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Germany's Gabriel Seeks Tougher Action On Swiss Banks

by Ulrika Lomas,, Brussels

15 August 2012

Adding further fuel to the fire in an increasingly tense situation between the two countries, Germany’s Social Democrat (SPD) leader Sigmar Gabriel has called for tougher action to be taken against Swiss banks suspected of aiding German residents avoid taxes.

Alluding to acts of “organized crime” taking place in Swiss banks operating in Germany, Gabriel denounced the failure of the government to set up a dedicated prosecutor to tackle the problem of tax evasion in the financial centre of Frankfurt, where Swiss banks have their subsidiaries. The SPD leader argued that the general federal prosecutor should also be able to carry out investigations.

Germany should look to the US where Swiss banks have actually been threatened with prosecution, Gabriel said, questioning why this has not yet happened in Germany.

The SPD leader once again defended the controversial decision by the red-green led state of North Rhine-Westphalia (NRW) to purchase Swiss banking data, insisting that it is possible for the state to procure information to bring violations of law to justice, according to a 2010 ruling by the Federal Constitutional Court.

Ending his remarks, Gabriel reiterated that the coalition government’s negotiated tax deal with the Confederation merely served “to legalize tax evasion” and to enable sufficient time for tax evaders to relocate their money elsewhere, so that in the end the accord is completely ineffective.

Gabriel’s comments follow hot on the heels of a statement made earlier by NRW’s Finance Minister Norbert Walter-Borjans (SPD), who said that tax investigators now believe that Swiss banks are assisting German tax evaders, by enabling their clients to relocate their undeclared “black money” to the Far East.

Germany’s Finance Minister Wolfgang Schäuble has faced growing criticism for his part in the negotiations, in particular for failing to ensure that Swiss banks report their German clients to the federal tax authorities.

Adopted at the end of April by the German cabinet, the accord, which has already been modified following significant concessions from Switzerland, aims to ensure the equal treatment of the wealth of German citizens, whether located in Germany or in Switzerland, and to restore tax equity for the past by means of a lump sum tax.

Germany’s Social Democrats have, however, opposed the plans from the outset, and have threatened to veto the provisions in the Bundesrat, where the coalition no longer has a majority.

TAGS: court | compliance | Finance | tax | investment | tax compliance | tax avoidance | law | banking | international financial centres (IFC) | banking secrecy | Germany | Switzerland

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