German tax evasion deal faces challenge
A tax evasion deal signed between Germany and Switzerland has been opposed for being too lenient.
Germany’s Cabinet has endorsed its agreement with Switzerland to collect unpaid tax from Swiss accounts, but it could still be derailed in parliament after unlikely opposition came from the Sozialdemokratische Partei Deutschlands, Germany’s opposition labour party.
The SPD labour party, which might be expected to support moves to stop tax evasion, has branded the plan unthinkable inasmuch as “tax swindlers’ identities remain anonymous, and Germany undertakes contractual obligations not to follow up on investigative leads for criminal prosecution.”
The stipulation that offenders remain anonymous, and Swiss banks collect and remit their unpaid foreign tax for them, were key goals of Swiss authorities in negotiating agreements with Germany. The UK sought a similar deal, according to James Badcock, partner in Geneva with UK-based law firm Collyer Bristow.
If the SPD derails the German agreement – which still faces parliamentary vote – it would save significant extra work by Swiss banks and their asset management units in assessing and sending the German tax payable from undeclared Swiss accounts.
But the leader of the SPD parliamentary party Frank-Walter Steinmeier is pushing for further negotiation on the deal, and said there was no political majority for the measures as they now stand.
They are slated to take effect in 2013, after Germany’s finance minister Wolfgang Schaueble and his Swiss counterpart Eveline Widmer-Schlumpf signed the agreement in Berlin yesterday.
Berlin is expecting to take in EUR 10bn from the move, which imposes a retrospective tax of between 19% and 34% on undeclared Swiss accounts back to 2002.
Swiss banks will also make an upfront payment to Berlin.
Some estimates have put the amount of money Swiss banks have from German clients at €280bn, about half of which is private wealth, and about 80% of this has not been fully taxed.