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Schäuble Seeks To Renegotiate Swiss Tax Deal

by Ulrika Lomas,, Brussels

18 November 2011

Determined to gain support from Social Democrat-led states (SPD) in the German Bundesrat or upper house of parliament, German Finance Minister Wolfgang Schäuble is reportedly endeavouring to renegotiate the bilateral tax agreement reached recently with Switzerland.

Jeopardizing the long-awaited agreement between Switzerland and Germany, aimed at resolving the long-standing dispute between the two countries concerning the taxation of German investors' investment income in Switzerland, the SPD-led states have threatened to block the deal in the Bundesrat, where the coalition government no longer has a majority, arguing that the accord is too lenient.

Signed on September 21, the landmark Swiss German bilateral tax deal provides for the future taxation of income earned by German taxpayers with accounts held in Switzerland from January 1, 2013 by means of a withholding tax, with the proceeds derived from the levy subsequently transferred to the German authorities.

The agreement also provides for the lump sum taxation of 'old money' held by German residents in undeclared Swiss accounts, while at the same time maintaining traditional banking secrecy.

In a bid to appease the main opposition party, to secure parliamentary approval of the deal, German Finance Minister Wolfgang Schäuble reportedly now aims to amend the provisions, to allow more instances of mutual assistance. The current text limits the number of requests for information to 999 over a period of two years.

The German finance ministry nevertheless expects that the agreement will go into force as planned by January 1, 2013.

Within the framework of a joint working group, Germany’s federal and state governments aim to settle their differences by the beginning of next year. The German states of Bavaria, Lower Saxony, Rhineland-Palatinate and North Rhine-Westphalia are said to be currently in ongoing discussions with the German finance ministry.

The agreement has yet to be ratified by either country's parliament.

TAGS: tax | investment | banking | offshore | agreements | offshore banking | banking secrecy | withholding tax | Germany | Switzerland

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