This was the message relayed by Swiss Finance Minister Hans Rudolf Merz following discussions on the issue of tax and banking secrecy with Luxembourg Prime Minister Jean-Claude Juncker last week, in which he stressed that a paying agent tax, as opposed to automatic exchange of information, was the only means to accomplish the EU's goal of taxing capital yields.

"Switzerland will not deviate from this stance," the Swiss Federal Department of Finance confirmed after Merz's meeting with Juncker in Luxembourg.

The European Union is currently reviewing the Savings Tax Directive with a view to improving the legislation's effectiveness at taxing the investments of EU residents held in other member states and certain third countries, such as Switzerland and UK offshore territories in the Channel Islands and Caribbean.

One proposal that is being considered is to force all countries that have signed up to the directive to adopt automatic exchange of information with national tax authorities on such investments. Presently, certain countries keen to uphold banking secrecy laws are able to apply a withholding tax on such income instead of exchanging information.

While Switzerland and Luxembourg acknowledge that any shortcomings must be resolved first by amending the directive, the Swiss have emphasised that they have no obligation to enter into talks with the EU on a revision of the agreement on the taxation of savings income before 2013.

Furthermore, the Swiss authorities are adamant that the subject of banking secrecy would not be open to negotiation, "even within the scope of such discussions".

"This stance is shared by Luxembourg," the Swiss statement went on to add.

After his meeting with Juncker, Merz also sought to counter recent criticism that Swiss secrecy laws hamper the fight against financial crime, insisting that Switzerland "does not provide protection for criminals and fraudsters".

Merz added that citizens have a right to privacy which must also be preserved.