While a row continues over three German tax inspectors who bought a secret CD containing information about tax evaders' Swiss bank accounts, politicians have moved to try to regulate relations between the two countries over hidden money.
Germany's finance ministry said it was happy to raise the top limit of taxation of German money held in Switzerland to 41 percent. The new deal should garner between €2 billion and €10 billion for German state coffers.
Although German tax dodgers will pay more, their anonymity will be preserved, the ministry confirmed.
The deal was criticised by the opposition centre left Social Democratic Party as irresponsible. Party leader Sigmar Gabriel said it had far too many loop holes and amounted to a whitewash for Swiss bankers.
"There is no chance that we'll support this," he said, referring to vote needed from the upper house of parliament, the Bundesrat, to implement the law.
The two countries signed a deal in 2011 giving German taxpayers a one-off chance to make an anonymous lump sum tax payment, with the tax rate to vary between 19 and 34 percent of the assets.
That will be raised to between 21 and 41 percent after some German states rejected the first deal, saying it was too lax.
From 2013, a withholding tax of 26.375 percent - the same as in Germany - will also be levied on all future investment income and capital gains arising from assets held by German taxpayers in Switzerland.
In Germany the Greens and Social Democrats vowed to block the ratification of the "cut price" deal.
The accord aimed to end a dispute between the two neighbours that blew up into a major spat in July 2010 when German authorities raided branches of Credit Suisse bank after buying data on suspected tax dodgers.