October 16, 2010 / 5:22 PM / 9 years ago

Germany, Switzerland reject report of tax deal

* Report of tax deal is “speculation”- Swiss, German finmins

* Berlin, Berne still aiming for deal by end-October

By Michael Nienaber and Sven Egenter

BERLIN/ZURICH, Oct 16 (Reuters) - Germany and Switzerland on Saturday rejected a report they had agreed a landmark tax deal that would reap 30 billion euros ($42.28 billion) from tax evaders but said they still aimed for a deal this month.

Germany, along with Italy, the United States and France, has been one of the most fervent critics of Switzerland’s banking secrecy laws.

Berlin has paid for stolen data from Swiss banks to catch tax cheats and raided the German offices of Switzerland’s No.2 bank Credit Suisse CSGN.VX (CS.N).[ID:nLDE682150]

Both the German and Swiss Finance Ministries dismissed as “speculation” a report in news weekly Focus that finance experts had agreed a withholding tax on German assets hidden in secret Swiss accounts that would yield 30 billion euros for Berlin public coffers.

“Speculation about billions flowing back to the German tax authority is completely unfounded,” said ministry spokesman Michael Offer.

Talks about solving the issue of an estimated 200 billion euros of untaxed German wealth were constructive, he added, but both parties had agreed to maintain silence about the details.

“The working group has continued to do its work. This will now go to the level of ministers,” said Swiss Finance Ministry spokeswoman Tanja Kocher.

The two countries’ finance ministers hoped to agree on the key points of a new agreement by the end of October, when Swiss finance minister Hans-Rudolf Merz will leave office.

But German finance minister Wolfgang Schaeuble had to be hospitalised for a month at the beginning of October, putting question marks on this time frame.

Offer said the countries were still aiming to clinch the deal by the end of October, “if possible”.

Schaeuble has said that under the planned deal, crucial to Switzerland’s $2 trillion offshore wealth management industry, Germany would accept the Swiss applying a withholding tax on German assets in return for more cooperation from Berne in tax evasion cases.

But the Swiss will not automatically share bank information with Germany, preserving some bank privacy.

Swiss officials expect the withholding tax to be set at the same level as the 25 percent Germany has for capital gains and profit from share sales.

Focus reported on Saturday however that the countries were considering a withholding tax of 35 percent.

Tax experts say the agreement with Germany, Switzerland’s largest trading partner, would pave the way for similar deals with other large European partners.

The finance policy spokesman for the parliamentary group of Chancellor Angela Merkel’s conservatives told Reuters a deal would be good news for all tax payers in Germany.

“This would be a real breathrough in the fight against international tax evasion,” Leo Dautzenberg said. (Additional reporting by Elke Ahlwede; Writing by Sarah Marsh; Editing by Keiron Henderson)

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