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German Bundestag Waves Through Swiss Tax Deal

by Ulrika Lomas, Tax-News.com, Brussels

30 October 2012


On the recommendation of the finance committee, the German Bundestag, or lower house of parliament, recently adopted the bilateral tax accord with Switzerland from September 21, 2011, in the form agreed with the Confederation on April 5, 2012.

The text was adopted by 312 votes to 256, with one abstention.

Negotiated by German Finance Minister Wolfgang Schäuble, the bilateral tax treaty provides for a 25% withholding tax (plus solidarity surcharge) to be imposed from 2013 on capital gains received by German taxpayers with accounts held in Switzerland, ensuring that capital gains realized in Switzerland are in future treated in the same way as in Germany.

The accord also provides for a 50% tax to be imposed on inheritances in Switzerland, unless German residents opt to declare their inheritance to the German tax authorities.

To resolve the past, the tax deal provides for the taxation of hitherto undeclared and untaxed assets held by German taxpayers in the Confederation’s banks, at withholding tax rates varying from 21% to 41%.

Opposed to the treaty, the Social Democrats (SPD) had urged the government to withdraw the bill and to instead work on an agreement providing for the automatic exchange of tax information. The SPD also urged the government to participate in the purchase of so-called “tax discs”, containing information on alleged German tax evaders.

The Green Party had called for the government to push at international level for a solution to the problem of untaxed assets held in previous so-called "tax havens", jurisdictions deemed to be uncooperative in tax matters.

The Bundestag rejected both applications. Finance Minister Schäuble warned that there is either this agreement, or none.

However, despite this small victory, the Swiss-German tax accord still requires the approval of the German Bundesrat, or upper house of parliament. Opposition parties have from the outset threatened to veto the text in the Bundesrat, where the black-yellow coalition no longer has a majority. The SPD argues that the provisions are too lenient for tax evaders.

The vote is scheduled to take place on November 23.

TAGS: compliance | Finance | tax | investment | tax compliance | tax avoidance | agreements | tax rates | withholding tax | Germany | Switzerland

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