Credit Suisse to pay 150 mln euros to end German tax probe

19th September 2011, Comments 0 comments

Swiss banking giant Credit Suisse announced on Monday a deal with German authorities to end a tax evasion probe, saying that it would pay 150 million euros ($205 million) to settle the case.

"Credit Suisse group and the Public Prosecutor's Office in Duesseldorf have reached an agreement regarding the proceedings against Credit Suisse employees," said the bank in a statement.

"The entire proceedings are to be resolved," it added.

The bank said the settlement meant that "a complex and prolonged legal dispute has been avoided."

In addition, the deal provides "legal certainty."

Stocks in the bank were down 3.39 percent at mid-day to 21.95 francs, underperforming the Swiss Market Index, which was down 1.18 percent.

In 2010, the Duesseldorf prosecutor's office raided branches of Switzerland's second biggest bank in 13 German cities as part a probe of 1,100 clients and bank staff suspected of hiding funds from tax officials.

The raid came after officials in the German state of North Rhine-Westphalia bought a computer disc for a reported 2.5 million euros (3.2 million dollars) with information on wealthy Germans linked to the investigation.

They were urged to come forward of their own accord to avoid prosecution, and some 12,000 had done so by late March 2010.

A spokesman for Duesseldorf prosecutors told AFP at the time that "the Credit Suisse clients have investments in total of around 1.2 billion euros."

German authorities have been putting pressure on Swiss banks over banking secrecy rules, which Berlin says help to shield tax cheats.

Swiss private bank Julius Baer, which was also the target of a tax probe, in April said it would pay 50 million euros to settle the case.

In August, Bern and Berlin also announced a comprehensive deal to end the long-standing tax dispute between the two countries.

Under the accord, Swiss banks agreed to pay 2 billion francs to German tax authorities.

The deal could snare up to just short of 1,000 tax cheats over two years.

German taxpayers would be given a one-off chance to make an anonymous lump sum tax payment, with the tax rate to vary between 19 and 34 percent of the assets.

Any taxes collected from these voluntary disclosures would be offset against the two billion franc advance payment and refunded to the Swiss banks.

In the future, all investment income and capital gains arising from assets held by German taxpayers would also be covered by a withholding tax of 26.375 percent.

The agreement would have to be approved by both countries' parliaments before entering into force early 2013.

However, some German parliamentarians have already signaled their opposition.

The finance minister of North Rhine-Westphalia, Norbert Walter-Borjans, on September 12 threatened to block the deal.

"I will do everything to prevent the indulgence given to tax frauders," said the social-democrat minister in an interview with German magazine Spiegel.

Bank Helvea analyst Peter Thorne noted that given the new German-Swiss tax treaty, "this sort of tax driven business will not be the sort of business that Credit Suisse is looking to obtain."

According to German media, between 130 billion and 180 billion euros are hidden in Switzerland, which could therefore raise up to 54 billion in taxes for Berlin.

© 2011 AFP

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