President holds firm on German tax accord

Swiss president and finance minister Eveline Widmer-Schlumpf expressed her confidence in the German-Swiss tax deal currently being debated in Germany Keystone

Swiss President Eveline Widmer-Schlumpf didn’t budge on Switzerland’s proposed tax deal with Germany during an interview with Swiss television on Monday, declaring it a good solution to the countries’ ongoing fiscal disagreement.

Despite recent reports of German displeasure with the agreement and continued purchases of stolen Swiss bank data on the part of German finance ministers, she said there would be no re-negotiation of the deal currently on the table.

“It’s this deal or no deal,” said Widmer-Schlumpf, who is also the Swiss finance minister.

Germany’s ambassador to Switzerland Peter Gottwald also expressed confidence in the tax accord, telling Swiss Radio DRS on Tuesday that he believes there is still hope for its passage and that the debate in German parliament over the accord is only in early stages. 

Gottwald reacted to declarations made over the weekend by politicians in Germany’s SPD party that the tax accord is dead. German justice minister Sabine Leuthesser-Schnarrenberger also expressed doubt that the accord will pass German parliament on Swiss television on Monday.

“If the SPD (party) really means to block the treaty in German parliament, then it has no chance of passing,” Leuthesser-Schnarrenberger said. She added that the tax accord with Switzerland has become a major issue in Germany’s upcoming primary elections, making an agreement in the near future very unlikely.

The German-Swiss tax accord has been ratified by the Swiss parliament but not by Germany. The Swiss people will likely vote on the accord in November.

Under the proposed accord, existing German funds in Swiss banks will be taxed at between 19 per cent and 34 per cent, based on how long the money has been stashed away and the rate of capital gains.

The deal also states that future investment income and capital gains placed in Swiss banks will be taxed at 26.375 per cent. However, German states have said they want that rate to be 35 per cent, comparable with German levels.

Swiss banks would also pay SFr2 billion ($2.06 billion) up front to Germany within 25 days of the deal being ratified, and a provision in the deal prevents tax dodgers from moving their funds to another safe haven.

The names of German clients with money in Swiss banks will remain anonymous under the deal, a sticking point for many German politicians who want those names made public to recoup the full taxes owed.

TAX DEALS

Switzerland negotiated accords with Germany, Britian and Austria on taxing undeclared offshore assets.

They are scheduled to come into effect at the beginning of January 2013.

The three deals, with slightly different terms, were agreed by the respective governments in March and April.

However, the deals are still subject to approval by the parliaments in Britain and Germany.

They are the the first deals of the kind with EU member states.

Non-EU member Switzerland wants to maintain its banking secrecy rules.

But the 27-nation bloc wants to introduce an automatic exchange of banking data.