EU Seeks To Firm Up Tax Co-operation Plans With Switzerland

by Ulrika Lomas, Tax-News.com, Brussels

10 March 2003

The European Union on Friday met with representatives from the Swiss government in order to firm up the terms of the savings tax agreement reached earlier this year.

According to reports in the international media last week, the two sides were close to a deal over the issue, but announced following Friday's meeting that one key area remains under dispute.

In return for agreeing to impose a withholding tax on savings held by EU citizens in Swiss banks, Switzerland wants a tax exemption for the transfer of dividends, interest payments and license fees between Swiss company headquarters and their units within the EU. This would place Swiss firms on an equal footing with their EU counterparts.

'Its the only point which is open. On the others we've found a solution,' Swiss Finance Minister, Kaspar Villiger announced after the talks, continuing: 'I think it is a fair price for what we have contributed to the solution on the taxation of savings.'

However, France, Spain and Italy have all objected to Switzerland's request, arguing that the budget costs will be too high.

According to reports, the EU's energy taxation package, which has been stalled by disagreement between Germany and Italy, was also discussed at Friday's meeting.

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