Austria’s Finance Minister Maria Fekter has recently announced that talks on a planned bilateral tax agreement with Switzerland are due to begin in April. An official letter has been sent to Bern, Fekter explained, noting that a meeting with her Swiss counterpart Eveline Widmer-Schlumpf is expected to take place in April.
Alluding to the European Commission’s current opposition to such a bilateral tax deal aimed at resolving the issue of undeclared assets held in Switzerland by Austrian nationals, Fekter underlined her confidence that the Austrian government would be able to iron out any concerns that the Commission may have.
The European Commission confirmed plans at the end of last year to challenge similar landmark bilateral tax deals concluded between Switzerland and the UK and Switzerland and Germany pertaining to the taxation of savings held by British and German investors in Swiss bank accounts.
Undermining Switzerland’s hopes of negotiating further bilateral tax agreements with individual European Union member states, as a means to resolve the ongoing, longstanding disputes regarding undeclared assets held in Switzerland by EU nationals, the Commission recently asserted that the treaties are not compatible in their current form with European law.
The Commission argues that the tax deals undermine the objective of the Savings Tax Directive, a mechanism which allows member states to tax certain investments held by residents in other member states and certain third countries, including Switzerland. Opposed to the anonymity provision, the Commission is continuing to strive for an automatic exchange of tax information.
EU Tax Commissioner Algirdas Semeta recently insisted that any bilateral agreement that violates the EU Savings Tax Directive or EU agreements with third states is simply “not acceptable”. Banking secrecy must not be allowed to protect tax evaders, he stressed.
Signed on September 21, the Swiss-German bilateral tax deal provides for the future taxation of income earned by German taxpayers through accounts held in Switzerland from January 1, 2013 by means of a withholding tax, with the proceeds derived from the levy subsequently being transferred to the German authorities. The Swiss-UK deal has very similar terms.
The agreement also provides for the lump sum taxation of 'old money' held by German residents in undeclared Swiss accounts.
Both bilateral treaties maintain traditional Swiss banking secrecy, by regularizing accounts without, however, disclosing individual identities.
Austria’s Finance Minister also revealed plans to implement a reform of the country’s current system of taxation, “certainly in this legislative period”, and before autumn 2013. The central aspect of the reform would be a planned simplification of the existing tax system, a reduction in the entry rate of income tax, the introduction of a tax deduction for alimony payments, and additional tax relief measures for families, the minister explained.
Fekter alluded specifically to the German model, which provides for tax-free maintenance payments for children of EUR7,000 (USD9,285) a year..
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