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Tax evasion

October 15, 2011

Switzerland and Liechtenstein are no longer the tax havens they used to be for wealthy Germans. Now German authorities are tracking down untaxed funds in the tiny country of Luxembourg, too.

A shadow of a German eagle on piles of euro bills
Germany's expecting to get a good chunk of changeImage: picture-alliance/chromeorange

German authorities expect to see up to 900 million euros ($1.2 billion) in recovered taxes after the purchase of a disk containing banking details of thousands of potential tax evaders.

The finance ministry in the western state of North Rhine-Westphalia confirmed Friday that it had obtained information on German-held bank accounts at a Luxembourg subsidiary of HSBC.

The German Tax Union, whose members are German tax employees, welcomed the news, saying the purchase of bank data from neighboring countries was the most efficient way to track down unpaid taxes.

"What's new is that it's Luxembourg," the union's chairman Thomas Eigenthaler said in an interview with German press agency dpa.

"We thought that they were trustworthy there, but we must consider Luxembourg a de facto tax haven - and assume that this is just the tip of the iceberg," he added.

Eigenthaler estimated that some 50 billion euros in untaxed German funds were hidden in Luxembourg.

He said the investigation in Luxembourg had gone too far to allow tax cheaters to pay up and got off scot-free, as has been the case in similar incidents in Germany.

In September, Swiss bank Credit Suisse agreed to pay Germany 150 million euros to save its staff from prosecution for allegedly helping wealthy German tax dodgers.

Author: David Levitz (dpa, Reuters)

Editor: Sean Sinico