Swiss bank deal

The Swiss and German governments are close to a deal that will end a long-term wrangle over tax evasion, German media reported on Sunday.

Negotiators were expected to seal the agreement on August 10, the Swiss weekly SonntagsZeitung said, with a tax to be levied on the profits from dividends and interest.

Strict banking secrecy has been a key feature of Switzerland's banking system, helping the country to build a multi-trillion euro banking industry. Undeclared German assets in Swiss banks are believed to total 180 billion euros ($260 billion).

To compensate for taxes not levied in the past, it is expected that Swiss banks will have to pay an up-front levy to the German government. Part of this would be reimbursed to the banks only if German authorities were successful in making clients themselves pay.

While SonnntagsZeitung reported that Swiss banks would pay 2 billion euros from their own funds, German news magazine Spiegel put this figure as high as 10 billion euros.

Under the agreement, taxes would be levied directly on interest and dividends in future.

Some banks in Switzerland have struck their own agreements with Berlin. In April, the bank Julius Baer agreed to pay 50 million to end an evasion investigation into the bank and its employees.

Tougher approach taken

German officials have targeted tax evasion in both Switzerland and Liechtenstein in recent years. Most notably, Berlin made a controversial payment for stolen banking data to reveal details of those seeking to avoid paying taxes in Germany.

Tax officials say they recovered 1.6 billion euros last year using that data alone.

The issue of tax evasion has soured Switzerland's relations with several other countries in past decades. The Swiss government was also reported by SonntagsZeitung to be set to sign a similar deal with Britain.

Author: Richard Connor (AFP, Reuters)
Editor: Andreas Illmer