By Katie Reid
ZURICH (Reuters) - A Swiss decision to pursue German tax inspectors for industrial espionage is a sign of growing tension that could make it hard for both sides to secure parliamentary ratification of a deal preventing Germans dodging tax on their Swiss deposits.
While Berlin is trying to tax an estimated 150 billion Swiss francs ($166 billion) hidden by Germans in Swiss accounts, Berne wants to avoid revealing the identities of wealthy customers who are a mainstay of its offshore financial services industry.
Under the deal, Switzerland would impose taxes on Germans' accounts and levy a punitive charge on undeclared money. It would then pass the proceeds to the German government without revealing whom it had come from, preserving its cherished banking secrecy.
Both governments say they will sign the deal but it's also needs parliamentary approval, and Switzerland's announcement on Saturday that it was pursuing the tax inspectors in a case involving Credit Suisse was hardly a sign of mutual trust.
Bilateral talks on Sunday intended to allay the continued concerns of some of Germany's regional states, which have the power to block ratification in the Bundesrat upper house of parliament, adjourned without agreement, an official with knowledge of the talks said.
After a series of tax disputes with other countries, notably the United States, Swiss politicians' patience with further concessions to their big northern neighbor is wearing thin.
"Switzerland needs to be tougher. If Germany can't back the deal in an acceptable period of time, then we should throw the agreement in the bin," Martin Landolt, president-designate of Finance Minister Eveline Widmer-Schlumpf's Conservative Democrats, was quoted as saying in the weekly Der Sonntag.
Tax evasion is a civil rather than a criminal offence in Switzerland and it has no time for the whistleblowers who have passed or sold bank clients' details to foreign tax authorities.
On Saturday, Switzerland said it had issued arrest warrants for three civil servants in the German state of North Rhine-Westphalia (NRW), accusing them of industrial espionage for buying the bank details of German tax evaders.
The attorney-general said there was "concrete suspicion that specific orders from Germany were issued to use espionage to obtain information from Credit Suisse".
In 2010 several German states including NRW said they had bought Swiss bank data from whistleblowers, prompting thousands of Germans to declare their financial holdings to avoid risking jail sentences.
Germany's federal government gave regional authorities the go-ahead to buy the data, even if it had been obtained illegally. Continued...