Roland Reding, a tax expert at accounting firm KPMG, told Swissinfo in an interview published yesterday that he has seen figures suggesting that the amount of tax withheld by Swiss banks since the directive came into force last July is relatively small.

"I have seen [banking] provisions for this tax and I was always surprised the figures were so small. The payments to the EU may be far below expectations," he told the news service.

According to Swissinfo, estimates of Switzerland's withholding tax contribution vary between CHF120-200 million ($91-152 million) for the first 12 months. These contributions will soon be handed back to the government of the state where the investor has their primary residence.

As originally drafted, the directive aimed at a uniform 'information exchange' regime to apply across the Union, with all countries agreeing to report interest on savings paid to the citizens of other Member States to those States' tax authorities.

As Europe's major private banking centre, Switzerland was forced by the EU to adopt the directive, along with the UK's offshore dependent territories, the Netherlands Antilles, Aruba and some European centres (Andorra, Monaco, Liechtenstein and San Marino). By was of a compromise, the EU has allowed most of these places to opt for a 'transitional' withholding tax at 15% (20% from 2008).

However, as expected, wealthy investors are finding it easy to circumvent the directive; one of the most obvious 'loopholes', as many describe it, is the fact that the provisions of the directive apply to individuals, but not to companies or trusts.

Billions of euros in assets have also reportedly flown to parts of the world where the EU directive cannot reach such as Hong Kong and Singapore, while in August 2005 alone, shorlty after the directive entered into force, nearly EUR7 billion poured out of Swiss accounts into Luxembourg Sicav II bonds, which are outside the scope of the Directive.