Luxembourg May Block Possible EU Savings Tax Deal With Swiss

by Ulrika Lomas, Tax-News.com, Brussels

13 May 2004

Objections expressed by the government of Luxembourg have threatened to derail a possible deal between the European Union and Switzerland concerning the latter’s adoption of the Savings Tax Directive.

Before the banking information sharing agreement can become operative in January next year, the EU must seek the agreement of key third countries to be bound by its terms, including Switzerland.

However, the Swiss want a guarantee that EU border control arrangements would never force Switzerland to violate banking secrecy in cases of tax evasion, and this is holding up negotiations.

Prime Minister of Luxembourg, Mr Jean-Claude Juncker, is worried that a separate deal could create an unlevel playing field in the banking industry, and told EU ministers on Tuesday that his government could not accept an agreement that treated a third country differently.

Juncker declared that there must be a “strict parallel” between the treatment of the Swiss and EU member states.

The EU has set a deadline of June to reach a final agreement that will accommodate the Swiss, in addition to three other third countries, namely Andorra, Liechtenstein and Monaco.

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