BERLIN, June 14: A planned German government amnesty to encourage tax dodgers to repatriate funds stashed in foreign banks may extend into 2005, after the start of an EU clamp-down on tax evasion, a magazine reported on Saturday.

Citing from a draft which it said would be adopted by cabinet next Wednesday, Focus magazine said tax dodgers would be able to repatriate funds without fear of prosecution from January 1, 2004, until March 31, 2005.

Repatriated funds would be subject to a one-off tax of 25 per cent in 2004, rising to 35 percent for funds brought back in the first three months of 2005, it said.

A finance ministry spokesman declined to comment, saying details of the proposal were still being worked on.

European Union finance ministers agreed recently, subject to a final unanimous vote next year, to swap information from January 1, 2005, on savings held abroad by EU-residents to enable interest income to be taxed in their home country.

As part of the plan, the EU hopes neighbouring non-member states such as Switzerland will agree to withhold tax on EU residents savings income, and repatriate part of the proceeds.

Estimates of the amount of funds held abroad by Germans, much of it parked in Switzerland and Luxembourg, vary from 300 billion to 960 billion euros. Germany has previously said it hopes to garner around five billion euros from an amnesty.

Germany is planning a wider shake-up of the way it taxes savings from 2005 in order to try and keep capital in the country. Handelsblatt newspaper reported on Friday the government wanted to impose a flat-rate tax of around 25 per cent on all forms of investment income.

Separately, Focus reported tax revenues in May rose 2.6 per cent year on year, although in the January to May period were still 0.7pc below year-earlier levels.

The finance ministry spokesman said the report went in the right direction. Details would be published on June 20, he said. —Reuters