Mixed press reaction on Swiss deal with Germany

Several papers said Switzerland got a good deal from the agreement Reuters

The accord between Switzerland and Germany to start talks on legalising undeclared assets in Swiss bank accounts has prompted mixed feelings in Thursday’s newspapers.

Outgoing Swiss Finance Minister Hans-Rudolf Merz and his German counterpart Wolfgang Schäuble signed a joint declaration for formal talks on the issue in Bern on Wednesday.

The Bund newspaper of Bern says the deal means that Merz left office “with a bang” but that Switzerland is paying a high price for the accord.

“What has been achieved by Swiss negotiators is striking – the solution looks more or less like what the banks and the government wanted,” the paper comments.

The deal with Germany, and one with Britain earlier in the week, means that their citizens with accounts in Switzerland can remain anonymous.

“Instead of names, the banks will give the German and British tax authorities money.”

This means a special tax on money that has been in Swiss accounts for years and in future a withholding tax on interest that is accrued from the capital, it explains.

Cash flow

The paper also notes that “billions” from Swiss banks will now flow into Berlin and London and administrative assistance in tax matters may be simplified.

And it makes the point that the automatic exchange of information on tax matters has now been put aside, which will not please everyone in the EU.

Private banker Konrad Hummler in an interview with Zurich’s Tages-Anzeiger welcomed the accord to begin negotiations because “constant arguments with such an important trading partner as Germany are in the long run damaging”.

He also said that the tax deal was important because bank clients with accounts in Switzerland would not feel cheated.

“It’s important for Switzerland as a banking centre that foreign clients are decriminalised because their money in Switzerland has been legalised.”

Le Temps of Geneva comments that Switzerland, “true to its reputation in drilling tunnels, seems to have opened a gap and it did that at a time when the obstacles seemed insurmountable”.

The paper notes that “it was quite simply a question of forcing Switzerland to give up banking secrecy”.

But a team of bankers, diplomats and civil servants from the Swiss finance ministry made “tempting offers” under the name Rubik to “two big European countries” that meant a tax for the past and a withholding tax for the future at a rate of between 15 and 25 per cent.

Defeat of pragmatism?

The paper also has words of caution; it comments that it is still too early to exclude a “crushing defeat” for Swiss pragmatism, namely that the acceptance of Rubik will be turned down and that the automatic exchange of information will win the day.

The respected Neue Zürcher Zeitung newspaper of Zurich says Switzerland has made the most of the situation.

It describes the basic accord between both Germany and Britain as a “success” for the government, for Switzerland as a financial centre and the country as a location for citizens and companies.

But it warns that one point in the debate often gets forgotten: that is that banking secrecy basically concerns privacy. It’s about “the protection of the citizen” against “state arbitrariness and surveillance”.

EU difficulties

The Basler Zeitung is in no doubt about the framework accord: “Swiss diplomacy has achieved a masterpiece, whose importance cannot be underestimated.” It describes Merz as a “Titan”.

The paper also adds that the deal has put Brussels in difficulty. It is not clear now, it says, if the automatic exchange of information can survive after the “separate peace” made between Switzerland and Germany.

Reaction abroad

The agreement signed between Switzerland and Germany did not make big headlines in the German press. Other issues dominated, including good unemployment figures, a year of the coalition government and the EU’s stability pact.

Politicians seemed to be reluctant to speak because they did not know too many details of the accord.

However, financial specialist Gerhard Schick of the Green Party accused the German finance ministry of “bad handling of the negotiations”.

He accused the Berlin government in the daily Frankfurter Rundschau of neglecting to “abolish once and for all” the anonymity provided by Swiss banking secrecy.

Schick also claimed the two countries had agreed on “a broad amnesty for tax fraudsters” whose identity would remain hidden from the German authorities.

The Frankfurter Allgemeine commented that the tax agreement signed in Bern did not end the “permanent conflict” with Berlin. “What the finance ministers have to talk about deals with something more fundamental than their states – conflicting principles. “Switzerland is doing a balancing act between self-assertion and openness to the world”.

The Financial Times of London commented Switzerland had “furthered its strategy of sidestepping international pressure for automatic exchanges of information on taxation by agreeing a compromise solution with Germany”.

It added that the accord with Berlin on a deal to tax German account holders’ income at Swiss banks without revealing their identities echoed a similar agreement with Britain signed earlier in the week.