The World from Berlin 'Switzerland Has a Lot of Explaining to Do'

Swiss arrest warrants issued over the weekend for German tax inspectors have sparked heated debate in Berlin over the ongoing tax evasion conflict with Bern. German commentators on Monday discuss how renewed tensions could endanger a preventative deal between the two nations.

Over the weekend Switzerland issued arrest warrants for German tax officials.

Over the weekend Switzerland issued arrest warrants for German tax officials.

Tensions over tax evasion have flared up between Germany and Switzerland once again with the weekend announcement of Swiss arrest warrants for German tax inspectors accused of industrial espionage. The spying charges have opposition politicians so riled up that a tax evasion prevention deal currently under negotiation between the neighboring countries may now be at risk.

While both countries have signalled their willingness to sign the deal, they still need parliamentary approval -- which is now at risk after Swiss prosecutors on Saturday issued arrest warrants for three German tax inspectors from the state of North Rhine-Westphalia. The officials had federal approval to buy stolen bank information leaked from Credit Suisse in 2010, a move that triggered a wave of tax declarations by Germans seeking to avoid tax evasion charges.

The pending deal would require Switzerland to impose taxes on accounts held by Germans, in addition to handing out fines for undeclared assets, but would spare the country from having to reveal the identities of its valuable wealthy banking customers. With this, Berlin hopes to collect unpaid taxes on an estimated €130 billion to €180 billion socked away in the Alpine haven by its citizens.

But on Sunday, talks on the agreement reportedly broke down. The negotiations were aimed at concerns voiced by German states governed by the center-left Social Democrats. The party is in a position to block any deal in the Bundesrat, Germany's upper legislative chamber.

The arrest warrants seem to have further complicated the delicate issue. North Rhine-Westphalia governor Hannelore Kraft, an SPD member who is among those who could ultimately torpedo the deal in the Bundesrat, called the move by Swiss authorities an outrage on Sunday. "The NRW tax investigators were simply doing their job tracking down German tax dodgers who stashed undeclared money in Swiss banks," she said. Her party and the environmentalist Greens have both resisted the agreement, saying it doesn't go far enough despite concessions from the Swiss.

SPD member and North Rhine-Westphalia Finance Minister Norbert Walter-Borjans told daily Berliner Zeitung that the arrest warrants were a "massive intimidation attempt," adding that his state would not give up its efforts to fight tax evasion.

Opposition Demands Action from Schäuble

On Monday, the opposition in Berlin demanded a clear position on the issue from Finance Minister Wolfgang Schäuble, who is a member of Chancellor Angela Merkel's conservative Christian Democrats.

"Schäuble must make it unmistakeably clear that he will stand up for the enforcement of our tax law," deputy parliamentary leader for the SPD, Joachim Poss, told Die Welt on Monday, adding that Switzerland must give up its "business model" of protecting tax evaders.

Meanwhile, senior SPD parliamentarian Thomas Oppermann told mass-circulation daily Bild that the tax inspectors accused of espionage by Switzerland should get Germany's federal order of merit. The trio "deserves it for their fight against money laundering and tax evasion for the nation," he said.

But members of Chancellor Angela Merkel's center-right governing coalition have encouraged the opposition to approve the deal. "The federal government is convinced that it has negotiated a good agreement that will finally clarify open questions between Germany and Switzerland," Merkel's spokesman Steffen Seibert told Die Welt.

German commentators on Monday weigh in on the conflict:

Center-left daily Süddeutsche Zeitung writes:

"The outrage in Germany, fueled by election campaigns, is understandable. Has the Swiss justice system now allowed itself to be used in the struggle between Bern and Berlin, and is it the long arm of a government fighting for its banks by playing hardball and dirty tricks? No, Switzerland is not a banana republic, and its investigators are absolutely in a position to resist influence from the executive branch."

"Still, a bitter taste remains. The atmosphere is as poisoned as it was after the first stolen data CDs cropped up two years ago. A satisfactory solution to the conflict is foundering on irreconcilable differences. Here there are the Germans, who believe morality is on their side. After all, they are hunting mainly rich people (in their efforts to bring in) billions in tax revenue. And then there are the Swiss, who are defending their economic interests and hope to preserve for as long as possible the situation that has secured their advantage as a financial center for decades."

