BERN, SWITZERLAND – Swiss officials say if the German parliament does not approve the new tax treaty which is scheduled to go into effect in January 2013 Switzerland will not go back to the negotiating table to draft a new deal.
The German parliament will vote 23 November on the deal, initialed in 2011.
Swiss officials from the government and the finance world made their remarks while taking part Monday 24 September in a Bundestag tax commission meeting in Berlin, Germany to review the Rubik bilateral tax agreement. The Swiss team was led by State Secretary for International Financial Matters Michael Ambühl and Patrick Odier, who is president of the Swiss Bankers’ Association.
US opposes Swiss-German deal
Also presenting papers at the meeting were two US opponents of the Swiss-German deal, US law professor Itai Grinberg and Zurich-based tax consultant Mark Morris.
The United States opposes the deal as part of its efforts to push for automatic information exchanges, including Fatca, a US law that will soon require financial institutions worldwide to report all assets of US citizens and green card holders. Switzerland and the US are currently negotiating implementation of Fatca.
“According to the text forwarded to German MPs, use of a system of automatic information exchange, on the largest scale possible, is the only way to effectively fight tax evasion, if only for reasons of fairness. Such a system also helps identify all funds hidden by fraudsters abroad,” reports Europolitics.
Three Rubiks signed to date, others under discussion
The agreement, designed to create a legal framework for taxes to be paid to Germany by its citizens who have bank accounts in Switzerland, has been initialed by both governments. German and Swiss media have widely reported that it is uncertain the upper house, where Chancellor Angela Merkel’s government does not have a majority, will approve it. Both houses of parliament must accept the treaty.
Switzerland has negotiated three Rubik agreements; the other two are with Austria and the UK. The Rubik deals call for Switzerland to withhold a percentage tax at source, including on dividends and capital gains, while continuing to keep data about the account holder private, putting the onus on Germany’s citizens to declare their assets or not, but in any event to have tax withheld.
The now-hidden assets of Germans in Swiss financial institutions would thus discharge their tax liability. The tax will be paid directly to Germany and German tax authorities will be able to make sporadic checks on the system.
Greece is also considering a Rubik agreement and a number of other countries have shown interest, say Swiss tax authorities.