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Switzerland and Germany amend tax agreement

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Switzerland and the Federal Republic of Germany signed a Supplementary Protocol that supplements the tax agreement of 21 September 2011. The agreement is thus ready for parliamentary deliberation. It should enter into force at the start of 2013.

The Protocol of Amendment to the tax agreement was signed today in Bern on behalf of their governments by State Secretary Michael Ambühl and Germany's ambassador to Switzerland and Liechtenstein, Peter Gottwald. The essence of the agreement remains unchanged, that the taxation of German capital assets in Switzerland is ensured for the present and the future and thereby places relations between Switzerland and Germany on a forward-looking basis.  The following points have been added:

  • After the agreement has come into force, inheritances which occur will be covered. In the case of inheritance, heirs must consent either to collection of a 50% tax or disclosure.
  • In the case of flat-rate taxation of the past, the size of the tax burden has been increased. Instead of being between 19% and 34% as it was up to now, the tax rate is now at least 21% and no more than 41%.
  • In addition the number of possible requests for information after entry into force of the agreement have been increased from a maximum of 999 to a maximum of 1300 within a period of two years. This option extends and supplements the exchange of information according to the OECD minimum standard.
  • With the entry into force of the agreement on 1 January 2013, German taxpayers will no longer be able to shift assets out of Switzerland to third countries without notification. The appointed deadline was brought forward from 31 May 2013 to 1 January 2013.
  • It was made clear that interest payments which are covered by the Taxation of Savings Income Agreement with the European Union or will be covered by this in future, will be excluded from the scope of the agreement. In this way, the concerns of the EU Commission regarding compatibility with EU law have been removed as was the case with the tax agreement between Switzerland and the UK.
  • The regulations on the distribution in Germany of the revenue generated will be taken from the tax agreement. Within the scope of a German legislative procedure concerning the one-off flat-rate tax payment a higher proportion of the German Länder and communes will receive payment than would have resulted from the distribution key in the case of tax on investment income.
  • Individual models which come under the anti-abuse provision will now be described. In addition, monitoring implementation of the agreement by the competent Swiss authority and by an independent auditing company and the appointment of German Länder representatives on the so-called joint commission has been specifically laid down.

An important contribution will be made to tax equity with the amended agreement. The agreement not only respects the protection of bank clients' privacy applicable in Switzerland but also ensures the implementation of Germany's legitimate tax claims.

In addition procedural issues relating to cross-border activities in the financial sector should be improved. The execution of the exemption procedure for Swiss banks in Germany has thereby been improved in such a way that the procedures on the basis of more intensive cooperation between the supervisory authorities in both countries within the scope of the respectively applicable national law will be streamlined and accelerated.

Swiss Federal Department of Finance

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