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Europe

Tax Haven Clash Takes on Symbolic Proportions

A German-Swiss tax-haven row has angered the Swiss defense minister so much he no longer wants his chauffeur to show up in a Mercedes. But German politicians are more concerned with the dispute's political consequences.

Montage of Swiss flag, a hand holding euro coins and 500 euro notes

Germany wants details on who is holding money in Swiss accounts

Swiss Defense Minsiter Ueli Maurer has replaced the Mercedes S430 he used to ride in, with a Renault Espace. The symbolic move is meant to show his discontent with the ongoing tax-haven disagreement between Switzerland and Germany.

"The tax dispute has annoyed and angered him so much that he has switched to another pool car," Maurer's spokesman said Sunday, March 22.

The quarrel began last week when German Finance Minister Peer Steinbrueck said the Swiss were like Indians running scared from a cavalry ready to enforce international banking laws. In return, a Swiss politician compared Steinbrueck to a Nazi.

A domestic decision

Montage of a Renault Espace and a Mercedes

A Renault is edging out Mercedes in Switzerland

Herbert Scheidt, the head of Zurich-based Vontobel banking group, accused Steinbrueck of running roughshod over Swiss interests.

"As a German, I find the virulent and rough behavior shown by the finance minster of the last days and weeks to be particularly regrettable," Scheidt told the Welt am Sonntag newspaper, adding that the Swiss view of tax law was something Berlin has to accept for the time being.

While Swiss politicians decry what they see as foreign interference in their domestic affairs, Germans have accused Steinbrueck of tarnishing Germany's image abroad.

"The completely inappropriate way the finance minster has expressed himself to Switzerland in the legitimate fight against tax havens is inacceptable," Volker Kauder, the Christian Democratic Union's parliamentary group leader, told the Leipziger Volkszeitung on Monday.

Punishing German banks

Steinbrueck has said he would be willing to meet his Swiss counterpart but justified his remarks saying he had learned to "formulate his remarks regarding tax havens in Switzerland in an unambiguous way."

Man carrying a briefcase overflowing with euros

Berlin may try to put an end to non-transparent banking deals

Part of the unambiguous action could be punishing German banks with subsidiaries in Switzerland, according to a report in the German newsmagazine Der Spiegel.

The office responsible for administrating Germany's financial sector bailout funds (BaFin) reportedly requested information from banks about their operations in Switzerland and Liechtenstein, to ensure regulations dealing with the prevention of money laundering were being met.

According to the magazine, the banks will be forced to end "non-transparent business relationships."

Spiegel said a Swiss subsidiary of Deutsche Bank administered accounts held by foundations in Liechtenstein. Foundations in the Alpine principality have been used by tax evaders, including former Deutsche Post head Klaus Zumwinkel, to hide money from authorities.

Deutsche Bank as well as other banks with Swiss subsidiaries, including Commerzbank and Dresdner Bank, did not comment on the Spiegel report.

The Organization for Economic Cooperation and Development has named Liechtenstein, Monaco and Andorra as uncooperative tax havens.

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