May 2 (Bloomberg) -- German wealth managers may benefit from a withholding tax deal with Switzerland as affluent Germans repatriate funds from the Alpine country, according to Edison Investment Research.
German holdings in Switzerland probably rose to about 222 billion euros ($291.8 billion) at the end of 2010 from 187 billion euros at the end of 2007, Peter Thorne and other analysts at Edison wrote in a note to be published tomorrow. About 41 percent of those funds were declared, they said.
Switzerland and Germany signed an amended withholding-tax accord last month to end a dispute over tax evasion between the neighboring countries. The Swiss financial industry, with the exception of some “very small” private banks and asset managers, should digest repatriation of German funds as they represent 12 percent of non-resident money in Switzerland, according to Edison.
The number of Germans declaring their funds fell to 27,496 in 2010 from 56,566 in 2007, which probably “reflects the repatriation of money to Germany rather than the decision by Germans not to declare their earnings,” Edison said.
German wealth managers will probably also profit from demand for investment products as the country’s population ages and seeks alternatives to state pensions, according to Edison.
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