiss banks, which reportedly exceed €100 million, it emerged yesterday.
Government spokesman Stefanos Stefanou said an agreement already exists concerning Cypriots with deposits in Switzerland.
“But we are interested to know, and tax, what capital there is in Switzerland. It is something we are working on,” the spokesman said without offering more details.
Reports said the cash, which exceeds €100 million, was taken out of Cyprus during the 1999-2000 stock market (CSE) bubble and the construction boom that followed.
It is understood that the current agreement – an EU directive -- provides for Switzerland to pay some form of compensation to Cyprus but apparently the government wants a stricter deal.
Under the current scheme, the tax is withheld at source and passed on to the EU country of residence without disclosing the holders’ names.
The government will try to strike an agreement that is similar to the one between Switzerland and the UK, reports said.
That deal includes a one-off tax ranging between 19 per cent and 34 per cent depending on how long the cash has been in the bank.
The 1999-2000 CSE fiasco saw thousands of people lose their life's savings by investing in bubble shares.
The market gained 688 per cent in 1999 as its capitalisation bulged to around €18 billion (CYP11 billion) at one point.
All those gains were wiped out a year later by a rash of new issues that drew a stampede of uninitiated investors on borrowed funds and led to a subsequent liquidity squeeze.
Almost 12 years on, Cypriots continue to harbour a sense of injustice for the scandal that brought the CSE into disrepute and triggered a painful restructuring to regain investor confidence.