Sweden To Focus On Swiss Reluctance To Embrace EU Tax Plans

Ulrika Lomas, Tax-news.com, Brussels

16 January 2001

Sweden, which now has chairmanship of the European Union's council of finance ministers (Ecofin), faces tricky times ahead. It's broaching the subject of the withholding tax and information-sharing once again, and is bound to raise the hackles of a number of countries, notably Switzerland. Exchange of information, which is designed to stop tax avoidance, has always been a contentious issue and tough negotiations in November 2000 did not leave everyone smiling.

Sweden's Finance Minister, Bosse Ringholm, said last week that the Nordic nation plans to use its time at the helm of Ecofin to initiate talks with countries outside the 15-strong EU bloc over proposals aimed at closing savings tax loopholes. According to Mr Ringholm, he has already held talks with with his British and Dutch counterparts on how to approach countries in their former territories. Now Mr Ringholm wants to turn his attention to Switzerland, which is and always has been fiercely protective of its banking secrecy laws and therefore presents a rather large obstacle to the institution of an all-encompassing information-sharing regime.

In an interview with Reuters last week, the Swedish Finance Minister said: 'I hope we can start discussions with Switzerland. The timetable is 24 months and... there will be a (progress) report from the Swedish presidency in June'. Mr Ringholm is well aware that it will be difficult to convince the Swiss of the merits of information-sharing, and does not expect an immediate agreement. The Swedes will only hold the chair of Ecofin for six months, and any progress with Switzerland is likely to take much longer than that.

Back in November, a deal on information sharing was accepted by the majority of EU members, and it's all scheduled to happen by the end of 2002. Luxembourg and Austria, however, are digging their heels in and saying that they will only agree to the current plans if countries such as the US, Switzerland and Monaco agree to toe the line too.

At the end of last year, the Swiss ruled out the possibility of exchanging information with EU tax authorities. Swiss Economy Minister Pascal Couchepin said then that Switzerland could consider imposing a withholding tax on non-resident savings but its revered banking secrecy laws would be undermined by any information exchange agreement. Mr Couchepin said at the time: 'We are ready to discuss with the European Union when it itself has decided a certain number of issues, for example, defining the capital which is to be taxed and how to apply (the measure) in EU territories. We could consider a form of advance tax payments - a withholding tax. Exchange of information does not appear to us to be the most appropriate instrument.'

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