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Switzerland Stands Firm On German Tax Deal

by Ulrika Lomas,, Brussels

14 September 2012

Switzerland has vehemently rejected the idea of entering into further negotiations with Germany to rescue the controversial tax agreement between the two countries, which is currently at grave risk of being blocked by opposition parties in the German Bundesrat.

Although Switzerland’s Financial State Secretary Michael Ambühl ruled out further talks, given the concessions already made by the Confederation back in April, he underlined his optimism that the chances for the agreement remain intact, highlighting the fact that the accord represents a good compromise.

If the treaty cannot be ratified, then the status quo will quite simply remain, Ambühl added.

Rejecting claims that there have been massive flights of German capital out of Swiss bank accounts into countries with favourable tax conditions, as a result of the brokered tax deal, Ambühl insisted that there is no evidence of significant transfers to other financial centres. Dismissing allegations that Swiss banks have assisted their German clients in this respect, Ambühl maintained that the banks in Switzerland have pledged not to advise their clients in such a way.

The economic committee of the Swiss National Council recently opposed plans to allow retroactive grouped requests that would have enabled the German tax authorities to trace German taxpayers that have transferred their money from the Confederation abroad since the conclusion of the tax agreement.

The tax agreement between Switzerland and Germany, aimed at resolving the longstanding issue of German residents’ wealth deposited in Swiss bank accounts, still requires the approval of the Bundesrat, or upper house of parliament in Germany, where the black-yellow coalition no longer has a majority. The Social Democrats and the Green Party have threatened to veto the treaty, however.

Despite the apparent impasse, German Finance Minister Wolfgang Schäuble told the Bundestag that he still hoped that the agreement will be ratified.

Following increased international action to dilute banking secrecy, wealthy foreigners with money invested in Swiss bank accounts are said to be withdrawing money from the Confederation in droves, to avoid the advances of the domestic tax authorities. Credit Suisse has estimated the amount of money that will be relocated in the coming years to be between CHF25bn (USD26.6bn) and CHF35bn.

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

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