As a tax row between UBS, Switzerland and the US tax authorities rumbles on, the banking giant now faces a fresh probe in Germany.

New troubles are ahead for UBS as the German subsidiary of the Swiss banking giant is being investigated for having allegedly helped a client to systematically avoid taxes by establishing false residency in Switzerland.

BaFin, the German financial regulator, has launched a special investigation into the case of a former client of UBS who claims that UBS Deutschland helped him to get a residence permit in Zurich in order to avoid paying taxes in Germany, Spiegel Online reports.

In accordance with German privacy laws the claimant has been named only as Peter S.

A UBS spokesperson told WealthBriefing that the bank was “in close, regular contact with BaFin.”

The spokesperson added: “We confirm that BaFin has initiated a special probe in connection with the allegations raised by Peter S. Obviously, UBS Deutschland AG is co-operating with BaFin.”

UBS has initiated an internal investigation into the matter, the bank told this publication.

BaFin told WealthBriefing that it is investigating UBS in connection with money laundering in a probe which began about two weeks ago. The regulator added that it is not concerned with tax evasion but said it would forward any evidence of criminal actions that had or may come to light to the relevant law enforcement agencies.

In February this year, Peter S brought criminal charges against UBS.

UBS has of course been involved in a high profile row over tax evasion with the IRS, with the Swiss authorities also drawn into the numerous legal wranglings associated with the case. While the two parties have reached an agreement to settle the matter, a recent Swiss court ruling has thrown the transfer of data on the bank's clients to the US tax authorities into doubt.