Data Dilemma Berlin Risks Spat with Switzerland over Tax Evaders

Paradeplatz square in Zurich: Berlin wants to crack down on Germans who use Swiss bank accounts to dodge taxes.

Paradeplatz square in Zurich: Berlin wants to crack down on Germans who use Swiss bank accounts to dodge taxes.


Part 2: 'Modern Form of Bank Robbery'

According to officials at the Swiss Finance Ministry in Bern, the two ministers concluded that Germany and Switzerland have different interpretations of the law. Merz, say the officials, told Schäuble that Switzerland is willing to address tax matters with Germany on the basis of a revised double taxation agreement. A new round of negotiations on the treaty, scheduled for March, will address the question of whether Switzerland should in the future surrender data in response to German requests based on suspicions of tax evasion.

On Monday, the Finance Ministry in Bern was unwilling to rule out the possibility that Germany's possible purchase of the CD could adversely affect the talks. "This remains to be seen," said a spokesman for Merz. He also told the German newspaper Die Welt: "What Germany is doing here is illegal in Switzerland."

On the weekend, several Swiss politicians warned the German government that a possible tax deal could upset relations between the two countries. On Monday Mario Fehr, a Social Democratic member of the Swiss parliament, the National Council, told the leading Swiss tabloid newspaper Blick that he could "not believe that Germany really wants to go ahead with this deal." According to Fehr, Schäuble and Merkel are trying to use scare tactics to coerce Switzerland into signing the double taxation agreement and to encourage German tax evaders to turn themselves in. By purchasing the data, Fehr added, the German state would essentially become "a receiver of stolen goods. This is not the level at which civilized states interact with each other."

Politicians with Switzerland's Liberal Party have also used the term "dealing in stolen goods," as did Adrian Amstutz of the right-leaning populist Swiss People's Party (SVP) in remarks to Die Welt. Pirmin Bischof, a member of Switzerland's Christian Democratic People's Party, called the data theft a "modern form of bank robbery." In an interview with Germany's ZDF television network, Thomas Sutter of the Swiss Bankers Association said: "It is our hope that Germany will not purchase this data, and will instead arrest the criminals who have committed a crime in Switzerland, and then return the data to Switzerland."

'Making Deals with Thieves'

Naturally the German tax authorities could also launch investigations even without Swiss help. In many cases, however, the key evidence needed to prosecute tax evaders can only be obtained directly from banks. The problem for the Germans is that Swiss banks can only surrender the relevant information if the Swiss authorities have first initiated a cooperation procedure aimed at helping Germany.

If the German government decides to acquire the sensitive data, it will not only be ignoring the concerns of the Swiss, but will also face questions from within its own ranks. On the weekend, Defense Minister Karl-Theodor zu Guttenberg, a member of the CDU's Bavarian sister party, the Christian Social Union (CSU), voiced his objection to the purchase of the data, saying: "Personally, I have a problem with this." Volker Kauder, the CDU/CSU parliamentary floor leader, also rejected the idea. "Theft remains theft," he said. "The government should not be making deals with thieves."

Will the government become a receiver of stolen goods, after all? Foreign Minister Guido Westerwelle, the leader of the Free Democratic Party (FDP), the junior partner in Merkel's coalition government, sounded skeptical on Monday when he said that the government could not turn itself into a "thieves' accomplice." Although tax evasion is a crime, he added, the government must also adhere to strict legal principles when prosecuting it.

The opposition Social Democrats have not been nearly as exacting. Former Finance Minister Peer Steinbrück, for example, had no qualms when it came to purchasing the Liechtenstein data in 2007. SPD General Secretary Andrea Nahles called the purchase of the CD an "imperative of justice" and said she suspected that the qualms being voiced by coalition politicians are "a sort of preventive way of protecting their supporters, in anticipation of generous political contributions ahead of the next election." Green Party leader Claudia Roth says that it is common practice to pay for "relevant information" that can be used to investigate a crime.

According to Schäuble's spokesman, the German government will determine "without delay" whether it is prepared to pay for the Swiss data. Apart from the legal implications, this raises the issue of who exactly will foot the bill for the CD. The prosecution of tax evaders is normally considered a matter for the individual German states, and in this case the federal tax authority has apparently decided that the western state of North Rhine-Westphalia is responsible. In the Liechtenstein case, the federal and state governments split the costs.

In the meantime, the German government is hoping that the affair will already act as a deterrent, even before they get their hands on the data. The mere prospect of the authorities obtaining the CD, they hope, will persuade many tax evaders to voluntarily turn themselves in.

Translated from the German by Christopher Sultan


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