Switzerland's tax treaty with Germany may end banking secrecy in Europe and prompt withdrawals as Swiss banks will no longer guarantee client confidentiality.
The treaty will allow investigators to request Swiss aid in tracking down undeclared money from German nationals, said Eric Jucker, a tax lawyer in Zurich. It probably will be signed this month by Swiss Finance Minister Hans-Rudolf Merz and his German counterpart Wolfgang Schaeuble.
"The agreement that will come into force will go very much further on the information that can be exchanged between officials," Jucker said. "Banking secrecy will come to an end" for clients who are not Swiss as the country adopts international tax standards, he said.
Germans are the biggest clients of Swiss money managers, with assets of about 260 billion francs ($264 billion), according to estimates from Geneva broker Helvea. Swiss banks, including Julius Baer Group Ltd. and Bank Sarasin & Cie., are setting up branches around Europe to retain cross-border clients.
The German accord follows standards from Switzerland's agreement with the Organization for Economic Cooperation and Development in March 2009 after the country was threatened with being blacklisted as a tax haven. It will spell out when Switzerland is to give Germany "administrative assistance" where there is evidence of tax evasion, said Mario Tuor, a spokesman for the Swiss State Secretariat for International Financial Matters in Bern.
"This is a dramatic change because until recently there was no chance a foreign tax authority could get hold of information," said Kurt Blickenstorfer, a lawyer at Bratschi Wiederkehr & Buob in Zurich.