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Germany clashes with Switzerland over tax info

AFP · 1 Feb 2010, 16:32

Published: 01 Feb 2010 16:32 GMT+01:00

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Press reports said that an informer had offered Berlin the names of up to 1,500 Germans hiding their riches from the tax authorities in Switzerland for €2.5 million ($3.5 million).

Switzerland warned Germany that buying stolen information "violates public policy and the principle of good faith ... (and) constitutes a breach of the privacy of the clients concerned," refusing to cooperate if Berlin went ahead.

But with reports saying that the information would give Germany around €100 million in recovered taxes, German Chancellor Angela Merkel said "everything must be done to get hold of these data."

"Like every sensible person, I want to clamp down on tax evasion," Merkel told reporters in Berlin. "If these data are relevant we should aim to get hold of them."

The Finance Ministry said that Germany was considering following a 2008 "precedent" involving Liechtenstein, another Alpine country that has come under fire for its banking secrecy.

In that case, the German secret service handed over €5 million for the names of hundreds of German business executives, sports stars and entertainers allegedly hiding some €4 billion. In the ensuing investigation, Germany clawed back some €180 million.

The scandal claimed the scalp of Deutsche Post chief Klaus Zumwinkel, who got a two-year suspended jail sentence and was fined close to €1 million after admitting hiding cash in the principality.

Germany handed other countries the names of some their nationals and the scandal put tax havens in the international firing line just as the financial crisis sparked new calls for transparency in the banking industry.

Switzerland and Liechtenstein have since moved to clean up their acts, agreeing to share more tax information with other countries. Both have since been removed from an OECD "grey list" of tax havens.

Swiss banking giant UBS last year agreed to hand over details of about 4,450 clients and US taxpayers, although last month a Swiss court upheld an appeal by one taxpayer against the transfer.

There are some voices in Germany, however, that are cautious about paying for the information and with a new government in power after elections late last year, it is not clear that Berlin would cough up again.

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"Personally, I have a problem with it if one hands over money for something that has come into someone's possession in a legally questionable fashion," Defence Minister Karl-Theodor zu Guttenberg, a close Merkel ally, told the Swiss daily Neue Zürcher Zeitung.

Doubts emerged meanwhile about the identity of the whistle-blower.

The Financial Times Deutschland daily named him as Herve Falciani, a IT specialist formerly employed by British bank HSBC in Geneva, who passed on data to the French tax authorities.

"This is just a rumour," Falciani, 37, told news agency AFP. "If they have any shred of proof, they should produce it.

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Your comments about this article

01:05 February 2, 2010 by Fredfeldman
So the German government wants to pursue tax cheats by paying a thief who stole the information. How could the germans possibly point fingers at anyone if they themselves support illegality?
11:32 February 2, 2010 by Legal E
Sounds like Germany could be in clear breach of ECHR §6.3(d) and the information used as evidence must be obtained lawfully. If they purchase information that was protected by Swiss Data Protection laws then they are in clear breach of ECHR laws. I am sure a few ECHR lawyers are now ramping up their legal precedence. Also Germany is also actively flaunting other democratically elected governments laws and encouring residents to breach these laws for financial gain. Swiss has every right to be cross as where does this stop? Protection of peoples data is another basic right under ECHR. This could open a whole can of worms.
16:37 February 3, 2010 by chigui
As Kay mentioned Tax Avoidance is not a crime.. It is also what hundred of thousands of New Yorkers do when they set residence in Florida, but continue to live in New York, avoiding both city and state taxes. What folks do in the Channel Islands, or Switzerland is pretty much the same and in most cases a cash flow issue. Why be employed by a german company, while you can work for it being employed for a Swiss company? (works for everyone but germans). At then you will still get taxed. You can not evade it, but you can avoid it and pay it at the lower rate. If you do it legally, at the end, you do pay the tax, like do many americans residing here, but not employed for german companies.

On the topic, of jail vs fine, remember that europeans value more money than freedom, hence you will more likely get fined than go to jail.
07:22 February 6, 2010 by Aussiefrank
All nations share information on crime through Interpol. The crimes which they share the data about generally involve terrorism, murder and so forth.

Tax avoidance is not the crime that tax evasion is, however not declaring your full income and avoiding tax by moving the money into another country tends to suggest that evasion is the basis of such an act, why else move your money out of your own country?

Switzerland and the Gnomes of Zurich can protest all they like about the pedantics of language, but the result is the same. They do so to assist outsiders to avoid legal taxes in their own countries, hence abet what is illegal in those other countries.

I am not a lawyer so not conversant with the Swiss laws, however the Swiss Banks have shown their willingness to break laws and profit from their secrecy laws. I refer to the ill-gotten gains held by those banks at the end of World War 2. Let them be judged by their actions !
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