Swiss banks will be thrown open to greater competition as a result of the European Savings Tax Directive, due to enter into force in July 2005, according to the Swiss National Bank President Jean-Pierre Roth.
Because Switzerland's participation in the agreement will mean that it will levy a withholding tax on individuals' interest income, Roth told a business conference in Milan on Tuesday that: "this means Swiss banks will face increased competition."
Initially, the Savings Tax Directive (STD) aimed at a uniform 'information exchange' regime to apply across the Union, with all countries agreeing to report interest on savings paid to the citizens of other Member States to those States' tax authorities.
However, as a result of resistance from EU Member States with strong traditions of banking secrecy, the European Commission had to allow Switzerland, along with Austria, Luxembourg and Belgium to apply a withholding tax at 15% until 2009.
In addition, many of the UK's offshore financial centres have been forced to join the STD, along with the Netherlands Antilles, Aruba and some European centres including Andorra, Monaco, Liechtenstein and San Marino. Most of these places will also take the withholding tax route.
A comprehensive report in our Intelligence Report series examining offshore confidentiality and multilateral initiatives such as the European Savings Tax Directive is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report1.aspTags: Curaçao
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