Swiss arrest warrants fuel tax row with Germany

Credit Suisse sign and Swiss flag - file pic German politicians have long complained about Switzerland's strict banking secrecy

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German opposition politicians are threatening to block a deal with Switzerland to tackle tax dodgers after the Swiss issued arrest warrants for three German tax officials.

The warrants accuse the three of industrial espionage by getting the secret details of accounts at the Swiss bank Credit Suisse.

The data about German tax dodgers was on a CD bought by German investigators.

The German parliament has not yet approved the tax deal with Switzerland.

Berlin estimates that 130-180bn euros (£108-150bn; $173-240bn) of German citizens' deposits in Swiss banks are liable for tax.

Berlin has reached a deal with Switzerland to tax the deposits at 26.4% minimum - the same rate as in Germany - from next year, German media report.

But the opposition Social Democrats (SPD) and Greens, who control several German states, are not happy with the deal, saying it has too many loopholes. They can block it in the upper house of parliament, the Bundesrat.

In 2010 tax officials from North Rhine-Westphalia state, governed by the SPD, paid a whistleblower 2.5m euros for a CD containing the names of people evading tax in Germany by using Swiss bank accounts.

Switzerland accuses the officials of violating its banking secrecy laws and industrial espionage.

Tax inspectors also raided branches of Credit Suisse in Germany in 2010.

Tax haven criticised

Switzerland's secretive banks have faced growing pressure internationally as governments try to recover taxes in the wake of the financial crisis.

The Economy Minister of Germany's Baden-Wuerttemberg state, Nils Schmid (SPD), said the Swiss warrants were "a bad sign" that "does not contribute towards a tax agreement between Germany and Switzerland".

North Rhine-Westphalia's Finance Minister, Norbert Walter-Borjans of the SPD, called the Swiss move "an attempt at intimidation" and vowed that his officials would buy such CDs again if necessary in future.

The BBC's Steve Evans in Berlin says the Swiss move is a sign of the tensions between governments trying to maximise tax revenues and countries with powerful banks who want to protect the identities of rich customers.

The SPD deputy leader in the Bundestag (lower house), Joachim Poss, said German Finance Minister Wolfgang Schaeuble "has apparently not yet grasped the scale of the conflict [with Switzerland]".

"Instead of expressing understanding for the Swiss position I expect from him a crystal-clear statement of the German state's legal position", he told the Saarbruecker Zeitung.

He said Mr Schaeuble must urge the Swiss to abandon their policy of "sheltering cross-border tax crimes".

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