Credit Suisse Settles German Tax Probe

by Lorys Charalambous, Tax-News.com, Cyprus

21 September 2011

Swiss banking giant Credit Suisse has reached an agreement with the public prosecutor’s office in Düsseldorf aimed at ending proceedings against Credit Suisse employees in relation to allegations of aiding tax evasion.

Resolving all proceedings, Credit Suisse now aims to make a payment of EUR150m to the German authorities shortly.

The Düsseldorf authorities launched investigations into the Swiss bank and their clients in March last year, following the controversial EUR2.5m purchase by the German state of North Rhine-Westphalia in 2010 of a tax data disc containing the names and details of Germans alleged to have evaded taxes in Switzerland.

Commenting on the agreement reached by both parties, Credit Suisse announced that it “welcomes this outcome”, noting that “a complex and prolonged legal dispute has been avoided, with an agreed solution that provides legal certainty”.

The firm states in its release that: “Credit Suisse pursues a strategy of only acquiring and managing assets in compliance with the applicable legislation and regulations.”

It adds: “Credit Suisse has been preparing for the changes in cross-border wealth management for a long time and today has a strong presence in Germany, with operations in 12 locations and a team of around 750 employees.”

Credit Suisse is not the only bank to have made one-off payments to end similar investigations into allegations of assisting tax evasion. Earlier in the year, the Swiss bank Julius Bär and the Liechtenstein LGT bank both made payments of EUR50m aimed at resolving German tax proceedings.

However, with Germany and Switzerland on the brink of signing a landmark tax agreement intended to resolve the long-standing friction on the issue of banking secrecy, Germany will in future no longer be able to purchase stolen bank data.

The Swiss-German bilateral tax deal provides for the future taxation of income earned by German taxpayers with accounts held in Switzerland as well as for the taxation of old money held by German residents in undeclared Swiss accounts, while at the same time maintaining traditional banking secrecy.

Due to enter into force in 2013, the Swiss-German agreement has yet to be signed by German Finance Minister Wolfgang Schäuble and his Swiss counterpart Eveline Widmer-Schlumpf and must subsequently be ratified by the parliaments of both countries.

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