While Switzerland and Luxembourg support the European Union's efforts to ensure
that investment income is properly taxed under the Savings Tax Directive, the
two countries are insistent that they will not be persuaded by Brussels to adopt
exchange of information with other member states for tax purposes.
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.
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