Germany Questions Swiss Transparency Pledge

by Ulrika Lomas, Tax-News.com, Brussels

18 March 2009

German-Swiss relations took a turn for the worse last weekend following impromptu remarks made by the German Finance Minister, Peer Steinbrueck, at the meeting of G20 finance ministers in Horsham, England, in preparation for next month's full G20 conference.

Although last week the main European countries known for their tight bank secrecy laws had already given in to pressure to conform to OECD standards introduced to combat tax fraud, Mr Steinbrueck continues to express his scepticism and confirmed within earshot of Swiss journalists that the threat of inclusion on a blacklist was as yet merely a threat, a scare tactic so that the 'cavalry' (the OECD and Germany) does not need to ride out to bring 'the Indians' (especially Switzerland) into line.

The inflammatory language used has led to a summoning of the German ambassador in Switzerland to talks with the Swiss Foreign Ministry on the subject, and serious protests from Federal Council members in parliament and senior politicians in the Swiss press. In addition formal protests from the Swiss Government to the OECD have been ignored. According to Roland Meier, spokesman for the Swiss Federal Finance Ministry, Switzerland, as a member of the OECD, feels strongly that it should be party to deliberations in the OECD about possible future sanctions against countries not conforming to the OECD standards.

The German Finance Ministry clarified its standpoint further in a statement:

"The acceptance of the OECD standard on transparency and exchange of information is a positive development. Unfortunately, there have been too many promises over the past years which failed to turn declarations of intent into concrete actions. Latest comments from the weekend, such as from Switzerland and Austria, give reason to doubt their willingness to implement the OECD standards unreservedly, particularly if the willingness to share information is dependent on well-founded suspicion of tax evasion and if bank secrecy remains basically in place. The OECD requires countries to share tax information regardless of whether there are good reasons for suspecting tax evasion."

In addition to the deliberations in the OECD about sanctions against countries not conforming to its standards, the German government proposes its own legislation against tax fraud and evasion which includes bilateral sanctions. Peer Steinbrueck has encouraged other countries in general to do the same. The progress of this legislation is now giving rise to unconcealed conflict in Germany's grand coalition government in an election year. CSU Economics Minister, Karl-Theodor zu Guttenberg, has indicated his intention to halt any further progress in the current legislative term.

Recommended