Bundesrat Blocked Swiss-German Tax Deal

Bundesrat Blocked Swiss-German Tax Deal

As expected, the upper house of German parliament, Bundesrat, has rejected the tax deal between Germany and Switzerland during the recent plenary sitting.

The lower house, Bundestag, and federal government now have recourse to an arbitration committee. However, amending of the treaty itself is not possible within the framework of the arbitration process.

The bilateral Swiss-German tax treaty provides for a 25% withholding tax (plus solidarity surcharge) to be imposed from 2013 on capital gains received by German taxpayers with accounts held in Switzerland. It also provides for a 50% tax to be imposed on inheritances in Switzerland, unless German residents can declare their inheritance to the German tax authorities.

The text was blocked in the Bundesrat by representatives of the Social Democrat and Green Parties. The opposition parties insist that the agreement is not fair for tax evaders and other taxpayers in its current form and contains too many loopholes.

The German Finance Minister expressed clearly his determination to continue to fight for the adoption of the treaty, for it is a balanced and fair deal, stressing that Germany could neither want, demand nor expect any more.

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