Germany Says Tax-Evasion CD Purchases Show Need for Swiss Treaty

Chancellor Angela Merkel’s government said the reported purchase by a German state of a compact disc with data on tax evaders underlines the need for a stalled German-Swiss tax treaty to be approved.

The accord, signed by the German and Swiss governments though yet to be ratified in Germany’s opposition-controlled upper house of parliament, presents “a correct, substantial and helpful” way to resolve the matter of untaxed assets in Switzerland, Finance Ministry spokesman Martin Kotthaus told reporters today in Berlin.

Ratification, which is being blocked by the Social Democrats and Greens in the upper house, where Germany’s 16 state governments are represented, would remove an incentive for regional authorities to buy tax-data CDs, Kotthaus said. Kotthaus said he couldn’t confirm whether the purchase of the CD has been completed.

The state of North Rhine-Westphalia, governed by an SPD-led coalition, bought a CD from an undisclosed source in Switzerland with data on about 1,000 German clients of RBS Coutts, the private banking unit of Royal Bank of Scotland Group Plc, the Financial Times Deutschland reported July 14. The CD was purchased for 3.5 million euros ($4.3 million), the FTD said, without saying where it got the information.

RBS Coutts said yesterday that there’s no evidence its client data has been infringed.

The Social Democrats are leading opposition to a treaty that would levy a tax on German assets held in Swiss banks while keeping client identities secret, saying that it doesn’t go far enough in penalizing tax cheats. Finance Minister Wolfgang Schaeuble said the purchase of CDs can only be a “temporary crutch,” according to an interview in today’s Bild newspaper.

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Rainer Buergin in Berlin at rbuergin1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net