Monday, September 24, 2012
Itai Grinberg (Georgetown) testified today in the Finance Committee of the German Bundestag against ratification of an anonymous withholding agreement entered into between Germany and Switzerland. He reports that the the agreement has become a major political football in Germany, and also has important consequences for the future of FATCA. The title of the testimony is Anonymous Withholding Agreements and the Future of International Cooperation in Taxing Foreign Financial Accounts:
Chairwoman Reinemund and members of the Finance Committee, this testimony will make three key points:
• Automatic information exchange is superior to anonymous withholding for the purpose of combating tax evasion involving the use of foreign financial accounts.
• German ratification of the Swiss-German anonymous tax withholding agreement would stifle the emergence of a multilateral automatic information exchange system. As a result, Germany would be less able to address its own concerns with tax evasion through foreign accounts over the medium term. By ratifying this agreement, Germany would also slow the development of a multilateral system that would allow many other countries around the world to effectively address their concerns with tax evasion through foreign accounts.
• Switzerland has in effect agreed to automatic information exchange with the United States. Germany could pressure Switzerland unilaterally, multilaterally, and through the EU for a similar agreement.