The Munich branch of Swiss bank UBS has been raided as part of the country's unprecedented tax evasion crackdown.

The investigation also raised the ire of Liechtenstein royalty today, with Crown Prince Alois accusing Germany of failing to respect the country's sovereignty. The outcry followed revelations that Germany had spied on the diminuitive state's banks in a bid to ensnare German tax evaders.

There were raids across Germany yesterday as part of the investigation, which has already claimed the scalp of Deutshe Post's former chief executive, Klaus Zumwinkel.

"There has been a raid at our Munich branch," a UBS spokesman confirmed. "There has been an investigation into an individual case rather than the bank itself."

Prince Alois accused Germany of using “draconian methods that defy the rule of law” at a press conference aired on German television, adding that Germany had "the worst tax system in the world".

“Germany has clearly failed to understand how one behaves towards a friendly state," he said. "We are a small country and we want good relations with our neighbours but we are also a sovereign state.”

The Prince, who is acting head of state, said he would investigate whether Germany had illegally obtained client data from Liechtenstein banks.

His family owns LGT bank, which last week reported the theft of client data six years ago, although it has not said whether the theft is connected to the German investigation.

Relations between the two states are rapidly becoming frayed after Germany admitted to paying an informant €4 billion (£3 billion) for information on hundreds of German tax evaders hiding assets in Liechtenstein banks and it was revealed that Germany had been spying on its banks for some time.

The Prince has vowed to “see what we can do to protect our citizens and also our investors, who trust us, against such methods of investigation”.

The German government expects the investigation will uncover tax evasion among the country's business elite “totalling hundreds of millions of euros” through secret bank transactions in Liechtenstein.

Mr Zumwinkel, who had led the Bonn-based Deutsche Post for 18 years, tendered his resignation last Friday after raids on his home. German authorities are investigating Mr Zumwinkel, 64, over allegations that he evaded €1 million in taxes by transferring money to Liechtenstein.

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