The post-war partnership

Trade, investment and the German economic miracle

The German economic recovery after the currency reform of 1948 made the Federal Republic once again Switzerland’s dominant trading partner within a few years. In 1957 Swiss imports from West Germany already exceeded two billion francs, while exports to Germany amounted to 960 million francs. Germany’s share of total Swiss imports rose from about 6 per cent in 1948 to almost 34 per cent in 1990. By 2002, Switzerland imported goods worth more than 40 billion francs from Germany and exported goods worth 27 billion francs there.¹ The German community in Switzerland recovered more slowly. It had fallen from 219,530 persons in 1910 to 55,437 in 1950 and reached 110,789 in 2000, two thirds of whom lived in the consular district of Zurich.²

The Zurich banks played their traditional role in this recovery. They financed German imports of Swiss machinery and chemicals, placed German borrowers’ bonds on the Swiss capital market once German borrowers regained access to it, and advised Swiss industrial companies that built or bought factories in southern Germany. Swiss insurers, whose history is told in Part E of this book, returned to the German market or expanded their existing German branches, which had in several cases continued to operate throughout the war. The Swiss franc, convertible and stable when the Deutsche Mark was still subject to controls, made Zurich the obvious place for German companies and families to hold reserves outside Germany. After the introduction of full convertibility of the Deutsche Mark in 1958, the flows in both directions became a matter of routine.

The reunification of 1990 produced a final burst of Swiss investment in the German economy. According to the Historical Dictionary, some 140 Swiss companies acquired formerly state-owned enterprises in eastern Germany through the privatisation agency, the Treuhandanstalt.³ In the same decade the Swiss big banks and insurers expanded their German operations by acquisition, while German banks consolidated their presence in Zurich.

German banks in Zurich, Swiss banks in Frankfurt

The institutional presence of each financial sector in the other country developed along asymmetric lines. German banks came to Zurich above all to serve German private clients who wanted a Swiss account, and to participate in the Swiss capital market and the foreign exchange business. The large private banks, among them Deutsche Bank, Dresdner Bank and Commerzbank, and several regional state banks (Landesbanken) operated Swiss subsidiaries, most of them in Zurich. Because their clientele consisted to a considerable extent of Germans, the German banks were particularly exposed when the tax conflict escalated after 2008. In the years that followed, a number of German institutions sold or reduced their Swiss private banking units. Commerzbank sold its Swiss private bank, which it had run since 1985 with offices in Zurich, Geneva and Vienna, to Vontobel in 2009.⁴

Swiss banks, by contrast, went to Germany primarily to do business with Germans in Germany. Credit Suisse and UBS built up investment banking and wealth management operations in Frankfurt, Munich, Hamburg and Düsseldorf. A number of Zurich private banks opened German subsidiaries or representative offices from which they could serve German clients onshore. The advantage of an onshore presence became obvious once the tax conflict made cross-border business from Zurich legally and reputationally hazardous. Since the United Kingdom’s withdrawal from the European Union, UBS has run its principal bank in the Union, UBS Europe SE, from Frankfurt am Main, which has made Frankfurt the European base of the largest Zurich bank. Frankfurt thereby acquired a role for the Zurich banks that had no precedent in the nineteenth or twentieth centuries: that of the gateway through which a Swiss institution reaches the European single market.

The legal framework of the partnership

The legal relationship between the two states was rebuilt in the same decades. The double taxation agreement of 11 August 1971, whose instruments of ratification were exchanged on 29 December 1972, replaced the pre-war arrangements and has governed the taxation of income and capital between the two countries ever since. It was amended by protocols of 30 November 1978, 17 October 1989, 21 December 1992, 12 March 2002 and 27 October 2010. A separate agreement of 30 November 1978 deals with taxes on estates and inheritances.⁵ The substance of these agreements, including the special rules for German emigrants to Switzerland in Article 4 and the cross-border commuter regime, is treated in Chapter K.II. For the history told here, one feature of the 1971 agreement is decisive. Like the other Swiss agreements of the period, it provided for the exchange of information only to the extent necessary for its correct application. Information that would have allowed the German authorities to tax the undeclared income of German residents from Swiss accounts was excluded. For almost four decades, the treaty relationship between the two states therefore rested on the same premise as the banking business: Swiss banking secrecy stood between the German tax authorities and the Swiss accounts of German taxpayers.

Notes

1. HLS, “Deutschland” (cited above), section on the period after 1945. ↩
2. HLS, “Deutschland” (cited above), section on the period after 1945. ↩
3. HLS, “Deutschland” (cited above), section on the period 1985 to 2000. ↩
4. finews.ch, “Commerzbank Schweiz: Das seltsame Gefühl des Déjà-vu”, https://www.finews.ch/news/banken/30390-commerzbank-familiy-office-marc-steinkat-vontobel, which links the exit to the move towards declared money and to the difficulties of the German parent. ↩
5. Swiss Federal Tax Administration (ESTV), “Deutschland”, overview of the double taxation agreements with Germany, https://www.estv.admin.ch/estv/de/home/internationales-steuerrecht/international-laender/sif/deutschland.html, listing the agreement of 11 August 1971, the five protocols with the dates of their conclusion and entry into force, and the inheritance tax agreement of 30 November 1978. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.