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Switzerland, Germany near tax deal to regularise untaxed money

Germany and Switzerland are close to striking a deal to regularize untaxed money saved in secret Swiss accounts.

Swiss paper SonntagsZeitung has reported that as per the deal 26% has been set as withholding tax on future German assets deposited in Swiss banks.

The terms to nearing a deal was made when Germany reduced its original demand of CHF10bn as upfront payment to CHF2bn ($2.6bn) after the amount was deemed as unacceptable from UBS and Credit Suisse.

The advanced payment is intended to settle a dispute over an estimated CHF200bn held by German citizens in untaxed Swiss accounts in the past 10 years.

Major part of the advance payment will be made by UBS and Credit Suisse while the remaining will be paid by other smaller Swiss banks.

The increasing global pressure on Switzerland to address tax evasion has led German clients’, who form largest percentage of foreign assets in Swiss banks, to declare untaxed funds.

Germany is not the only country with which Swiss government is negotiating such deal. Couple of years ago, the Swiss Government reached an agreement with US to provide the details of 4,450 UBS accounts in return for the dropping of a damaging lawsuit against the bank.

UBS ended up paying a fine of $780 million to US probe agencies to close the investigation related to tax evasion.

However, Swiss attempts to reach a tax deal with the US have stalled as the Department of Justice has launched an investigation into Credit Suisse as part of a broader probe into Swiss banks suspected of helping Americans evade taxes.

Switzerland is also under negotiations over a similar treaty with the UK, under which British regulators would receive an upfront payment of CHF500m ($652m) from Swiss banks.