Swiss strike bank deposit tax deal with Germans

THE FEDERAL government in Germany has reached agreement with Switzerland to collect and forward deposit interest tax to Berlin.

Swiss officials said they hoped that parliamentary approval for the deal would follow soon, ending years of negotiation and diplomatic tensions between the two countries.

The German finance minister Wolfgang Schäuble has welcomed as “balanced” the deal that could bring an estimated €10 billion his way.

Eveline Widmer-Schlumpf, the Swiss finance minister, told a Bern news conference it was a “good solution for both sides”. “We did and will insist on the protection of the private sphere of bank clients,” she added.

The deal, similar to one already agreed with Britain, allows Swiss banks to keep their clients’ identity secret in exchange for collecting tax revenue.

Berlin can look forward to a one-off windfall thanks to a retroactive tax on undeclared income of between 21 and 41 per cent on accounts opened in the last 10 years. Future capital gains will be taxed at a rate of 26.4 per cent and the proceeds forwarded to the German exchequer.

Germans who inherit a Swiss account will have the option of paying a 50 per cent tax to keep it anonymous.

The agreement is still not a done deal as it needs approval of both houses of parliament in Berlin. The opposition Social Democratic Party and Green Party in Germany have vowed to use their majority in the Bundesrat, the upper house, to stop the deal claiming it is too soft on tax evaders.

Swiss authorities have put off negotiations with other EU countries until agreement is reached with Britain and Germany.