Germany’s finance ministry has estimated that if approved, the tax evasion treaty between Switzerland and Germany could raise £8.3bn in revenue over the next year.
The German and Swiss tax evasion treaty has been signed in response to a long-running argument over German nationals that have ‘hidden’ taxable income within Switzerland.
Although unclear how much money has been banked in Switzerland by German nationals, opposing MPs from Germany’s Social Democratic Party (SPD) have objected and threatened to block the tax evasion treaty.
The SPD are the Social Democratic Party of Germany and are led by Sigmar Gabriel. The SPD are one of the two major contemporary political parties in Germany along with the conservative Christian Democratic Union (CDU); Germany has a great coalition which means that the CDU and the SPD share the power.
The initial tax evasion agreement between Germany and Switzerland was postponed due to the upper house of German parliament arguing for stricter punishment on tax evaders.
Now that changes have been made to the German and Swiss tax evasion treaty, Sigmar Gabriel, leader of Germany’s Social Democratic Party (SPD), has argued that the tax evasion treaty will fail for a second time as German Social Democratic Party led states ‘will not go along with it’.
Gabriel said that the tax evasion agreement would allow German tax evaders adequate time to move their funds to another ‘tax haven’ and ‘that tax cheaters will [still] get away without punishment’.
If allowed, the tax evasion treaty between Germany and Switzerland would allow Germans with undeclared assets in Swiss bank accounts to avoid tax penalties.
They would, however, be required to make a one-off payment between 21-41% of the undeclared money held in Switzerland.
In the wake of a financial crisis secret Swiss banks have been faced with the dilemma of helping governments to recover taxes. If implemented the tax evasion treaty between Germany and Switzerland will give Swiss authorities the power to calculate and transfer tax payments to the German government.
Switzerland has guaranteed £1.6bn through the tax evasion treaty and Germany predicts a payment of £8.3bn or more over the next year.
The German and Swiss tax evasion treaty would also allow German authorities to gain more understanding on information concerning German nationals’ bank accounts in Switzerland.
Kevin Kinsella Jnr, of KinsellaTax, said:
“When I went to Zurich in the sixties the last thing I thought I would hear about is the Swiss banking authorities and the Swiss government negotiating with other governments to deal with tax evasion.
“This was the country where you tucked away all your dodgy money, they were happy to take the money. Any money from the Nazi’s in Germany during the 1939-45 war to, I guess, the Mafia controlled gangs and the drug cartels in South America and now they want to go kosher. They are arguing about whether or not something is strict enough or whatever.
“Well I read all about it but I’ve yet to be convinced that the matter will be resolved and actually confirmed by the parliaments of the various governments, especially in Switzerland, let’s wait and see.”
Do you hold undeclared assets in an offshore bank account?
KinsellaTax can help to dramatically reduce your HMRC tax penalties by making an offshore disclosure on your behalf.
KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise Officers, fully trained in all types of HMRC tax investigations.