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Germany considering tax fraud probe of Swiss bank UBS

German justice officials are weighing a probe of Swiss bank UBS following a television report that allegedly showed staff ready to assist Germans who sought to commit tax fraud.

The spokesman for the prosecutor’s office in the southwestern city of Baden-Baden said officials in Mannheim were “examining” UBS activities, while stressing that it did not mean they were opening a full investigation.

Journalists for the Frontal 21 program of the public broadcaster ZDF had passed themselves off as Germans who sought to place money abroad without attracting the attention of tax authorities.

Fitted with a hidden camera, they reportedly spoke with staff at a UBS branch in Baden-Baden and then with a bank officer in Switzerland. Images of the subjects’ faces were scrambled and their voices transformed.

The program showed what it said was the director of the German branch of UBS, initially saying he would handle “only legal money” but then suggesting several options “if you want more discreet methods.” He proposed setting up a trust in Liechtenstein or an investment in Singapore.

Another purported UBS employee quoted in the report added that necessary documents were to be handled by an internal UBS postal service but could also be transported by car “with German license plates to avoid raising suspicions among neighbours.”

“We are going to investigate the conversation recorded during the programme with regards to UBS,” UBS bank told AFP in a statement. It said the bank’s employees are expected to respect the law and clear internal regulations, adding that “the active aiding of tax evasion is neither permitted in Switzerland nor in Germany.”

The programme was aired following the disclosure last month of a vast German tax evasion scandal. An investigation has been launched of hundreds of Germans suspected of seeking to avoid paying taxes on money placed in Liechtenstein trusts.

The German government said it paid an informer for bank data that led to the biggest tax fraud probe ever in Germany and sparked similar investigations around the globe.

Austria, Australia, Britain, Canada, France, Greece, Italy, New Zealand, Spain, Sweden and the United States have launched investigations into their citizens’ investments in Liechtenstein.

Switzerland’s finance minister has criticized Germany’s handling of the affair and launched a fierce attack on foreign critics of Swiss banking secrecy laws.

COST OF LIVING

Families in Germany to see next child benefit hike in 2025, says finance minister

Finance Minister Christian Lindner, of the pro-business Free Democrats (FDP), says he expects the next increase for child allowance or Kindergeld to take place next year, as bickering among German coalition parties continues.

Families in Germany to see next child benefit hike in 2025, says finance minister

The minister, who was discussing relief for families in Germany in an interview with Redaktions Netzwerk Deutschland (RND), said that Kindergeld will be increased in 2025 but didn’t say how much it would increase. 

“For the exact amount, we will have to wait for the subsistence level report in autumn,” the FDP politician said.

Lindner added that there are also plans to compensate for inflation in wage and income tax in 2025.

“Together with an increase in child benefits, there will also be a further increase in the basic tax-free allowance and the child allowance in wage and income tax in 2025,’ he said. He estimated the volume of relief from these tax cuts to support German residents at a time of high inflation at a “single-digit billion amount”.

However, the interview also revealed further cracks within the coalition government, which has been arguing about several topics recently including unemployment benefits. 

READ ALSO: Why a push for tougher sanctions in Germany is sparking a coalition row

Lindner said his party continues to reject a hike in child benefit called for by coalition partners the SPD and the Greens at the beginning of 2024.

“Child benefit was already increased significantly and disproportionately in 2023 in order to relieve the burden on families,” he said. “That was a great success. That is why the next increase is not due until 2025.”

Lindner also reiterated his call for child tax free exemptions (known as the Kinderfreibetrag) to be increased retroactively to the beginning of 2024, which he says is necessary for constitutional reasons. “Unfortunately, the SPD and the Greens have blocked this so far,” the FDP politician lamented.

There has been a row in the coalition over this matter for some time. 

Lindner wants to increase the tax-free allowance for families with children without increasing child benefit at the same time. However, the SPD considers this to be unfair because it would only relieve the burden on families with high incomes. For families with lower incomes. child benefit is the main factor. The FDP argues that the increase it wants to see is intended to follow on from the hike in child benefit from 2023.

German Finance Minister Christian Lindner.

German Finance Minister Christian Lindner. Photo: picture alliance/dpa | Kay Nietfeld

Parents in Germany automatically receive either child benefit or child tax exemptions depending on their income. The Finanzamt (tax office) looks at each tax return to determine whether the Kinderfreibetrag or Kindergeld makes the most sense for the family in question. 

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The tax-free allowance is often only worthwhile for families bringing in higher incomes. It was increased from €6,024 to €6,384on January 1st and would rise retroactively to €6,612 under the Finance Minister’s plans.

Child benefit or Kindergeld rose to a standardised €250 per month and child in 2023.

As The Local has been reporting, the German government has agreed to replace Kindergeld with Kindergrundsicherung or ‘basic child allowance’ from 2025.

The new system will see those with a greater financial need granted additional benefits. It means all benefits including a basic allowance, a supplemental allowance, and parts of an “education and participation package” will be bundled into the Kindergrundsicherung.

READ ALSO: What families in Germany need to know about Kindergeld’s replacement from 2025

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