Germany and Switzerland on Friday agreed a new double taxation deal that will clarify tax disclosure rules for the Alpine country's multi-trillion-dollar wealth management industry. The German Finance Ministry said the agreement, details of which would be disclosed after it was signed, would enable an exchange of information in line with norms established by the Organisation for Economic Co-operation and Development.
Switzerland has watered down its treasured bank secrecy law recently, caving in to pressure from the United States and European governments that are cracking down on tax evasion. Germany, along with Italy, the United States and France, has been one of the most fervent critics of Switzerland's banking secrecy and has paid for stolen data from Swiss banks to catch tax cheats.
Germany's willingness to buy stolen bank data increased pressure on Switzerland's large private banking industry and stirred emotions in both countries. Germans hold an estimated 200 billion euros in undeclared funds in Switzerland. Switzerland's Finance Department said on Friday Germany had recognised in the talks that the Alpine nation would not give administrative assistance in cases of bank data bought from a third party.
It added that Switzerland was able to secure several advantages for Swiss business during the negotiations, and that a bilateral working group would clarify unresolved tax issues before the signing. The Swiss Bankers Association welcomed the double taxation agreement, especially as it conformed to OECD standards, spokesman Jean-Marc Felix said. "We also welcome the implementation of the joint working party, because this will tackle the topics we have always put forward for discussion, namely a withholding tax, the regulation of untaxed client assets and the improvement of market access in Germany," he said.