EU Presents Switzerland With New Negotiating Mandates For 'Bilaterals II'

by Ulrika Lomas, Tax-News.com, Brussels

11 April 2002

The European Union has presented Switzerland with four new negotiating mandates in an attempt to revive the second round of bilateral negotiations, which have recently stalled.

Although Switzerland and the 15-nation bloc have now set an implementation date for the first batch of bilateral treaties, which addressed issues such as the liberalisation of labour markets, agriculture, air traffic, and research, progress on 'Bilaterals II', as they are known, has been slow.

Negotiations for the second set of treaties are concerned principally with customs fraud, the taxation of savings, liberalisation of services, and cooperation on asylum and security.

However, the taxation of non-resident savings interest has proved to be a rather large fly in the ointment, much to the dismay of the EU. It has until the end of the year to get non-members such as Switzerland and the United States to agree to share information on this issue, if its own information sharing regime is to be successful.

Switzerland has thus far refused to concede to EU demands on information sharing, offering instead to extend a withholding tax on non-resident savings interest which, it argues, will serve the European Union's stated purpose, without forcing the alpine jurisdiction to compromise banking secrecy.

The launch date for the first set of seven bilateral treaties was confirmed last month as June 1.

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