A month ago, finance ministers from the EU member states provisionally agreed on a timetable for the introduction of European taxation of interest; according to the schedule presented by the Belgian EU President, as from 2003, banks in EU member countries will be obliged to report interest gained by foreign EU citizens to their local fiscal authority. However, the proposed guidelines which are due to be released in September, require unanimous approval if they are to be passed in 2003, and herein lies the problem.

Various member states, among them Austria and Luxembourg, have stated that they will only accept this regulation if the US, Liechtenstein, and Switzerland (all non-member states), will also introduce a mutual information exchange obligation or some similar measure. However, Liechtenstein and Switzerland in particular are ferociously protective of their banking secrecy laws, and although the former made some concessions in this area in order to secure removal from the FATF money laundering blacklist, it seems unlikely that it will give much more away.

Indeed, not even a week after the last ECOFIN meeting of EU finance and economic ministers, Switzerland and Liectenstein met privately to confirm their joint opposition to the EU's tax harmonisation proposals and the heavy-handedness of the OECD.