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Swiss get closer to German tax dodging deal

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12:16 CEST+02:00

 

Swiss President Micheline Calmy-Rey said a tax evasion deal with Germany that will levy a 26 percent withholding tax on new German assets in Swiss banks, will be signed “shortly”. 

 

 

The treaty is due to be signed on August 10th, according to SonntagsZeitung newspaper.

“Switzerland’s banking sector has no interest in untaxed assets,” Calmy-Rey said in an e-mailed statement issued after she met with German Foreign Minister, Guido Westerwelle.

Progress in negotiations came after Germany backed down on a key demand: a payment by Swiss banks of 10 billion francs ($13 billion) to cover undisclosed funds from the past 10 years, which was deemed “unacceptable” by Switzerland’s two biggest banks - UBS and Credit Suisse. A lower figure of 2 billion francs has since been approved.

Because of that compromise, the 26 percent levy is higher than anticipated, SonntagsZeitung reported.

Switzerland has come under increasing global pressure to address tax evasion. In 2009, UBS paid a $780 million dollar fine to U.S. authorities, as well handing over names of thousands of U.S. customers with private accounts in Switzerland. 

Swiss banks’ Germans clients, who represent the largest percentage of foreign assets, up to half of which is thought to be undeclared, could now face similar pressure to declare untaxed funds. 

If Switzerland finalises this deal with Germany, a similar treaty with the United Kingdom and other countries could follow. British authorities are to receive a payment of 500 million francs ($652 million) from Swiss banks, SonntagsZeitung said.

In another article, the Financial Times reported at least six more Swiss and one Liechtenstein private bank have caught the attention of US prosecutors investigating which Swiss bankers helped rich Americans evade tax.

No further banks have been outed yet. However, the latest revelations will put other banks under pressure to provide further client names.

What this means for Switzerland’s hallowed banking secrecy laws, which have been steadily eroding over the past few years, remains to be seen.


 

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