Germany's SPD Set On Opposing Swiss Tax Deal
Threatening a collapse in the Bundesrat, Germany’s main opposition party the Social Democrats (SPD) remain opposed to the tax deal concluded between Switzerland and Germany, aimed at resolving the longstanding issue of undeclared, untaxed assets held by German residents in Switzerland.
The Social Democrats are calling for greater concessions from the Confederation and for tougher action to be taken against tax evaders.
According to North Rhine-Westphalia’s Minister for Federal Affairs Angelica Schwall-Düren (SPD), progress made so far in the ongoing negotiations between the coalition government and opposition parties is not enough to secure the backing of the SPD-led states.
Insisting that the text in its current form is simply not ready to be put to the vote, Schwall-Düren underscored that North Rhine-Westphalia would prefer to do without the agreement rather than vote in favour of the accord as it stands.
Angered by the SPD’s stance, and reflecting the view of Chancellor Merkel’s Christian Democratic Union (CDU) party, Bavaria’s Minister for Federal Affairs Emilia Müller (CDU) warned that a collapse of the tax deal would lead to a loss of revenues for the German tax authorities of billions of euros.
The SPD must give up its opposition to the agreement, Müller demanded, emphasizing that the SPD’s “unrealistic” position will merely serve to endanger vital infrastructure and education projects in Germany.
The German cabinet adopted the bill implementing the bilateral tax agreement with Switzerland at the end of April.
Describing the bilateral tax treaty as a 'landmark' in Swiss-German relations, the German finance ministry said at the time that the deal will ensure the equal treatment of the wealth of German citizens, whether located in Germany or in Switzerland, and will restore tax equity for the past by means of a lump sum taxation.
Following significant concessions from Switzerland, the cornerstones of the agreement are now as follows:
- Following entry into force of the treaty, the capital deposits of German taxpayers located in Switzerland will be taxed at the same rate as applied to capital investments in Germany;
- In the future, German heirs will either agree to a 50% tax levied on inheritances, or to a full disclosure;
- The taxation of wealth will in future be assured by means of an exchange of tax information, which goes beyond the international Organization for Economic Cooperation and Development standards, to ensure that no new deposits of undeclared wealth are hidden in the Confederation;
- As regards the past, German residents can opt either for a flat tax imposed on capital or to submit a self-declaration. Otherwise, cases will be pursued; and
- If German taxpayers relocate wealth from the Confederation to a third country, Germany will be able to obtain information from Switzerland regarding the precise flow of money, following entry into force of the treaty.
According to the German finance ministry, the provinces will receive a significant portion of the revenues accruing from the agreement.
A first instalment of CHF2bn (USD2.2bn) is due to be paid to the German state directly following entry into force of the accord.
Defending the agreement as the best and most comprehensive means of resolving the situation, the ministry warned then that failure to implement the agreement would be the worst outcome for all parties involved, as millions of irretrievable tax assets would continue to be lost every year.
Yet without the backing of federal states led by the SPD and the Green Party, the coalition will be unable to secure the necessary majority in the Bundesrat, or upper house of parliament, to adopt the text. Further negotiations between government and opposition parties are expected.
Story taken from: www.tax-news.com