Germany and Switzerland have signed a controversial deal that would tax money held by German citizens in secret Swiss bank accounts. From 2013, the deal could reap more than 50 billion euros in tax revenues.
Germany's opposition says the new deal doesn't go far enough
German Finance Minister Wolfgang Schäuble formally signed an agreement with his Swiss counterpart on Wednesday to end a long-standing dispute over tax evasion.
Due to come into force in 2013, the accord will see German citizens taxed 26.4 percent on assets hidden in secret Swiss accounts.
In addition, Germans who have been avoiding tax by holding assets in Switzerland from 2000 onwards will have to pay a retrospective rate of between 19 and 34 percent, depending on the size of their holdings and how long the cash has been in a Swiss bank.
If the deal receives approval in both parliaments it could reap more than 50 billion euros in tax revenues and snare up to 1,000 tax cheats over two years. The Swiss banks will, however, be permitted to keep the names of their German clients private.
Schäuble said he was glad to have resolved "a problem that has been open for years" and had been a source of dispute between the two countries. Swiss Finance Minister Eveline Widmer-Schlumpf said the deal was "a remarkable result."
"This agreement is in the interest of both states. It will return to Germany the tax money it is entitled to, and on the other hand it will make it possible for Switzerland to protect privacy," she said.
When the deal comes into force, Swiss banks will pay an upfront guarantee of 2 billion francs (1.64 billion euros/$2.24 billion) to Germany's tax authorities.
As an incentive in Switzerland to pressure clients to declare their assets, banks will only be reimbursed once Berlin has received the tax payments.
Germany's main opposition, the Social Democrats, have criticized the deal, arguing it lets large-scale, long-term tax evaders escape without punishment.
Nevertheless, Schäuble said he was confident the deal would pass through both houses of parliament, adding he could answer any objections and questions "satisfactorily and convincingly."
The German media has claimed that between 130 billion and 180 billion euros in German assets are hidden in Swiss bank accounts.
Author: Charlotte Chelsom-Pill (AP, AFP)
Editor: Martin Kuebler