Germans smuggle cash over border from Switzerland to avoid paying tax
Germans who avoided taxes by keeping money in Switzerland are bringing wads of cash home and hiding it in odd places.
With Swiss banks the target of an international crackdown against tax evasion, the Swiss government wants the industry to stop managing undeclared funds.
It comes after high-profile cases such as that of Bayern Munich soccer club president Uli Hoeness, who is charged with using a Swiss account to evade paying taxes, and the purchase of client data by German officials. Customs agents say the move has frightened tax cheats into action.
"We had a 72-year-old man wearing a woman's corset with €150,000 (HK$1.53 million) stuffed inside," said Markus Ueckert, a German customs spokesman. "In another instance, a man had on two incontinence diapers with nearly €140,000 in between."
Non-resident Germans and Britons may have held 164 billion Swiss francs (HK$ 1.36 trillion) of undeclared funds in 2010, according to one estimate. Since then, more than 36,000 requests for tax amnesty were filed in Germany. Those who don't want to come clean are prepared to violate the law that requires more than €10,000 in cash to be declared at the border.
The customs districts bordering Switzerland turned up €20 million of undeclared cash last year. In the Bavarian border town of Lindau, where officers once caught a man with €25,000 stuffed inside a gingerbread house, €2 million in undeclared cash was discovered last year.
"A pair of pensioners had money in their shoes, and we had a case of money hidden by the car battery," said Harald Gabele, a spokesman for Germany's Singen customs district. "You regularly have instances of people wearing a secret money belt or concealing it in their underwear."
Tax evasion is a hot campaign topic ahead of Germany's election on September 22. Peer Steinbrueck, who is running for the chancellorship against Angela Merkel, criticised Switzerland's stance at a rally last month. "I don't have a problem saddling the cavalry to fight tax fraud and tax evasion," he said.
Germans are the largest group of foreign tourists in Switzerland, and their holidays mean easy access to accounts. Not only millionaires such as Hoeness and former Deutsche Post chief executive Klaus Zumwinkel, who was convicted in 2009 of tax evasion, may hold secret accounts. Avoiding taxes is a "national sport" practised by dentists and taxi drivers alike, said German tax official Frank Wehrheim in a 2012 interview.
Switzerland negotiated withholding tax agreements with Austria and the UK that allow the countries to recoup tax revenue and preserve secrecy. A similar deal with Germany was rejected because of parliamentary opposition in Berlin.
For Germany, breaches of the €10,000-rule increased 11-fold since 2000 to 2,489 last year; the penalty equals 10 per cent and 25 per cent of the discovered sum.
German border agents also hunt for stacks of papers that point to secret accounts.