Germany and Switzerland sign amended withholding tax agreement

05 April 2012

The withholding tax agreement negotiated between Germany and Switzerland last September has finally been signed in an amended form.

The main alteration is that German clients of Swiss banks will have to make larger one-off payments to settle their past liabilities for unpaid German taxes. In the original agreement, this amount would range from 19 to 34 per cent of the taxpayer’s undisclosed Swiss assets. The amended range is 21 to 41 per cent (the exact calculation depends on the specifics of each case).

Moreover, Swiss banks have had to agree that they will not allow their German clients to shift assets out of Switzerland to third countries without notification. Originally this restriction was to have been brought into force on 31 May 2013; it will now take effect on 1 January 2013, simultaneously with the introduction of the withholding tax itself.

Another amendment affects the number of times the German authorities will be allowed to make requests for information about specific client accounts, in order to check that the Swiss banks are fulfilling their side of the bargain. In the original agreement Germany was limited to 999 requests within the first two years of the agreement coming into force; this has now been increased to 1300.

A separate inheritance tax clause has also been included in the agreement. If a German owner of Swiss assets dies, his heirs must consent either to disclose the assets to the German tax authorities, or have the Swiss bank hand over 50 per cent of the assets to Germany in tax. In the agreement’s initial form, the taxpayer’s one-off “regularisation” payment was taken to cover any inheritance tax liabilities as well as income taxes.

Lastly, in order to satisfy the European Commission, the Swiss-German agreement explicitly excludes interest payments which are covered by the EU-Swiss Savings Tax Agreement.

Amendments similar to the last two of these were also accepted by the UK in the renegotiation of its bilateral treaty with Switzerland.

The Swiss Bankers Association said the amendments represented “significant concessions” by Switzerland in meeting Germany’s demands. It accepted the new agreement as signed, but warned Germany’s opposition parties (which forced the renegotiation upon Angela Merkel’s coalition government) that Swiss banks would not brook any further concessions.

The agreement will now be referred to both countries’ parliaments for ratification.



Swiss Federal Department of Finance

Swiss Bankers Association



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