Swiss-German Tax Row Nears Resolution

by Ulrika Lomas, Tax-News.com, Brussels

09 September 2010

During a recent economics conference held in Basel, Germany’s Finance Minister Wolfgang Schäuble revealed that ongoing negotiations between Germany and Switzerland regarding a bilateral tax agreement would be completed by the end of October. The agreement, he explained, would include a combination of a withholding tax and an administrative assistance procedure.

The idea of imposing a withholding tax as a means of resolving the escalating conflict between Switzerland and other states, including Germany, has long since been favoured by the banks themselves.

While maintaining full anonymity of the account holder, a withholding tax would be levied on the assets of German account holders by Swiss financial institutions. This sum would then be transferred to the Swiss authorities, before finally being returned to the tax authorities in Germany.

Schäuble underlined the need for an administrative assistance procedure to form part of the agreement between the two governments, noting that such a procedure should have the same preventative powers as the automatic exchange of tax information provision currently used within the European Union. Regarding the regularization of existing accounts, dating back years if not decades, Schäuble emphasized that a solution is also needed here.

Defending the German government’s decision to purchase stolen tax data, Schäuble stated that the new provisions of the forthcoming agreement must serve to deter tax evaders in future. Germany would then no longer have reason to obtain such data, he added.

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