Government ministers from Switzerland and Germany have signed a key tax agreement, officially putting an end to a long-running tax evasion dispute.This content was published on September 21, 2011 - 17:52
The accord was signed in Berlin on Wednesday by Swiss Finance Minister Eveline Widmer-Schlumpf and her German counterpart, Wolfgang Schäuble.
The accord, which was announced on August 10 and hailed in many quarters in Switzerland as a breakthrough, includes an up-front payment to Germany of SFr2 billion ($2.76 billion) by Swiss banks.
The banks’ advance payment will only be reimbursed if and when the German authorities recoup enough back-taxes from Swiss accounts owed to them.
In future, Swiss banks will be obliged to levy a withholding tax of 26 per cent on income earned on assets belonging to German customers. This rate is roughly equivalent to the current rate of tax charged on such income in Germany.
The withholding tax will allow Switzerland to preserve banking secrecy by forgoing the automatic exchange of information.
Under the treaty, the German tax authorities will be able to make requests for information based only on the name of a taxpayer, without mentioning a specific bank. But the total number of requests will be limited (999 over two years) and each request must be based on a genuine reason, thus preventing so-called “fishing expeditions”.
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