BERLIN/BERN Switzerland and Germany are to toughen their tax crackdown on secret Swiss bank accounts in a move that could pour billions of extra euros into German state coffers, but which does not go far enough for the country's main opposition party.
The deal could end a diplomatic spat that has dragged on for years and net Berlin billions of euros in revenues from Germans who parked their cash in the small Alpine nation to avoid taxes, while preserving Switzerland's cherished banking secrecy.
The Swiss and German governments re-opened negotiations after Germany's opposition Social Democrats (SPD) rejected an initial deal signed last September, saying it was too soft on tax dodgers.
The revised terms announced on Thursday met some but not all of the SPD's demands, prompting the party's leader to threaten a veto.
"It will fail a second time because the SPD-led states will not go along with it," Sigmar Gabriel said, describing the deal as "a voucher for Persil washing powder for Swiss banks, to wash them white after they helped tax evaders".
German Chancellor Angela Merkel does not have a majority in the Bundesrat upper house of parliament, meaning she is dependent on opposition parties to get the agreement passed.
Her government is betting that SPD-led states will ultimately drop their objections and support the deal because it will bring them a huge windfall. Germans hold an estimated 150 billion Swiss francs in Swiss accounts.
Under the revised terms, the German finance ministry said the countries had agreed to raise the retroactive levy on German funds stashed in Swiss bank accounts to a rate between 21 and 41 percent, from a previously agreed range of 19 to 34 percent.
They also agreed a one-off tax of 50 percent for people who inherit Swiss bank accounts and do not want to declare them. German officials would be allowed to put in up to 1,300 requests with their Swiss counterparts to investigate cases of fiscal evasion, compared with a previously agreed 999.
Switzerland's bank secrecy code has helped it build a $2 trillion offshore financial sector.
Germany and Switzerland are keen to ratify the deal after years of tortuous negotiations on an issue that has strained bilateral relations. Bern has agreed a similar deal with Britain and is also in talks with Austria and Greece.
"The talks have been fairly heated recently," Swiss Finance Minister Eveline Widmer-Schlumpf told a news conference in Bern.
"I think we have found a fair compromise and a good solution for both sides," she added.
The Swiss Banking Association immediately rejected SPD demands for further changes, saying that while it supported the revisions unveiled on Thursday, it would not budge further.
"Switzerland has made significant concessions with regards to meeting Germany's demands," the SBA said.
The German taxpayer association, which had opposed the initial deal, urged parliament to ratify the revised accord.
"The association views as positive the fact the government renegotiated the deal with Switzerland after strong criticism of the first tax deal," the association said.
The legislation will likely now be put to Merkel's cabinet in May but will only face a vote in the Bundesrat after the summer, once two regional elections which the SPD hopes to win are out of the way.
The government has been operating under the assumption that some SPD states could drop their opposition after those elections, particularly as big states such as North Rhine-Westphalia - which votes on May 13 - stand to gain much-needed tax revenues, in some cases more than a billion euros.
But Berlin's efforts to secure broad support for the deal were not helped by news at the weekend that Switzerland had issued arrest warrants for three German civil servants, accusing them of industrial espionage for buying the Swiss bank account details of German tax evaders.