Germany Eyes Swiss Tax Concession In EU Context

By Editorial 18 April, 2013

Although the landmark tax agreement with Switzerland cannot now be revived, a new regulation aimed at combating tax flight could still be negotiated with the Confederation within a European context, German Finance Minister Wolfgang Schäuble recently indicated.

Lamenting the tactical decision by German Opposition parties to block the Swiss-German tax accord in the Bundesrat, or upper house of parliament, Finance Minister Schäuble explained that there will not now be a solution to regularize the past. The planned lump sum taxation of German residents’ undeclared Swiss accounts would have served to yield substantial revenues in back payments, Schäuble argued. The minister pointed out that banks in Switzerland had already agreed to transfer a CHF2bn (USD2.6bn) advance payment to Germany, and stressed that more revenues had been expected. The fact that the Federal Government, states, and communes have been irretrievably deprived of such vast sums of money is "regrettable for all honest taxpayers in Germany," Schäuble emphasized.

Schäuble nevertheless expressed his confidence that a solution could indeed still be found, albeit at European rather than bilateral level. There is "movement from Switzerland," Schäuble stressed, alluding to recent comments made by Swiss Finance Minister Eveline Widmer-Schlumpf. She has indicated that the Confederation might be prepared to make further concessions to the European Union, to find an appropriate solution to tax flight. Widmer-Schlumpf distanced the Confederation from an automatic exchange of information, however. Switzerland is a third country, and as long as the US and Asian financial centers reject such a mechanism, then this model can not be pushed through as the international standard, the minister made clear.

Underlining the fact that pressure on taxpayers to regularize their tax situation "is not new," Schäuble posited that pressure on taxpayers to submit a voluntary tax declaration to declare any undisclosed accounts is set to rise in the wake of recent events and advances from other EU countries. Luxembourg has made a great first step in accepting an automatic exchange of information, and there are "positive signals" from Austria, Schäuble noted.

Luxembourg has agreed to introduce an automatic exchange of information mechanism for interest payments by 2015. Similarly, Austrian Chancellor Werner Faymann has revealed Austria’s willingness to enter into negotiations with the EU on the automatic exchange of bank deposit information, albeit purely for foreign clients.

Tags: Expatriates | Compliance | Finance | Tax | Tax Compliance | Tax Avoidance | Interest | Luxembourg | Withholding Tax | Austria | Germany | Switzerland | Standards | Regulation |


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