German-Swiss tax deal signed

German and Swiss government officials on Thursday signed an amendment to a treaty designed to allow Berlin to collect billions of euros in evaded taxes. The German government hopes to have the agreement, which was signed at a ceremony in the Swiss capital, Berne, implemented by next year.

"The ratification of the Swiss-German tax agreement should be completed this year, so that it can come into force starting on January 1, 2013," the Bundestag wrote in a press release. "[The government] considers the deal to be compliant with the German Constitution."The opposition Social Democrats (SDP) and Greens, however, look set to oppose the current deal. SDP leader Sigmar Gabriel told the mass-circulation Bild daily on Thursday that "foreign banks' complicity in tax evasion must finally be systematically investigated."

"It cannot be allowed that finance officials here fastidiously check every small tradesman's records but that no one worries about tax evasion aided and abetted by foreign institutions."

Other top SDP politicians voiced similar skepticism, with Hannelore Kraft - state premier of North Rhine-Westphalia - saying that the current deal would still lead to Germany losing billions in tax revenues over the years.

Kraft's reticence might be partly tied to the Swiss government's decision to issue arrest warrants against three tax officers from North Rhine-Westphalia, who were allegedly involved in purchasing tax data from Switzerland from a renegade banker over two years ago.

The secretary general of Merkel's Christian Democrats, Hermann Gröhe, said the SPD's complaints were "pure hypocrisy."

"The ever-more shrill tones serve only to distract from the failures of past Social Democrat finance ministers, who were able to deliver nothing beyond pithy platitudes on this important question," Gröhe said.

Tight-lipped negotiations

Negotiators have been working on improvements and alterations to a framework first drafted last August, though few of the changes have been made public. Under the initial deal, Germans sending money to Swiss accounts would have to first pay taxes of 26.4 percent; the changes are widely thought to involve a slight increase in the tax revenues due.

The Swiss government has given the deal the green light, on Wednesday authorizing Finance Minister Eveline Widmer-Schlumpf to sign up to the new terms.

The deal would also involve retroactively taxing German funds transferred into Switzerland since the year 2000; negotiators announced a slight increase in the rate of taxation on Thursday, with investors likely to pay between 21 and 41 percent on the funds, depending on the sums involved and the age of the Swiss account in which they were deposited.

Any deal between the German and Swiss governments would still need to go through parliament, with SPD-led states theoretically able to block the legislation in the upper house, the Bundesrat - especially if the party fares well in upcoming regional elections.

Germans hold an estimated 150 billion Swiss francs (124.6 billion euros, $163.5 billion) in Swiss accounts.

pfd,msh/rc (dpa, Reuters, AP)