"It can't be a good political goal to bring Switzerland to its knees for an indefinite period with stolen data. The agreement with Switzerland is certainly not perfect, but it's a basis for a thriving cooperation. It shouldn't be allowed to fail."

Conservative daily Die Welt writes:

"For Germany, the issue is one of tax fraud, leading the country to authorize three tax inspectors to buy leaked stolen data on tax evaders in 2010. This legally dubious approach wasn't an issue domestically because of the common belief that the state was collecting its alleged due and it effects only 'the rich.' But in reality, because Switzerland has different laws, the officials acquired stolen property to use as evidence, and paid the thieves €2.5 million for it. Anyone who dismisses this as a trifle needs legal tutoring."

"Because Switzerland is a sovereign state in Europe, and not a colony to which one sends the cavalry, there was and is no other way: One must negotiate …Those who want it all often get nothing."

The left-leaning Die Tageszeitung writes:

"Switzerland has a lot of explaining to do. Why is an arrest warrant against three tax investigators only being issued now, some two years after the purchase of an illegally copied CD full of tax data? Why is the move taking place precisely at the point when negotiations over a German-Swiss tax treaty appear to be on the brink of collapse? It looks very much as if Switzerland is trying to apply pressure."

"Despite all the outrage, one should not overlook the fact that the purchase of illegally copied tax data is also controversial under German law. ... It would be sensible to create a clear legal basis for the purchase of illegally obtained evidence."

Conservative daily Frankfurter Allgemeine Zeitung writes:

"It is a fact that Switzerland has profited from legal and illegal tax refugees from Germany and elsewhere. Foreigners … attracted by the lax tax laws, live like kings. It is good for them, but bad for the German Finance Ministry. Those who have secretively moved their money across the border are invisible. Some of them have recently come clean due to the purchase of data by German finance officials. And growing foreign pressure has led Switzerland to rethink its position on bank secrecy."

"But Germany isn't blameless on the issue either. The country has done business with data thieves, leaving itself open to accusations of trading in stolen goods. As such, Germany has incited criminal behavior in Switzerland. Just imagine how Germany would react were the Chinese government to buy automobile designs from German car company employees to speed up industrial development -- with the argument that patent laws are too strong in the West."

Business daily Financial Times Deutschland writes:

"Even if the timing of the arrest warrant seems strange, there is little to suggest this was a political maneuver by Switzerland. The federal prosecutor's office in Bern is independent and doesn't take orders from the government. Besides, Switzerland would have no interest in torpedoing the tax agreement. On the contrary, the current plans would serve it quite well: The Alpine Republic would continue to be able to keep the names of German investors secret and could thereby protect the financial sector that is so important for the country's prosperity. If Switzerland were to deliberately endanger the tax agreement, it would be scoring a huge own goal."

"And the agreement isn't bad for Germany either. Germany wouldn't get the names of the tax refugees, but it would be able to retroactively levy taxes on German capital deposited in Swiss banks. It's a good compromise and it would be unrealistic to demand even more concessions from Switzerland."

Financial daily Handelsblatt writes:

"It's doesn't take long to figure out why Schäuble is staying silent. The Finance Ministry must have known for a long time that the German tax inspectors were being investigated in Switzerland. The arrest warrants hardly came as a surprise."

"In particular, the indignation of the opposition parties ... will soon emerge as nothing more than hot air, since under Swiss law the purchase of tax data is a criminal offense, a fact that has been known for some time. The two countries have distinct interests. The Swiss banks want to protect their own customers' information and right to confidentiality. Germany wants to retrieve hidden assets and bought the tax evasion data in the knowledge that it could be prosecuted for doing so."

"The opposition parties and independent tax body have described the action as 'grotesque' and 'outrageous.' The SPD and Greens could quickly provide a solution, if they stopped blocking the Swiss-German agreement in the Bundesrat. ... It's a smart and simple solution. But the opposition parties don't want to give the finance minister credit for its success. In the meantime, the German tax inspectors must prepare to be investigated in Switzerland."

-- Kristen Allen


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