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Market watchdog Bafin probing UBS unit

Financial markets watchdog Bafin is investigating a subsidiary of Swiss bank UBS that German officials suspect may have helped clients avoid paying taxes, Bafin and the bank said Thursday.

Market watchdog Bafin probing UBS unit
Photo: DPA

“We are checking whether directives against money laundering are respected by UBS,” a Bafin spokesman told news agency AFP.

UBS confirmed in a statement that its German subsidiary was the target of a probe by the German watchdog, with which it was working in “close cooperation.”

A UBS spokeswoman contacted by the German magazine Der Spiegel said Bafin had launched its probe following one by prosecutors in Frankfurt to determine if the Swiss bank systematically helped clients avoid taxes. UBS is carrying out an investigation of its own, the spokeswoman said.

Bafin cannot sanction banks directly if it uncovers evidence of wrong-doing, but can order that remedial measures be taken.

The affair was revealed when a UBS customer told Frankfurt prosecutors the bank had helped him set up a false address in Zurich to defraud the German tax system.

In March, prosecutors in Düsseldorf, western Germany, opened a separate investigation of some 1,100 Credit Suisse clients suspected of tax fraud, a probe that included bank workers.

German tax authorities can expect to rake in more than €1 billion ($1.35 billion) from tax dodgers after buying a CD containing their names, a German tax union said Saturday.

Relations between Germany and Switzerland have been strained by alleged tax fraud for several years, and they are currently negotiating terms of a treaty to avoid double imposition.

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Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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