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Credit Suisse to pay $206 mn to settle German tax probe

Credit Suisse to pay $206 mn to settle German tax probe
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First Published: Mon, Sep 19 2011. 03 34 PM IST
Updated: Mon, Sep 19 2011. 03 34 PM IST
Zurich: Credit Suisse is to pay a fine of €150 million ($206 million) to end an investigation of its employees in the German city of Duesseldorf over allegations that they helped citizens dodge taxes.
Switzerland’s banking secrecy rules, which have been used by foreigners to hide money in secret accounts, have come under pressure from other countries in recent years as their cash-strapped governments try to crack down on tax dodgers.
In February Credit Suisse’s offices in Germany were raided and Germany’s campaign against tax evasion also ensnared Julius Baer, which paid a €50 million fine this year.
One senior Credit Suisse employee agreed to pay a fine of €2,50,000 to end the probe, the Duesseldorf prosecutor’s office said on Monday, adding that the €150 million payment would allow investigations into other employees to be dropped.
“A complex and prolonged legal dispute has been avoided, with an agreed solution that provides legal certainty,” the bank said in a statement.
Shares in Credit Suisse were down 4.8% at 02:57 pm, underperforming a 2.6% fall in the Stoxx Europe 600 banking sector index.
“Julius Baer paid a fine of €50 million to settle its German tax issues and the sum paid by Credit Suisse should be viewed in this light. It will lower our 2011 net profit forecasts by around 4%,” Helvea analyst Peter Thorne said in a note.
German-Swiss Tax Accord
Credit Suisse’s payment comes just days before Germany and Switzerland are set to sign an accord taxing money stashed by German citizens in secret Alpine accounts, a German government source told Reuters.
The terms of the accord were struck in August, after months of wrangling over how to regularise up to 150 billion Swiss francs in untaxed funds.
Switzerland has struck a similar deal with Britain to regulate untaxed funds, and in 2008 Liechtenstein’s LGT became the centre of a German probe after Berlin paid a former employee to access bank client data.
Credit Suisse is also the target of a formal US tax probe, and a number of current employees and former employees have been charged with helping US citizens dodge US taxes.
US authorities forced Switzerland to bend bank secrecy laws and hand over data on some 4,450 clients of rival UBS.
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First Published: Mon, Sep 19 2011. 03 34 PM IST