Credit Suisse to pay €150 million to settle German tax probe

Swiss banking giant Credit Suisse said yesterday it has reached a deal with German authorities to end a tax evasion probe, and that it would pay €150 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.

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 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”.

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

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

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

The deal, which is expected to be signed in the coming weeks, could snare up to just short of 1,000 tax cheats over two years.

Under the deal, 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 per cent 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 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 per cent.

The deal would have to be approved by both countries’ parliaments before entering into vigour by early 2013.

Between €130 and €180 billion are hidden in Switzerland, according to German media, which could therefore raise up to €54 billion in taxes for Berlin.