EU Considers Swiss Proposal To Extend Withholding Tax On Bank Accounts

by Ulrika Lomas, Tax-news.com, Brussels

24 May 2001

In an effort to reach a tentative agreement on tax evasion policy with the European Union, Swiss finance minister, Kaspar Villiger, has put forward a suggestion to extend a withholding tax on accounts belonging to EU citizens in Switzerland's banks until the year 2010.

According to the Swiss media, Villiger's proposal is awaiting approval from the government but it has been described by Frits Bolkestein, EU finance commissioner, as a step in the right direction. Bolkestein said that both the EU and Switzerland recognised a shared interest in clamping down on individuals who hide their funds in offshore accounts in the attempt to evade taxes.

Until recently the European Commission had plans not only to harmonise tax rates across the 15 member states of the EU, but with non-members as well such as Switzerland and Liechtenstein. However, a shift in policy towards supporting the implementation of the European single market has scuppered those plans.

The EU would like to see the free exchange of information among tax collectors which would inevitably result in relaxing banking confidentiality but Switzerland - fiercely protective of its banking secrecy regulations - has offered to compromise by extending the withholding tax on savings and bonds.

Villiger suggested the compromise during planning talks last week on a set of bilateral accords between the two parties. The Swiss government has revealed that it will discuss 10 new agreements which include forging closer ties on on asylum, education and media issues.

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