Sunday, April 1, 2012

The Swiss Tax Episode

Two years ago....some German tax investigation guys stumbled across this opportunity.  A number of Germans, which we have no idea how many.....had moved their money across the border into Switzerland, and put it secretly into accounts that involve no taxation.  Swiss banks....usually known for their secret business dealings....ensured some discretion.  Well....a Swiss bank clerk who was very unhappy with his Swiss bank....downloaded all the account numbers and names of Germans connected to them.  He turns around sells this CD to the German tax investigation guys.

This episode started up a huge mess for the Swiss bankers.  A number of Germans had to come over to the German tax office, admit their issues, and pay taxes.  They weren't happy about this, and in most cases....they probably removed all their funds from the Swiss banks.  Anger and hostility in Switzerland over the purchase of this CD has been significant in banking circles.

This past week....the Swiss finally decided to issue warrants for the arrest of the three German tax investigators.  The charge?  Economic espionage.

At the public level in Germany....I doubt if many people care about the charges or the implications.  Around political circles....if you read various German newspapers....there is some worry.  The Swiss folks could try to make the warrants effective in Germany....which would mean the detention and the examination by the German court system over the legitimate means of getting information outside of Germany.  The question of who authorized the purchase of the data will also come up.

The three German tax guys?  I'm guessing that all three have gone to a lawyer and tried to figure out how messy this might become.  Even if the German courts say 'no' on the warrants....other European countries could examine the warrants and make them when Huns or Johann go off to Greece or Austria for a vacation.....they might be arrested.  Would the German government try to recover them?  Would there be some negotiation involved to toss out the warrants?  You just don't know the end result of this.

So tonight, you can imagine Johann the tax investigator....sitting on his balcony with a beer....looking at the stars and wondering how he ever got into the tax investigation business.  What would a Swiss jail look like and how long might he dwell in such a prison?  Meanwhile.....a couple hundred millionaires in Germany are feeling like some revenge has been accomplished in their favor.  Every single German tax investigation has to worry about how he gets his information.  My humble guess is that for the remainder of this year....nothing much happens on investigations outside of Germany.  Management will be angry over this attitude and demand people actually do their job.....I suspect that someone has finally opened up a can of worms, and no one feels good about it.

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