Overall positive assessment of the tax agreement between Switzerland and Germany – Agreement is in the interests of clients – Foundation laid for repositioning of the Swiss financial centre - Protection of financial privacy remains intact for clients who are tax compliant

The Swiss Bankers Association (SBA) welcomes the finalisation of the tax agreement between Switzerland and Germany. Firstly, the bilateral treaty gives clients of banks in Switzerland who are taxable in Germany a path to tax compliance while maintaining their financial privacy. The maximum tax rate for regularising the past is 34%. However, the effective tax rate for most clients will be between 20% and 25% of total assets. Secondly, the agreement allows Switzerland as a financial centre to implement its forward strategy and focus in future on acquiring and managing taxed assets. Thirdly, Germany will receive direct access to the tax base it is due, both past and future. Finally, the agreement provides for easier market access in the bilateral relationship and the decriminalisation of banks and their employees – an important basis for future growth in the cross-border business with Germany.

A positive outcome is the fact that Germany has unequivocally acknowledged that the final withholding tax for the future is equivalent to the automatic exchange of information in the long term. The SBA expects that the EU proponents of an automatic exchange of information will now have a less ideological position on this issue.

The agreement also foresees that Swiss banks will make an advance payment of CHF 2 billion relating to clients’ tax liabilities in order to regularise untaxed assets. This payment is due after the agreement comes into effect and will thereafter be offset against the tax payments made by clients.

The tax agreement does not come without a price tag for the banks, however. The implementation of the measures will cost the banks in Switzerland a mid-three-digit million Swiss franc amount.

Patrick Odier, Chairman of the SBA, says of the agreement: "Overall, my assessment of the tax agreement is positive. It is an important milestone for the Swiss financial centre. As a banker, I am especially grateful that clients have been offered a fair solution for regularising their assets. As promised, the Swiss banks have abided by their duty of fiduciary responsibility to their longstanding clients."

The SBA now expects that the Federal Council will approve the agreement without delay and that it will be passed by parliament. This is the only way that the tight deadline for the coming into effect of the agreement – early 2013 – can be met. Switzerland should initiate further negotiations with interested European countries as quickly as possible.

The SBA expressly thanks the Swiss negotiating delegation for their unwavering commitment and hopes that negotiations will be initiated soon with other European countries.